London midday: Stocks turn higher as investors eye Fed; Vodafone jumps

London stocks had turned higher by midday on Wednesday as investors eyed an expected pause in rates hikes from the US Federal Reserve and digested the latest UK GDP reading, with Vodafone rallying after it announced a mobile merger with Three UK.

The FTSE 100 was up 0.4% at 7,627.89.

CMC Markets analyst Michael Hewson said: "Having seen US CPI for May come in at a two year low of 4%, in numbers released yesterday, market expectations are for the US central bank to take a pause today with a view to looking at a hike in July.

"Of course, this will be predicated on how the economic data plays out over the next 6-7 weeks but nonetheless the idea that you would commit to a hike in July begs the question why not hike now and keep your options open regarding July, ensuring that financial conditions don’t loosen too much."

On home shores, figures from the Office for National Statistics showed the economy returned to growth in April.

Gross domestic product rose 0.2%, in line with expectations, following a 0.3% contraction in March.

The services sector was the main contributor, growing by 0.3% in April following a 0.5% contraction the month before.

The data showed that production output fell 0.3% in April following growth of 0.7% in March, while the construction sector saw a 0.6% decline following 0.2% growth in March.

In the three months to April, the economy grew by just 0.1%.

Darren Morgan, director of economic statistics at the ONS, said: "GDP (gross domestic product) bounced back after a weak March.

"Bars and pubs had a comparatively strong April while car sales rebounded and education partially recovered from the effect of the previous month's strikes.

"These were partially offset by falls in health, which was affected by the junior doctors' strikes, along with falls in computer manufacturing and the often-erratic pharmaceuticals industry.

"Housebuilders and estate agents also had a poor month.

"Over the last three months as a whole the economy grew a little, driven largely by the construction industries.

"The services sector dragged growth downwards, partly due to the impact of public sector strikes."

Ruth Gregory, deputy chief UK economist at Capital Economics, said: "The overall sense is that the economy is still proving fairly resilient to the drag from high interest rates. This resilience will further increase hopes that a recession is no longer likely. We are not convinced.

"We estimate that by the end of Q2 2023 less than 40% of the drag will have been felt and that more than 60% lies ahead. And we think interest rates need to rise further to quash inflation, from 4.50% now to a peak of 5.25%. That’s why we still think a recession is on its way in the second half of this year."

In equity markets, heavily-weighted miners were among the top performers, with Antofagasta, Rio Tinto, Anglo American and Glencore all up.

Vodafone surged after agreeing to merge its telecoms business with CK Hutchison’s Three UK mobile network.

Games Workshop gained after saying it expects to post increased annual profit of at least £170m, up from £157m a year ago, driven by a strong rise in revenue and licensing income.

Aston Martin jumped after Jefferies upgraded the shares to ‘hold’ from ‘underperform’ and hiked the price target to 300p from 160p. The bank said: "AML has finally broken a cycle of discounted rights issues and is firmly in M&A territory."

On the downside, recruiters PageGroup and Hays were under the cosh after Robert Walters warned that full-year profit would be "significantly" lower than current market expectations.

Victrex tumbled as it cautioned that annual profits would be sharply lower as group volumes continued to fall due to industrial headwinds.

Ladbrokes owner Entain tanked after it raised around £600m in a discounted placing to help fund the acquisition of Polish sports betting operator STS Holdings.

Market Movers

FTSE 100 (UKX) 7,627.89 0.44%
FTSE 250 (MCX) 19,201.81 0.07%
techMARK (TASX) 4,576.42 -0.10%

FTSE 100 - Risers

Antofagasta (ANTO) 1,567.00p 3.95%
Vodafone Group (VOD) 75.00p 3.55%
Anglo American (AAL) 2,566.50p 3.36%
Ocado Group (OCDO) 416.10p 3.25%
Smith & Nephew (SN.) 1,224.00p 2.94%
Glencore (GLEN) 473.45p 2.92%
Standard Chartered (STAN) 679.60p 2.81%
Rio Tinto (RIO) 5,345.00p 2.73%
Prudential (PRU) 1,141.50p 2.33%
Ashtead Group (AHT) 5,514.00p 1.88%

FTSE 100 - Fallers

Entain (ENT) 1,200.00p -9.19%
Endeavour Mining (EDV) 2,030.00p -1.84%
JD Sports Fashion (JD.) 145.65p -1.82%
Hargreaves Lansdown (HL.) 849.00p -1.67%
Halma (HLMA) 2,416.00p -1.47%
Sage Group (SGE) 862.40p -1.21%
Flutter Entertainment (CDI) (FLTR) 15,595.00p -1.14%
RS Group (RS1) 799.80p -0.94%
Bunzl (BNZL) 3,108.00p -0.92%
Taylor Wimpey (TW.) 110.05p -0.77%

FTSE 250 - Risers

Aston Martin Lagonda Global Holdings (AML) 292.00p 4.73%
Games Workshop Group (GAW) 10,080.00p 4.51%
Future (FUTR) 726.00p 3.64%
Hammerson (HMSO) 26.32p 2.89%
Helios Towers (HTWS) 93.10p 2.87%
CMC Markets (CMCX) 170.00p 2.78%
Tullow Oil (TLW) 25.98p 2.77%
Wizz Air Holdings (WIZZ) 2,908.00p 2.76%
TUI AG Reg Shs (DI) (TUI) 581.00p 2.74%
Carnival (CCL) 1,093.00p 2.68%

FTSE 250 - Fallers

Pagegroup (PAGE) 409.60p -7.37%
Hays (HAS) 101.40p -6.97%
Victrex plc (VCT) 1,464.00p -4.75%
Bakkavor Group (BAKK) 94.00p -4.67%
Oxford Instruments (OXIG) 2,615.00p -3.86%
SThree (STEM) 382.00p -3.29%
Bridgepoint Group (Reg S) (BPT) 219.40p -2.49%
Safestore Holdings (SAFE) 912.00p -2.09%
Syncona Limited NPV (SYNC) 150.80p -1.95%
Vistry Group (VTY) 736.00p -1.60%