London midday: Stocks stay down but Rightmove surges on potential offer

London stocks were still in the red by midday on Monday in what was likely to remain a fairly quiet session, with US markets closed for the Labor Day holiday.

The FTSE 100 was down 0.2% at 8,361.55.

Richard Hunter, head of markets at Interactive Investor, said: "The UK’s premier index drifted in early trade, despite the prospect of more M&A activity both underpinning share price performances while also confirming the fact that international institutions have been casting the slide rule over UK corporates.

"Given cheap valuations on a historical basis as well as in comparison to many developed markets elsewhere, the UK has inevitably become something of a hunting ground. The latest potential target in the premier index is Rightmove, after comments from Australia’s REA Group that it was considering making an offer having identified a ‘transformational opportunity’ in combining the two online property websites."

On the macro front, a survey released earlier showed that UK manufacturing activity grew at its fastest pace in more than two years in August.

The S&P Global manufacturing purchasing managers’ index rose to a 26-month high of 52.5 from 52.1 in July, in line with the flash estimate.

A reading above 50.0 indicates expansion, while a reading below signals contraction.

The PMI has now signalled expansion for five out of the past six months.

Rob Dobson, director at S&P Global Market Intelligence, said the upturn was broad-based across manufacturing, with the investment goods sector the standout performer.

"The upturn continues to be driven by the domestic market, which is helping to compensate for lost export orders," he said.

"The trend in export orders a key cause for concern, with new business from overseas having fallen continuously since early in 2022. UK manufacturers are experiencing difficulties in securing new contract wins overseas due to weaker demand from Europe, a slowdown in mainland China, freight delays, competitiveness issues, high shipping costs, global conflicts and political uncertainty.

"Many of these issues are also impeding imports which, while benefiting domestic suppliers, is causing supply chain-related production constraints as witnessed by a further marked lengthening of supplier delivery times.

"These supply constraints and higher shipping costs continued to drive up input prices for manufacturers, which rose sharply again in August by recent standards."

In equity markets, Rightmove surged more than 20% after the Australian real estate advertising company confirmed speculation that it was considering a possible cash and share offer for UK property platform.

REA, majority owned by Rupert Murdoch’s News Corp, said in a statement that it sees "clear similarities" between the two groups, but has not yet approached, nor had any discussions with, Rightmove regarding any potential offer.

Barratt Developments gained after UBS upgraded shares of the housebuilder to ‘buy’ from ‘neutral’ and lifted the price target to 630p from 610p.

Bodycote was also higher after Berenberg initiated coverage on the stock at 'buy'.

IT provider Kainos tumbled after saying it expects full-year revenues to be below market forecasts due to the tougher trading environment in services as clients delayed decisions on projects, but adjusted pre-tax profit would be in line with consensus estimates.

Market Movers

FTSE 100 (UKX) 8,361.55 -0.18%
FTSE 250 (MCX) 21,026.15 -0.29%
techMARK (TASX) 4,917.85 -0.43%

FTSE 100 - Risers

Rightmove (RMV) 678.80p 22.17%
Barratt Developments (BDEV) 516.00p 1.74%
Auto Trader Group (AUTO) 864.60p 1.60%
CRH (CDI) (CRH) 6,826.00p 1.22%
SEGRO (SGRO) 878.60p 0.85%
Vodafone Group (VOD) 75.04p 0.83%
Pershing Square Holdings Ltd NPV (PSH) 3,766.00p 0.80%
BT Group (BT.A) 140.00p 0.72%
Berkeley Group Holdings (The) (BKG) 5,015.00p 0.62%
HSBC Holdings (HSBA) 670.60p 0.58%

FTSE 100 - Fallers

Burberry Group (BRBY) 649.40p -2.76%
Croda International (CRDA) 4,006.00p -2.46%
Entain (ENT) 630.40p -2.41%
Smurfit Westrock (DI) (SWR) 3,507.00p -2.34%
Diploma (DPLM) 4,364.00p -2.24%
B&M European Value Retail S.A. (DI) (BME) 435.90p -2.04%
Kingfisher (KGF) 279.40p -1.69%
3i Group (III) 3,130.00p -1.54%
Intermediate Capital Group (ICG) 2,094.00p -1.51%
Prudential (PRU) 642.40p -1.47%

FTSE 250 - Risers

Patria Private Equity Trust (PPET) 571.00p 2.88%
Wood Group (John) (WG.) 133.70p 1.98%
Hiscox Limited (DI) (HSX) 1,200.00p 1.95%
Direct Line Insurance Group (DLG) 193.90p 1.95%
Bank of Georgia Group (BGEO) 4,635.00p 1.87%
Hays (HAS) 94.30p 1.78%
British Land Company (BLND) 417.80p 1.61%
Twentyfour Income Fund Limited Ord Red (TFIF) 105.60p 1.54%
Mony Group (MONY) 217.20p 1.40%
Bellway (BWY) 3,074.00p 1.32%

FTSE 250 - Fallers

Kainos Group (KNOS) 952.00p -13.92%
Wizz Air Holdings (WIZZ) 1,294.00p -3.00%
Auction Technology Group (ATG) 405.00p -2.76%
Aston Martin Lagonda Global Holdings (AML) 144.40p -2.76%
Watches of Switzerland Group (WOSG) 385.20p -2.58%
Rathbones Group (RAT) 1,844.00p -2.23%
Man Group (EMG) 219.00p -2.06%
SThree (STEM) 404.00p -1.94%
Alpha Group International (ALPH) 2,530.00p -1.94%
Carnival (CCL) 1,115.00p -1.76%