London midday: Stocks stay down ahead of Powell speech

London stocks were still a little lower by midday on Tuesday as investors mulled hawkish comments from Federal Reserve officials and looked ahead to a speech by Fed chair Jerome Powell.

The FTSE 100 was down 0.2% at 7,707.27.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "Fed Bank Presidents in San Francisco and Atlanta poured cold water on heated speculation that the hiking cycle may be soon at an end, indicating that interest rates were likely to be raised to above 5% and held there for some time.

"The same pattern keeps emerging, with investors clinging onto any data which appears to show the economy is cooling off, only to see their hopes dashed by policymakers who clearly believe the inflation-busting job is far from over.

"It is clear that the Fed will stay on high alert to any evidence that inflation is proving sticky and will be hesitant to press pause until significant progress is made in reducing the price spiral. That’s adding to concerns that the US economy may not escape with a soft landing."

Powell is due to speak later in the day at a central bank conference in Stockholm.

On home shores, meanwhile, data showed that retail sales jumped in December as shoppers splashed out on Christmas food and gifts.

Many in the sector had been concerned that the cost-of-living crisis, widespread rail strikes and the cold snap would weigh on sales during December, one of the most important months of the year for retailers. But according to the latest BRC-KPMG Retail Sales Monitor, total sales increased by 6.9% last month, compared to 2.1% growth in December 2021.

On a like-for-like basis, they improved 6.5% against a 0.6% rise a year previously. The increase was driven largely by food sales, which jumped 7.7% in the three months to December. Non-food sales rose 1.1% over the same period on the same basis.

The strong end to the year helped UK total retail sales increase 3.1% year-on-year in 2022, with food sales ahead 3% and non-food sales up 3.2%.

Helen Dickinson, chief executive of the British Retail Consortium, said: "After an exceptionally challenging year, which saw inflation climb and consumer confidence plummet, the uptick in spending over Christmas gave many retailers cause for cheer.

"Nonetheless, despite the strong sales, growth remained below inflation, making December the ninth consecutive month of falling volumes.

"Retail faces further headwinds in 2023: cost pressures show little immediate signs of waning, and consumer spending will be further constrained by increasing living costs."

In equity markets, ITV was the worst performer on the FTSE 250 after Morgan Stanley cut its price target on shares of the broadcaster.

Recruiters PageGroup and Hays slumped after a profit warning from Robert Walters.

Miniature wargames manufacturer Games Workshop was in the red after it posted a decline in half-year profit.

IT infrastructure and services provider Softcat was knocked lower by a downgrade to ‘sell’ from ‘neutral’ at UBS.

On the upside, insurer Admiral was sitting pretty at the top of the FTSE 100 after an upgrade to ‘buy’ at Deutsche Bank.

Online electrical retailer AO World rallied after it lifted its profit guidance for the year to March 2023 as it said profitability was running ahead of its previous expectations, having taken actions to cut costs and improve margins.

Greeting card retailer Card Factory was also trading up as it upgraded profit guidance for the year, pointing to better-than-expected trading as customers returned to shopping in bricks and mortar stores.

Plus500 advanced as it hailed an "excellent" operational and financial performance throughout 2022.

Market Movers

FTSE 100 (UKX) 7,707.27 -0.23%
FTSE 250 (MCX) 19,426.68 -0.27%
techMARK (TASX) 4,485.94 -0.34%

FTSE 100 - Risers

Admiral Group (ADM) 2,268.00p 2.72%
DCC (CDI) (DCC) 4,307.00p 1.34%
Hargreaves Lansdown (HL.) 884.40p 1.12%
Convatec Group (CTEC) 243.60p 1.00%
Associated British Foods (ABF) 1,765.50p 0.89%
Endeavour Mining (EDV) 1,929.00p 0.78%
Centrica (CNA) 91.16p 0.77%
Pearson (PSON) 913.20p 0.73%
AstraZeneca (AZN) 11,818.00p 0.70%
Whitbread (WTB) 2,825.00p 0.61%

FTSE 100 - Fallers

Ocado Group (OCDO) 723.00p -2.72%
Anglo American (AAL) 3,491.00p -2.53%
Next (NXT) 6,300.00p -2.39%
Airtel Africa (AAF) 112.20p -2.01%
RS Group (RS1) 933.50p -1.99%
Scottish Mortgage Inv Trust (SMT) 737.40p -1.89%
Haleon (HLN) 315.50p -1.87%
Rolls-Royce Holdings (RR.) 101.90p -1.79%
BT Group (BT.A) 125.95p -1.64%
Legal & General Group (LGEN) 257.00p -1.53%

FTSE 250 - Risers

Plus500 Ltd (DI) (PLUS) 1,764.00p 3.10%
Harbour Energy (HBR) 314.50p 2.34%
W.A.G Payment Solutions (WPS) 75.90p 2.02%
Drax Group (DRX) 642.50p 1.66%
Mitie Group (MTO) 81.60p 1.62%
Watches of Switzerland Group (WOSG) 951.00p 1.60%
The Renewables Infrastructure Group Limited (TRIG) 131.00p 1.55%
Indivior (INDV) 1,920.00p 1.43%
GCP Infrastructure Investments Ltd (GCP) 99.80p 1.42%
Helios Towers (HTWS) 115.50p 1.40%

FTSE 250 - Fallers

ITV (ITV) 76.50p -6.11%
Pagegroup (PAGE) 446.80p -5.70%
Hays (HAS) 115.40p -4.94%
International Distributions Services (IDS) 222.60p -4.91%
Games Workshop Group (GAW) 8,690.00p -4.77%
Clarkson (CKN) 3,035.00p -4.71%
Softcat (SCT) 1,195.00p -3.86%
Molten Ventures (GROW) 380.20p -3.75%
Oxford Instruments (OXIG) 2,145.00p -2.72%
TI Fluid Systems (TIFS) 133.00p -2.35%