London midday: Stocks stay down as investors mull UK, China services data

London stocks were still in the red by midday on Wednesday as investors digested UK and China services data, and eyed the latest minutes from the Federal Reserve.

The FTSE 100 was down 0.5% at 7,481.25.

A survey out earlier showed the recovery in the UK service sector lost momentum in June as rising interest rates weighed on demand.

The S&P Global/CIPS services PMI business activity index came in at 53.7, still indicating growth but down on May’s 55.2. It was in line with both the flash estimate and consensus.

A reading above the neutral 50.0 level indicates growth, while one below suggests contraction.

The survey showed that staffing levels were continuing to grow, with job creation reaching a nine-month high, while input cost inflation eased to its lowest since May 2021.

But while volumes of new work were ahead moderately, the rate of growth was the slowest since February, when the current period of expansion begun.

And while respondents found business and consumer spending remained generally resilient, rising interest rates meant there was weaker demand from real estate and construction clients.

The composite PMI - a weighted average of the services and manufacturing indices - was 52.8 in June, down from 54.0 in May and in line with expectations.

Tim Moore, economics director at S&P Global Market Intelligence, said: "The service sector showed renewed signs of fragility in June, as rising interest rates and concerns about the UK economic outlook took their toll on customer demand.

"Business activity increased at the slowest pace for three months, while the rate of new order growth eased further from April’s recent peak."

Investors were also mulling the latest data out of China, which showed that the services sector expanded at its slowest pace in five months in June.

The Caixin/S&P Global services purchasing managers' index fell to 53.9 from 57.1 in May - the lowest reading since January.

The composite PMI, which includes both manufacturing and services activity, fell to 52.5 from 55.6 in May.

"Employment contracted, deflationary pressure mounted, and optimism waned in the manufacturing sector," said Caixin senior economist Wang Zhe. "Meanwhile, the services sector continued a post-Covid rebound, but the recovery was losing steam."

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "There are fresh concerns about the global economy powering down as data from China’s service sector underlines how tepid the post-pandemic recovery has become, just as trade tensions between Beijing and Washington ramp up.

"This has put indices in Europe on the back foot, following falls in Asia, with Japan’s Nikkei falling 0.49% and Hong Kong’s Hang Seng down 1.38%."

Later in the day, the FOMC minutes will be in focus.

In equity markets, vehicle hire company Redde Northgate slumped despite posting a strong rise in annual profit, driven by higher demand. The company reported a 34.7% rise in pre-tax profit to £178.7m. Revenue grew by a fifth to £1.49bn and the full-year dividend was lifted by 3p a share to 24p.

Outside the FTSE 350, SIG tanked after it said full-year operating profit was set to be towards the lower end of market expectations.

Quiz also tumbled after the fashion retailer posted a jump in full-year profit and revenue but pointed to "tough" trading in the opening months of the new financial year.

On the upside, Keller Group surged as it lifted its full-year earnings outlook on the back of strong first half trading and a "robust" order book.

Market Movers

FTSE 100 (UKX) 7,481.25 -0.51%
FTSE 250 (MCX) 18,449.05 -0.46%
techMARK (TASX) 4,412.97 -0.03%

FTSE 100 - Risers

Pearson (PSON) 835.80p 2.25%
Tesco (TSCO) 250.40p 1.05%
Smith & Nephew (SN.) 1,211.00p 0.92%
Convatec Group (CTEC) 204.80p 0.89%
Rightmove (RMV) 530.80p 0.80%
B&M European Value Retail S.A. (DI) (BME) 547.20p 0.77%
BAE Systems (BA.) 915.00p 0.66%
Auto Trader Group (AUTO) 609.80p 0.49%
Sainsbury (J) (SBRY) 270.90p 0.48%
Next (NXT) 7,002.00p 0.40%

FTSE 100 - Fallers

Ocado Group (OCDO) 589.80p -4.13%
Prudential (PRU) 1,076.50p -2.67%
Anglo American (AAL) 2,271.00p -2.62%
Antofagasta (ANTO) 1,470.50p -2.13%
Legal & General Group (LGEN) 224.00p -1.93%
RS Group (RS1) 747.00p -1.87%
Johnson Matthey (JMAT) 1,734.50p -1.70%
Severn Trent (SVT) 2,496.00p -1.69%
Kingfisher (KGF) 228.20p -1.68%
Endeavour Mining (EDV) 1,878.00p -1.62%

FTSE 250 - Risers

Keller Group (KLR) 790.00p 12.22%
C&C Group (CDI) (CCR) 133.20p 2.78%
Molten Ventures (GROW) 266.20p 1.68%
Spire Healthcare Group (SPI) 218.50p 1.39%
FDM Group (Holdings) (FDM) 600.00p 1.35%
Plus500 Ltd (DI) (PLUS) 1,488.00p 1.16%
Foresight Solar Fund Limited (FSFL) 99.40p 1.12%
International Public Partnerships Ltd. (INPP) 129.40p 1.09%
Dr. Martens (DOCS) 121.30p 1.08%
Fidelity Emerging Markets Limited Ptg NPV (FEML) 598.00p 1.08%

FTSE 250 - Fallers

Redde Northgate (REDD) 346.50p -8.33%
Watches of Switzerland Group (WOSG) 626.00p -2.95%
Jupiter Fund Management (JUP) 105.40p -2.77%
Synthomer (SYNT) 76.35p -2.74%
Travis Perkins (TPK) 803.20p -2.69%
IP Group (IPO) 54.10p -2.52%
Marshalls (MSLH) 239.40p -2.44%
Carnival (CCL) 1,320.50p -2.29%
Serco Group (SRP) 153.70p -2.29%
IWG (IWG) 136.90p -2.07%