London midday: Stocks rebound by lunchtime amid Russian gas tensions

London stocks had rebounded into positive territory by midday on Wednesday, following another rough and tumble session overnight on Wall Street, as investors sifted through a slew of earnings updates.

At 1201 BST, the FTSE 100 was up 0.88% at 7,451.50, and the FTSE 250 was 0.22% firmer at 20,537.97.

“The situation in markets remains tense today as risks to global growth increase after Russia decided to move forward with halting its natural gas supply to ‘unfriendly’ countries,” said XTB chief market analyst Walid Koudmani.

“Gazprom announced it will suspend flows to Polish and Bulgarian suppliers and will not resume them unless payments are made in Russian rubles.

“While neither Poland nor Bulgaria plan to comply, the reaction of other European countries may be different.”

Koudmani noted that some unconfirmed media reports claimed Austria had backed down and agreed to pay for Russian gas in roubles, as Greece called an emergency meeting on the situation.

“So far, Russia has halted supplies to relatively small European countries, probably with the intention of sending a message to bigger countries, like Germany and France.

“While the sudden interruption of Russian gas exports to Europe will have significant repercussions for the European economy, it will also be a blow to Russia as the country cannot replace exports to the EU with exports to other customers due to inadequate infrastructure.

“As the situation benefits no one, the question is who will give in first.”

On the economic front, fresh industry research showed UK retail sales struggling in April, as the cost of living crisis saw consumers rein in spending.

According to the latest CBI Distributive Trades Survey, sales volumes tumbled by far more than expected, to -35 in the year to April compared to 9 a month previously.

Analysts had been looking for a balance of around -5.

Retail sales were seen as poor for the time of year, with a balance of -24 in April compared to -23 in March, while orders placed with suppliers was also down, at -7 compared to 3 in March.

Internet sales volumes continued to fall in the year to April, at -36, though at a slower pace than in March, when the balance was -46.

“Retail sales were below seasonal norms in April, as consumer spending power continued to shift back towards services and rising prices impacted households spending power,” said Martin Sartorius, principal economist at the CBI.

“Rapid inflation means that the cost of the living crisis is going nowhere soon.”

Investors were now looking across the pond, where the advanced report on foreign trade covering March was set to be released at 1330 BST.

In equities, retail banking giant Lloyds was still higher despite reporting a fall in first-quarter pre-tax profits, as higher net income was offset by an underlying impairment charge.

The bank posted profits of £1.6bn, up from £1.8bn a year earlier, and said the underlying impairment charge of £200.0m reflected a low incurred charge and limited impact from a revised economic outlook, including higher inflation offset by stronger house prices and unemployment.

Drax Group was ahead almost 6% after it said that, after a strong first quarter, it expected 2022 adjusted EBITDA to be around the top end of the current range of analyst expectations.

Primary Health Properties was managing small gains after reporting “good progress” in converting its year-end pipeline into committed deals in its first quarter.

London Stock Exchange Group was also in the green, after it reported “strong” financial and operational progress in the first quarter, with total income excluding recoveries up 6.3%.

The FTSE 100 exchange operator said it saw “good growth” across all divisions, with total income rising 6.8% adjusting for the actions taken in response to Russia’s invasion of Ukraine.

On the downside, industrial software company Aveva tumbled further after it reported a “strong” close to the financial year just ended, with organic constant currency revenue growth coming in at 18% in the fourth quarter, although it warned of lower revenue growth and margins amid rising costs.

Communications group WPP reversed earlier gains to trade more than 1% lower, after it made a "strong start to the year", with like-for-like revenue guidance being raised from 5% to between 5.5% and 6.5% amid continued investment into growth.

Persimmon was in the red after saying it was currently trading in line with expectations, with demand remaining strong and private average sales rates rising 2% year-on-year.

The housebuilder, which also highlighted its "robust" forward order book of roughly £2.8bn, anticipated full-year completions would be weighted towards the second half, with first half completions being lower than those delivered in 2021.

Stationery and travel outlet chain WH Smith was also weaker, despite swinging to a profit for the half-year as air and rail passengers returned after Covid lockdowns.

Market Movers

FTSE 100 (UKX) 7,453.91 0.92%
FTSE 250 (MCX) 20,553.05 0.30%
techMARK (TASX) 4,311.44 -0.15%

FTSE 100 - Risers

Glencore (GLEN) 477.20p 6.20%
Rio Tinto (RIO) 5,659.00p 5.34%
Anglo American (AAL) 3,454.00p 4.30%
HSBC Holdings (HSBA) 493.85p 4.22%
Severn Trent (SVT) 3,160.00p 3.50%
Fresnillo (FRES) 794.20p 2.82%
GlaxoSmithKline (GSK) 1,781.60p 2.44%
Croda International (CRDA) 7,594.00p 2.40%
AstraZeneca (AZN) 10,576.00p 2.36%
Antofagasta (ANTO) 1,496.50p 1.91%

FTSE 100 - Fallers

Aveva Group (AVV) 1,987.00p -13.16%
Royal Mail (RMG) 337.30p -4.09%
Rolls-Royce Holdings (RR.) 83.67p -3.64%
Rightmove (RMV) 604.20p -3.42%
Schroders (SDR) 2,878.00p -2.97%
Hikma Pharmaceuticals (HIK) 1,981.50p -2.82%
Persimmon (PSN) 2,133.00p -2.16%
Hargreaves Lansdown (HL.) 957.80p -2.15%
Standard Chartered (STAN) 486.80p -2.11%
Reckitt Benckiser Group (RKT) 6,190.00p -1.99%

FTSE 250 - Risers

Drax Group (DRX) 840.50p 5.79%
Beazley (BEZ) 421.60p 5.56%
Spirent Communications (SPT) 224.60p 4.27%
Provident Financial (PFG) 257.20p 4.05%
Wood Group (John) (WG.) 211.20p 4.04%
Telecom Plus (TEP) 1,560.00p 4.00%
UK Commercial Property Reit Limited (UKCM) 92.80p 3.92%
BlackRock World Mining Trust (BRWM) 690.00p 3.76%
Lancashire Holdings Limited (LRE) 400.80p 3.57%
Ibstock (IBST) 184.30p 3.42%

FTSE 250 - Fallers

Bytes Technology Group (BYIT) 451.00p -5.45%
WH Smith (SMWH) 1,437.50p -4.90%
Baltic Classifieds Group (BCG) 134.20p -4.82%
Softcat (SCT) 1,424.00p -3.65%
Trustpilot Group (TRST) 106.70p -3.53%
Kainos Group (KNOS) 1,208.00p -3.36%
HGCapital Trust (HGT) 419.50p -3.12%
Games Workshop Group (GAW) 7,230.00p -3.02%
Blackrock Throgmorton Trust (THRG) 657.00p -2.81%
Discoverie Group (DSCV) 798.00p -2.68%