London midday: Stocks stay down rate hike woes

London stocks were still down by midday on Thursday amid another deluge of earnings, as rate hike concerns weighed on sentiment after US Federal Reserve chair Jerome Powell’s congressional testimony.

The FTSE 100 was down 0.5% at 7,890.69, with all eyes on Friday’s all-important non-farm payrolls report.

Russ Mould, investment director at AJ Bell, said: "The FTSE 100 took another step back on Thursday as a second day of testimony in front of Washington lawmakers by Federal Reserve chair Jerome Powell largely stuck to the hawkish tone of the previous day.

"While Powell softened things a little by saying nothing is decided yet, the clear message is future rate decisions will be dependent on the data and for now that seems to be tilting things more towards a 50-basis point rather than 25 basis point rate rise later this month.

"This would shatter the market’s comfortable illusion at the start of the year that rates were about to pivot and a soft landing for the US economy could be engineered."

Investors were mulling the latest data from the National Bureau of Statistics in China, which showed that consumer price inflation eased more than expected in February.

CPI rose 1% on the year following a 2.1% increase in January, and versus expectations of 1.9%. It marked the slowest rate since February 2022.

The NBS put the slowdown down to cooling demand after the Lunar New Year holiday and ample food supply conditions thanks to warm weather.

Meanwhile, producer price inflation fell 1.4% on the year, having declined by 0.8% in January. Analysts had been expecting a 1.3% drop.

On home shores, the latest survey from the Royal Institution of Chartered Surveyors showed that the housing market is still falling but there are indications that pessimism is easing.

RICS said a return of optimism, and lower-than-expected interest rates, had boosted short-term hopes after a weak start to 2023.

Its monthly survey showed a net balance of -29% last month, up from -45% in January. This was the smallest decline since July although still the 10th consecutive negative reading.

The reading measures the proportion of surveyors who reported a rise in new buyer inquiries from those saying they fell.

New sales readings also improved in February, to -26% from a net balance of -36%. However, the average time taken to complete a transaction continues to rise and is now approaching 19 weeks.

In equity markets, Endeavour Mining lost ground as it said full-year profits slumped.

Packaging company DS Smith fell as it said third-quarter trading was in line with management expectations, but cautioned that customers had been de-stocking.

Rio Tinto and Beazley were both in the red as they traded without entitlement to the dividend.

Entain fell even as the gaming giant reported a rise in revenues, supported by strong growth in its retail estate, while Spirax-Sarco slid despite posting an increase in full-year adjusted pre-tax profit.

Hammerson, Domino’s and Network International were also weaker after results, while National Express was knocked lower by a downgrade to ‘sell’ at Liberum.

On the upside, M&G was the standout performer on the FTSE 100 as it reported a big hit to its bottom line for 2022 as a result of market volatility, but a second consecutive year of client inflows.

Informa rallied as it announced the acquisition of B2B events group Tarsus for $940m, alongside its full-year results.

Aviva was up after it posted a better-than-expected 35% rise in annual operating profit and announced a £300m share buyback, driven by a rise in life and general policy sales.

Volution also jumped on results.

Market Movers

FTSE 100 (UKX) 7,890.69 -0.49%
FTSE 250 (MCX) 19,628.95 -1.12%
techMARK (TASX) 4,647.38 -0.19%

FTSE 100 - Risers

M&G (MNG) 223.40p 3.23%
Informa (INF) 699.40p 2.94%
Aviva (AV.) 463.00p 2.87%
BAE Systems (BA.) 928.60p 1.46%
Prudential (PRU) 1,289.50p 1.14%
Frasers Group (FRAS) 779.50p 0.97%
Legal & General Group (LGEN) 263.90p 0.92%
Reckitt Benckiser Group (RKT) 5,860.00p 0.90%
Rolls-Royce Holdings (RR.) 158.10p 0.79%
Pearson (PSON) 867.20p 0.49%

FTSE 100 - Fallers

Endeavour Mining (EDV) 1,606.00p -5.03%
Smith (DS) (SMDS) 328.40p -4.28%
Rio Tinto (RIO) 5,732.00p -3.83%
Abrdn (ABDN) 224.70p -3.31%
Entain (ENT) 1,346.00p -3.30%
Spirax-Sarco Engineering (SPX) 11,485.00p -3.24%
Beazley (BEZ) 601.50p -3.22%
SEGRO (SGRO) 771.60p -3.19%
Ocado Group (OCDO) 490.50p -2.76%
Barclays (BARC) 164.38p -2.66%

FTSE 250 - Risers

Volution Group (FAN) 388.00p 9.30%
Close Brothers Group (CBG) 1,073.00p 7.41%
Darktrace (DARK) 272.00p 3.86%
Hill and Smith (HILS) 1,354.00p 2.58%
Tullow Oil (TLW) 32.28p 2.48%
Ibstock (IBST) 171.60p 2.39%
Jupiter Fund Management (JUP) 146.80p 1.94%
Coats Group (COA) 77.80p 1.30%
Indivior (INDV) 1,526.00p 0.93%
QinetiQ Group (QQ.) 332.40p 0.91%

FTSE 250 - Fallers

Hammerson (HMSO) 25.87p -11.71%
Domino's Pizza Group (DOM) 266.00p -6.86%
Aston Martin Lagonda Global Holdings (AML) 268.80p -5.68%
National Express Group (NEX) 134.70p -5.54%
Network International Holdings (NETW) 257.80p -5.43%
Warehouse Reit (WHR) 101.40p -5.06%
Urban Logistics Reit (SHED) 131.50p -4.71%
Carnival (CCL) 780.60p -4.34%
LondonMetric Property (LMP) 178.00p -4.30%
Tritax Big Box Reit (BBOX) 136.90p -4.27%