London midday: Stocks pare losses as investors mull Budget rumours, services data

London stocks had pared earlier losses to trade flat by midday on Tuesday, as investors mulled the latest Budget rumours, services and retail sales figures and a slew of corporate news.

The FTSE 100 was steady at 7,642.49.

Stocks had kicked the session off weaker, with miners in particular weak after China failed to announce any fresh stimulus.

China set a growth target of "around 5%" for this year. It also announced the issuance of “ultra-long” special bonds for major projects, according to a government work report.

However, Richard Hunter, head of markets at Interactive Investor, said the absence of any measures to bolster the economy in terms of stimulus was poorly received, putting pressure on the local markets.

He added: "The weakness in pockets of the economy, most notably the beleaguered property sector, is well-known and it increasingly appears that the authorities are content for natural economic growth to override any shorter term fiscal boosts to repair the economy."

On home shores and ahead of Wednesday's Budget, a report in The Times suggested that Chancellor Jeremy Hunt will announce a national insurance cut of a further two percentage points for 27m workers in a move worth £450 on average.

It was understood the chancellor will make national insurance the central measure in his spring budget after deciding against cutting income tax.

He will say that the tax cut is worth a total of £900 for the average worker when combined with the two percentage point cut that was announced in the autumn statement.

On the macro front, a survey showed the services sector continued to grow in February, albeit at a slower pace.

The S&P Global/CIPS services purchasing managers’ index fell to 53.8 from 54.3 in January, coming in below the first estimate and consensus of 54.3. However, the index was still higher than at any point in the second half of 2023.

The composite PMI - which measures activity in both the services and manufacturing sectors - rose to 53.0 from 52.9, This was below consensus and the flash estimate of 53.3.

Tim Moore, economics director at S&P Global Market Intelligence, said: "Another solid expansion of business activity across the service sector in February adds to signs that the UK economy has turned a corner after entering a technical recession during the second half of 2023.

"New business intakes were a particularly bright spot as service providers reported the fastest order book growth since May 2023. Survey respondents cited rising business and consumer spending, linked to improved optimism towards the broader economic outlook. Resilient export sales also provided support to service sector growth, as signalled by the strongest rise in new work from abroad for eight months.”

Rob Wood, chief UK economist at Pantheon Macroeconomics, said: "Don’t focus on the small drop in the services PMI in February, which is probably noise; it remains comfortably in expansionary territory.

"Meanwhile, the composite PMI improved slightly, reflecting the large jump in the manufacturing output balance to 48.3 in February, from 45.5 in January. Overall, the PMI data continue to suggest the economy has escaped the minor recession it experienced in the second half of last year. The composite PMI is consistent quarter-on-quarter growth in GDP of about 0.25% in Q1.

"The PMI details suggest solid growth will continue. Businesses were the most upbeat about the year-ahead outlook since February last year and more optimistic than on average between 2012 - when the question was first posed - and 2019. That optimism partly reflects increasing incoming business, as the new orders index improved to 52.3 in February - the best since May last year- from 52.2 in January. Firms also reported that expected interest rate cuts were driving better customer demand."

Data out earlier revealed retail sales growth slowed last month as volumes were dampened by the wettest February on record.

According to the British Retail Consortium-KPMG Retail Sales Monitor, total sales rose 1.1% year-on-year in February, following 5.2% growth the year before. This was lower than the 1.2% growth seen in January and well below the 12-month average growth rate of 3.1%.

In equity markets, Intertek rallied as it posted a jump in full-year 2023 profit and said it expects a "robust" performance in 2024.

Spirent Communications rocketed after agreeing to be taken over by US communications equipment company Viavi in a £1bn deal.

Trustpilot racked up strong gains as JPMorgan Cazenove lifted its price target on the shares to 250p from 190p. The bank said earnings momentum was set to continue "as Trustpilot transitions into a fast-growing free cash flow generator".

Hiscox rose as it hailed record pre-tax profit for the year to the end of December 2023 and announced a $150m share buyback.

High street bakery chain Greggs gained as it maintained guidance and said it had made a strong start to the current year after delivering a jump in 2023 profits as customers sought out its sausage rolls and doughnuts amid the cost of living crisis.

Shareholders were also rewarded with a special 40p-a-share dividend on top of the 62p full-year payout.

On the downside, equipment rental firm Ashtead slumped as it said that full-year group revenues will expand at the low end of its guidance as a result of the previously disclosed slowdown in North America.

Inchcape was under the cosh as it reported double-digit organic revenue and profit growth for the 2023 but struck a more cautious note on the outlook for 2024.

Office space provider IWG fell as it reported a sharp rise in annual profits but held a cautious line on 2024 prospects, despite bringing in record revenues last year.

Travis Perkins lost ground as it said it’s looking at exiting its French operations after group operating profits more than halved in 2023.

Market Movers

FTSE 100 (UKX) 7,642.49 0.03%
FTSE 250 (MCX) 19,281.31 0.17%
techMARK (TASX) 4,469.81 2.62%

FTSE 100 - Risers

Intertek Group (ITRK) 4,948.00p 7.08%
Marks & Spencer Group (MKS) 240.90p 4.65%
Endeavour Mining (EDV) 1,415.00p 3.44%
Fresnillo (FRES) 487.90p 2.48%
Glencore (GLEN) 387.90p 2.03%
SSE (SSE) 1,649.00p 1.51%
Bunzl (BNZL) 3,112.00p 1.50%
Weir Group (WEIR) 1,879.50p 1.48%
Rightmove (RMV) 571.40p 1.38%
BAE Systems (BA.) 1,276.50p 1.31%

FTSE 100 - Fallers

Ashtead Group (AHT) 5,438.00p -5.06%
Prudential (PRU) 756.80p -2.07%
International Consolidated Airlines Group SA (CDI) (IAG) 142.10p -1.86%
Standard Chartered (STAN) 670.80p -1.70%
Hikma Pharmaceuticals (HIK) 1,919.50p -1.61%
Barratt Developments (BDEV) 471.30p -1.50%
Antofagasta (ANTO) 1,815.00p -1.25%
Pearson (PSON) 1,023.00p -1.16%
Rio Tinto (RIO) 5,034.00p -1.10%
Imperial Brands (IMB) 1,663.50p -1.07%

FTSE 250 - Risers

Spirent Communications (SPT) 172.80p 59.41%
Keller Group (KLR) 937.00p 7.09%
Trustpilot Group (TRST) 193.80p 6.19%
Rotork (ROR) 334.80p 5.88%
Future (FUTR) 625.50p 3.99%
Greggs (GRG) 2,812.00p 3.53%
Bakkavor Group (BAKK) 99.20p 3.33%
Darktrace (DARK) 351.60p 2.93%
Centamin (DI) (CEY) 98.60p 2.92%
Hiscox Limited (DI) (HSX) 1,151.00p 2.68%

FTSE 250 - Fallers

Inchcape (INCH) 600.00p -11.83%
IWG (IWG) 174.50p -5.57%
Marshalls (MSLH) 296.00p -3.46%
Dr. Martens (DOCS) 92.25p -2.89%
Wizz Air Holdings (WIZZ) 2,154.00p -2.75%
Aston Martin Lagonda Global Holdings (AML) 161.00p -2.42%
Watches of Switzerland Group (WOSG) 402.40p -1.95%
Oxford Instruments (OXIG) 2,150.00p -1.83%
IntegraFin Holding (IHP) 274.60p -1.72%
TUI AG Reg Shs (DI) (TUI) 527.00p -1.68%