London midday: Stocks stay down; Burberry out of fashion

London stocks were still in the red by midday on Friday as investors mulled a slide in consumer confidence, better-than-expected retail sales data and a slew of rate announcements.

The FTSE 100 was down 0.4% at 8,292.78.

Joshua Mahony, chief market analyst at Scope Markets, said: "The post FOMC rally appears to be flagging according to European markets, with stocks giving back some of the gains seen yesterday. The Fed’s decision to cut rates by 50-basis points has been warmly welcomed by markets, with the bank shifting towards a pro-growth stance after years of blindly trying to drive down price pressures at all costs. While markets will undoubtedly enjoy an underlying feeling of optimism that the data will gradually start to improve, the Q3 earnings season and US election do provide a potential reason for markets to adopt a more cautious approach.

"The Bank of Japan completed the trio of central bank meetings, replicating the rate pause seen by the BoE yesterday. However, the commentary from Ueda set a more pessimistic tone for yen traders, with the Governor noting that upside inflation risks had eased of late. While the bank remains on a path to higher rates, these comments highlight the potential for a lower terminal level for Japanese rates. With the yen having been one the of best performing currencies of recent months, the weakness we are seeing this morning will be a brief pause in the recovery story."

Figures released earlier by the Office for National Statistics showed that retail sales hit their highest level in more than two years in August, ahead of expectations.

Retail sales volumes rose 1% in August, following an upwardly revised 0.7% uptick in July. Volumes were at their highest levels since July 2022. Analysts had been expecting a 0.4% increase.

Mahony said the retail sales data helped bolster confidence in the direction of travel for the UK consumer, with both headline and core metrics beating estimates.

"Notably, this represents a continuation of the recent recovery in the amount of goods being purchased, with the trend of paying more for less finally behind us. Despite this, UK stocks have found themselves on the back foot in early trade, losing traction after a pop in the pound this morning," he said.

Elsewhere, a survey showed that consumer confidence fell sharply in September despite the more stable economic backdrop, as people nervously wait on next month’s Budget.

The latest GfK consumer confidence index came in at -20, a seven-point slide on August’s reading.

All sub-measures fell. The index for expectations for personal finances in the coming 12 months fell nine points to -3, while the measure of predictions for the economic situation tumbled 12 points to -27.

The major purchase index lost 10 points to -23, while the savings index also fell 10 points, to 23.

Prior to September’s survey, consumer confidence had been improving, boosted by inflation returning to near target, a cut in interest rates earlier in the summer and a new government.

However, economic growth appears to have stalled. Recent data showed GDP stagnated for the second consecutive month in July, disappointing analysts who had been expecting in a 0.2% uplift.

Investors were also mulling news that higher-than-expected borrowing in August pushed public sector net debt to 100% of GDP.

According to the ONS , public sector borrowing - the difference between spending and tax revenue -reached £13.7bn in August. That was £3.3bn more than August 2023 and the third-highest August borrowing since monthly records began in January 1993. Once the impact of the pandemic is stripped out, it is the highest August borrowing on record.

It was also £2.5bn higher than the £11.2bn forecast by the Office for Budget Responsibility, the fiscal watchdog.

Since the start of the financial year in April, borrowing has totalled £64bn, £6.2bn higher than the OBR forecast in March.

In equity markets, luxury fashion brand Burberry was under the cosh ahead of its demotion from the FTSE 100 and after Jefferies downgraded the shares to ‘underperform’ from ‘hold’ and slashed the price target to 490p from 800p.

Dr Martens tumbled after an unnamed investor sold around 70m shares in the iconic boot maker in a placing. According to Bloomberg, the shares were placed at 57.85p each, which is discount of around 9.8% to the last closing share price. The shares were placed via Goldman Sachs.

Bridgepoint also slid after a group of 103 current and former employees and some related entities sold 14.7m shares in a placing. According to terms seen by Bloomberg, the shares were priced at 340p each via JPMorgan and Morgan Stanley, which is an 11% discount to the last closing price.

On the upside, Volution gained as it agreed to buy Fantech Group in Australasia from Elta Group for up to AUD280m (£144m).

Market Movers

FTSE 100 (UKX) 8,292.78 -0.43%
FTSE 250 (MCX) 20,960.90 -0.95%
techMARK (TASX) 4,819.35 -0.54%

FTSE 100 - Risers

Smurfit Westrock (DI) (SWR) 3,658.00p 1.87%
NATWEST GROUP (NWG) 340.60p 1.67%
Spirax Group (SPX) 7,335.00p 1.59%
HSBC Holdings (HSBA) 667.10p 1.34%
National Grid (NG.) 1,036.00p 1.27%
Scottish Mortgage Inv Trust (SMT) 819.80p 1.26%
Glencore (GLEN) 382.95p 0.82%
United Utilities Group (UU.) 1,064.00p 0.81%
Fresnillo (FRES) 592.00p 0.59%
Compass Group (CPG) 2,434.00p 0.54%

FTSE 100 - Fallers

Burberry Group (BRBY) 596.80p -4.73%
Kingfisher (KGF) 322.10p -2.92%
Hikma Pharmaceuticals (HIK) 1,908.00p -2.85%
SSE (SSE) 1,943.00p -2.68%
Frasers Group (FRAS) 860.00p -2.49%
Antofagasta (ANTO) 1,816.50p -2.23%
B&M European Value Retail S.A. (DI) (BME) 421.00p -2.07%
Croda International (CRDA) 3,981.00p -2.07%
Next (NXT) 10,200.00p -1.83%
Rightmove (RMV) 683.60p -1.78%

FTSE 250 - Risers

Volution Group (FAN) 621.00p 12.09%
Bytes Technology Group (BYIT) 521.00p 9.78%
Trainline (TRN) 339.80p 4.11%
Telecom Plus (TEP) 1,842.00p 3.48%
Kainos Group (KNOS) 905.00p 3.31%
Elementis (ELM) 163.80p 2.76%
SThree (STEM) 405.50p 2.53%
Harworth Group (HWG) 194.00p 2.37%
Savills (SVS) 1,184.00p 2.25%
St James's Place (STJ) 734.50p 2.16%

FTSE 250 - Fallers

Dr. Martens (DOCS) 53.80p -16.07%
Bridgepoint Group (Reg S) (BPT) 341.20p -10.96%
Close Brothers Group (CBG) 452.60p -9.12%
FirstGroup (FGP) 148.30p -5.24%
Johnson Matthey (JMAT) 1,537.00p -4.36%
Ocado Group (OCDO) 344.40p -4.15%
Investec (INVP) 570.00p -3.63%
Coats Group (COA) 100.60p -3.45%
Drax Group (DRX) 619.00p -3.43%
SSP Group (SSPG) 163.40p -3.20%