London midday: Stocks fall as Rolls-Royce, Melrose hit by Airbus warning

London stocks had fallen into the red by midday on Tuesday, with Rolls-Royce and Melrose pacing the declines after a profit warning from Airbus.

The FTSE 100 was down 0.2% at 8,268.65.

Market participants were looking ahead to US personal consumption expenditure data for May, which is due on Friday. In the UK, meanwhile, first-quarter GDP figures will be published.

In equity markets, Rolls-Royce, Melrose Industries and Bodycote all fell after Airbus cut earnings guidance and delivery targets late on Monday.

Neil Wilson, chief market analyst at Finalto, said: "Airbus cut its 2024 delivery target from 800 to 770, and delayed increasing output of the A320 to 2027, citing ‘persistent’ supply chain challenges. It also took a €900m charge at its Space Systems.

"It might not have much impact on airlines, who have already indicated that Airbus has reduced scheduled deliveries. But aircraft manufacturing is proving tricky - just ask Boeing. Demand is not the problem; quite the reverse. But if supply can’t keep pace and competition so constrained, it ought to mean airline capacity doesn’t increase too much, which could keep fares higher for longer."

Ocado was also under the cosh after Morgan Stanley cut its price target on the shares to 215p from 345p.

On the upside, Admiral was the standout gainer on the FTSE 100 after an upgrade to ‘buy’ from ‘hold’ at Berenberg. It said the valuation is attractive and there is scope for further EPS upgrades.

"Investor Warren Buffett once said: ‘It is far better to buy a wonderful company at a fair price than a fair company at a wonderful price.’ Fortunately, today investors can buy Admiral, a wonderful company, also at a wonderful price," Berenberg said in a research note.

Saga gained as the over-50s holidays and financial products firm said it remains on track to hit targets after an in-line start to its financial year, despite ongoing challenges in the insurance market.

Market Movers

FTSE 100 (UKX) 8,268.65 -0.16%
FTSE 250 (MCX) 20,440.69 -0.59%
techMARK (TASX) 4,801.15 -0.37%

FTSE 100 - Risers

Admiral Group (ADM) 2,615.00p 1.79%
Flutter Entertainment (DI) (FLTR) 14,785.00p 1.27%
Smurfit Kappa Group (CDI) (SKG) 3,660.00p 1.10%
Sage Group (SGE) 1,077.50p 1.03%
National Grid (NG.) 896.20p 0.83%
Shell (SHEL) 2,815.00p 0.73%
Rio Tinto (RIO) 5,261.00p 0.63%
BP (BP.) 476.40p 0.47%
AstraZeneca (AZN) 12,534.00p 0.45%
easyJet (EZJ) 457.20p 0.44%

FTSE 100 - Fallers

Rolls-Royce Holdings (RR.) 454.20p -3.63%
Melrose Industries (MRO) 560.60p -3.61%
BT Group (BT.A) 141.60p -2.38%
NATWEST GROUP (NWG) 308.60p -2.25%
Weir Group (WEIR) 2,008.00p -1.95%
WPP (WPP) 750.40p -1.93%
Burberry Group (BRBY) 1,001.00p -1.67%
Convatec Group (CTEC) 237.40p -1.66%
Prudential (PRU) 746.60p -1.63%
IMI (IMI) 1,792.00p -1.54%

FTSE 250 - Risers

W.A.G Payment Solutions (WPS) 65.60p 2.82%
Tritax Eurobox (GBP) (EBOX) 59.90p 1.53%
Bank of Georgia Group (BGEO) 4,140.00p 1.47%
Centamin (DI) (CEY) 118.80p 1.02%
Ascential (ASCL) 340.50p 0.89%
Direct Line Insurance Group (DLG) 203.80p 0.69%
Playtech (PTEC) 464.00p 0.65%
Balanced Commercial Property Trust Limited (BCPT) 77.60p 0.65%
Apax Global Alpha Limited (APAX) 156.00p 0.65%
Clarkson (CKN) 4,135.00p 0.61%

FTSE 250 - Fallers

Ocado Group (OCDO) 296.30p -5.18%
Bodycote (BOY) 699.00p -4.38%
Abrdn (ABDN) 147.40p -3.69%
PureTech Health (PRTC) 192.60p -2.92%
Babcock International Group (BAB) 534.50p -2.82%
4Imprint Group (FOUR) 5,990.00p -2.76%
WH Smith (SMWH) 1,159.00p -2.69%
Victrex plc (VCT) 1,188.00p -2.62%
IP Group (IPO) 43.60p -2.57%
Trustpilot Group (TRST) 227.00p -2.37%