London midday: Stocks tick higher but gains muted amid recession fears

London stocks had pared earlier losses to trade just a touch higher by midday on Friday, helped along by a weaker pound, as recessionary fears and weak manufacturing data kept a lid on gains.

The FTSE 100 was up 0.1% at 7,173.98. Meanwhile, sterling was down 1% against the dollar at 1.2059.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "Fears rattling financial markets show little sign of subsiding, with investors spooked about signs of looming recessions, while inflation stays stubbornly high.

"There are concerns that, just like in the seventies era, demand and inflation won’t fall back easily, and that the Federal Reserve and other central banks will have to step on the accelerator of interest rate hikes to bring red hot prices under control. The risk is that could see economies slam into a brick wall of recession, with ripple effects around the world."

On home shores , a survey showed growth in the manufacturing sector slowed to a two-year low in June.

The S&P Global/CIPS manufacturing purchasing managers’ index fell to 52.8 from 54.6 in May, coming in below consensus expectations and the flash estimate of 53.4 A reading above 50.0 indicates expansion, while a reading below signals contraction.

New orders contracted for the first time in 17 months and business optimism hit its lowest since May 2020, as the number of firms expecting production to rise over the coming year fell to 47% in June from 55% a month earlier.

The new orders index declined from 51.1 in May to 48.3 in June - its lowest level for two years.

Companies said a weaker economic outlook, reduced new export order intakes, slower growth of domestic demand, the war in Ukraine, raw material shortages and the slowdown in China all contributed to the reduction in new work received.

Rob Dobson, Director at S&P Global Market Intelligence, said: "UK manufacturing output growth ground to a near standstill in June, as intakes of new work contracted for the first time since January 2021. Domestic market conditions became increasingly difficult and foreign demand fell sharply again, stifled by Brexit, transport disruption, the war in Ukraine and a global economic slowdown. Business confidence took a hit as a result, dipping to its gloomiest since mid-2020. Jobs growth also slowed sharply amid the increasingly uncertain outlook and recent surge in energy costs.

"The consumer goods sector was especially hard hit, as household demand suffered a steep retrenchment on the back of the cost-of-living crisis.

"There were some welcome signs that supply-chain constraints and cost inflationary pressures may have passed their peaks. However, with these constraints still elevated overall and demand headwinds rising, it is likely that UK manufacturing will see the economic backdrop darken further in the second half of the year."

There wasn’t a whole lot going on in equity markets, but Abrdn and Jupiter Fund Management were both knocked lower by a rating downgrade at Citi. The bank cut its stance on both asset managers to ‘sell’.

"We see downside risks for almost all names, but see the biggest risk of disappointment at Abrdn and Jupiter," Citi said in a note on the sector.

Elsewhere, Chemring nudged a smidgen higher as it said the UK's Serious Fraud Office had closed its investigation into the activities of the Technology Solutions subsidiary and associated persons.

Oxford Biomedica gained as it signed a new three-year deal which would facilitate potential future manufacturing opportunities for the AstraZeneca Covid-19 vaccine.

Market Movers

FTSE 100 (UKX) 7,173.98 0.07%
FTSE 250 (MCX) 18,694.93 0.15%
techMARK (TASX) 4,263.15 -0.30%

FTSE 100 - Risers

Ocado Group (OCDO) 812.80p 4.05%
International Consolidated Airlines Group SA (CDI) (IAG) 111.20p 3.33%
Rolls-Royce Holdings (RR.) 85.50p 3.07%
Melrose Industries (MRO) 154.10p 2.94%
SSE (SSE) 1,655.50p 2.44%
Next (NXT) 5,964.00p 1.77%
Sainsbury (J) (SBRY) 207.60p 1.76%
Shell (SHEL) 2,168.50p 1.62%
Centrica (CNA) 81.20p 1.50%
Ashtead Group (AHT) 3,490.00p 1.48%

FTSE 100 - Fallers

Harbour Energy (HBR) 352.10p -3.22%
Fresnillo (FRES) 746.80p -2.61%
Endeavour Mining (EDV) 1,665.00p -2.17%
Antofagasta (ANTO) 1,132.00p -1.99%
Abrdn (ABDN) 156.80p -1.91%
Auto Trader Group (AUTO) 544.80p -1.84%
Smith & Nephew (SN.) 1,128.00p -1.70%
SEGRO (SGRO) 961.20p -1.60%
Glencore (GLEN) 438.00p -1.60%
London Stock Exchange Group (LSEG) 7,512.00p -1.57%

FTSE 250 - Risers

Polymetal International (POLY) 200.00p 10.50%
Wizz Air Holdings (WIZZ) 1,888.50p 7.67%
ASOS (ASC) 901.00p 7.45%
Caledonia Investments (CLDN) 3,655.00p 5.48%
easyJet (EZJ) 383.40p 4.58%
TUI AG Reg Shs (DI) (TUI) 137.35p 3.70%
Carnival (CCL) 642.20p 3.65%
Discoverie Group (DSCV) 639.00p 3.06%
Bank of Georgia Group (BGEO) 1,344.00p 2.91%
Virgin Money UK (VMUK) 134.55p 2.91%

FTSE 250 - Fallers

Bridgepoint Group (Reg S) (BPT) 229.80p -4.88%
Tullow Oil (TLW) 45.30p -3.33%
Abrdn Private Equity Opportunities Trust (APEO) 452.00p -3.00%
Jupiter Fund Management (JUP) 143.90p -2.84%
Safestore Holdings (SAFE) 1,032.00p -2.73%
Softcat (SCT) 1,282.00p -2.66%
Plus500 Ltd (DI) (PLUS) 1,633.00p -2.39%
HGCapital Trust (HGT) 323.00p -2.27%
Indivior (INDV) 302.80p -2.07%
IntegraFin Holding (IHP) 220.20p -2.05%