London midday: Stocks turn lower amid Middle East tensions, ahead of Fed minutes

London stocks had fallen into the red by midday on Wednesday on the 40th anniversary of the launch of the FTSE 100, with investors jittery amid escalating tensions in the Middle East and ahead of the latest Fed minutes.

The top-flight index was down 0.7% at 7,664.94, having opened in positive territory.

Joshua Mahony, chief market analyst at Scope Markets, pointed to the bearish precedent set by US equities on Tuesday, with Apple having led a wider big tech sell-off.

"While we have seen the S&P 500 enjoy a 14% gain in the last two months of 2023 alone, that extended move points towards a strong possibility that we could see some profit taking come into play before long," he said.

"Questions remain over the likeliness of the 150-basis points worth of rate cuts expected by the markets currently, and thus there is a risk that the Federal Reserve members will seek to reign in those expectations somewhat.

"Today’s FOMC minutes will provide one such opportunity for the disparity between market rate expectations and the Fed outlook to narrow, with traders keeping a close eye on the language behind a meeting that was widely considered to be highly dovish. With many Fed members emerging to reign in expectations following that meeting, there is a good chance that we see a somewhat less expansive view than that expressed by Jay Powell. After-all, the dot plot expectations signal a likely three rate cuts this year, bringing risk for equities given the current market pricing for six."

Investors were also nervous about the situation in the Middle East, after a drone strike killed Hamas deputy leader Saleh al-Arouni in Lebanon.

In equity markets, heavily-weighted miners were on the back foot, with Anglo American, Glencore and Antofagasta all lower.

Budget airline Ryanair slumped as it reported a 9% jump in December passenger numbers but cautioned that the removal of its flights from online travel agents will dent short-term load factors and soften short-term yields.

The airline noted that early last month, OTAs such as Booking.com, Kiwi and Kayak suddenly removed its flights from sale on their websites. Ryanair said that while these OTAs only account for a small fraction of its bookings, it expects the removal to reduce short term load factors by 1% or 2% in December and January and also to soften short term yields as it responds by making more low fares available directly to consumers.

The airline does not expect the move to materially affect its FY24 traffic or profit after tax guidance, however.

Luxury fashion brand Burberry was knocked lower by a downgrade to ‘hold’ from ‘buy’ at Stifel, while AstraZeneca was hit by a downgrade to ‘hold’ at Jefferies.

On the upside, Ladbrokes owner Entain jumped as it announced the appointment of Eminence Capital founder Ricky Sandler as a non-executive director.

GSK was also in the black after an upgrade to ‘buy’ at Jefferies.

Supermarket retailers Sainsbury’s and Tesco advanced after the latest data from Kantar showed that retailers enjoyed their busiest Christmas since 2019. The data also showed that the annual rate of grocery price inflation fell from 9.1% to 6.7% - the lowest level since April 2022. It also marked the sharpest month-on-month drop since Kantar started tracking prices.

Market Movers

FTSE 100 (UKX) 7,664.94 -0.73%
FTSE 250 (MCX) 19,364.23 -0.76%
techMARK (TASX) 4,267.69 -0.42%

FTSE 100 - Risers

GSK (GSK) 1,501.20p 1.45%
Tesco (TSCO) 297.10p 1.36%
Unilever (ULVR) 3,874.50p 1.31%
Entain (ENT) 997.20p 1.20%
Marks & Spencer Group (MKS) 279.10p 1.12%
Sainsbury (J) (SBRY) 302.00p 1.07%
Haleon (HLN) 327.35p 0.97%
Centrica (CNA) 142.35p 0.74%
BAE Systems (BA.) 1,124.00p 0.72%
Reckitt Benckiser Group (RKT) 5,494.00p 0.70%

FTSE 100 - Fallers

Anglo American (AAL) 1,867.20p -5.13%
Fresnillo (FRES) 549.00p -3.85%
Glencore (GLEN) 452.70p -3.41%
Rentokil Initial (RTO) 417.90p -3.38%
Spirax-Sarco Engineering (SPX) 9,914.00p -2.95%
Prudential (PRU) 833.60p -2.64%
Antofagasta (ANTO) 1,610.00p -2.51%
Ocado Group (OCDO) 722.20p -2.35%
IMI (IMI) 1,624.00p -2.23%
Burberry Group (BRBY) 1,369.50p -2.18%

FTSE 250 - Risers

Babcock International Group (BAB) 433.20p 3.14%
Jlen Environmental Assets Group Limited NPV (JLEN) 104.00p 1.76%
QinetiQ Group (QQ.) 315.40p 1.68%
Abrdn Private Equity Opportunities Trust (APEO) 464.00p 1.42%
Pantheon International (PIN) 314.50p 1.29%
PPHE Hotel Group Ltd (PPH) 1,180.00p 1.29%
Caledonia Investments (CLDN) 3,540.00p 1.29%
Vietnam Enterprise Investments (DI) (VEIL) 562.00p 1.26%
NB Private Equity Partners Ltd. (NBPE) 1,674.00p 1.21%
Twentyfour Income Fund Limited Ord Red (TFIF) 105.60p 1.15%

FTSE 250 - Fallers

Me Group International (MEGP) 117.20p -5.64%
Ashmore Group (ASHM) 213.00p -5.33%
Tullow Oil (TLW) 36.52p -4.60%
AJ Bell (AJB) 288.80p -3.22%
Kainos Group (KNOS) 1,062.00p -3.01%
Carnival (CCL) 1,229.00p -2.96%
Trustpilot Group (TRST) 134.70p -2.95%
Baltic Classifieds Group (BCG) 235.00p -2.89%
Wizz Air Holdings (WIZZ) 2,155.00p -2.75%
Bank of Georgia Group (BGEO) 3,895.00p -2.75%