London midday: Stocks up on US rate cut hopes

London stocks were still in the black by midday on Friday, with sentiment boosted by US rate cut hopes, as investors turned their attention to bank earnings across the pond.

The FTSE 100 was up 0.2% at 8,238.10, off earlier highs.

Richard Hunter, head of markets at Interactive Investor, said: "The latest inflation reading in the US provided a pleasant surprise which resulted in investors flocking to interest rate sensitive stocks and smaller companies.

"The consumer price index fell by 0.1% in June, annualised to 3%, against expectations of an increase of 0.1% and annual rate of 3.1%. The news convinced investors that a September rate cut is now firmly on the cards, with the consensus of a likely reduction now topping 90%.

"The scene is now set for further potential confirmation with the release of producer price index data later today. At the same time, banks such as JP Morgan Chase, Wells Fargo and Citigroup will report quarterly earnings which could also confirm whether any cracks are beginning to appear in the face of higher interest rates, most notably with regard to consumer debt default levels."

The US producer price index for June is scheduled for release at 1330 BST, while Michigan consumer sentiment is at 1500 BST.

UK corporate news was scarce, but Ashmore fell as it said assets under management declined in the last quarter on the back of weaker investor sentiment.

The FTSE 250 firm, a specialist in emerging markets, said AUM fell by $2.4bn in fourth quarter to 30 June to $49.5bn.

Within that, the negative investment performance was $0.4bn while net outflows were $2bn, unchanged on the previous quarter.

Ashmore attributed the level of net outflows to institutional decisions to reduce exposure to emerging markets, with investor risk appetite remaining "subdued".

On the upside, Smurfit Westrock was the top gainer on the FTSE 100 as JPMorgan Cazenove initiated coverage of the shares with an ‘overweight’ rating and $66 price target, adding the stock to its ‘Analyst Focus List’ and naming it "top pick" in the sector.

"In our view, the cycle is at the early stages of a recovery with current prices still below through the cycle levels (especially once marginal producer margins are considered)," JPM said.

The bank also said it sees significant scope to improve the business - beyond announced synergies - through integration and targeted mill improvement.

Corrugated and paper-based packaging firm Smurfit Westrock was recently formed through the merger of Dublin-based Smurfit Kappa and Atlanta-based Westrock.

Market Movers

FTSE 100 (UKX) 8,238.10 0.18%
FTSE 250 (MCX) 21,154.94 -0.16%
techMARK (TASX) 4,835.38 0.19%

FTSE 100 - Risers

Smurfit Westrock (DI) (SWR) 3,628.00p 3.01%
Rightmove (RMV) 567.60p 1.39%
GSK (GSK) 1,524.00p 1.26%
BP (BP.) 457.20p 1.20%
Pearson (PSON) 1,016.00p 0.89%
AstraZeneca (AZN) 12,206.00p 0.88%
Next (NXT) 8,976.00p 0.74%
British American Tobacco (BATS) 2,500.00p 0.73%
Flutter Entertainment (DI) (FLTR) 15,745.00p 0.64%
Mondi (MNDI) 1,580.00p 0.64%

FTSE 100 - Fallers

United Utilities Group (UU.) 1,064.00p -2.74%
International Consolidated Airlines Group SA (CDI) (IAG) 173.45p -2.50%
Severn Trent (SVT) 2,667.00p -1.77%
easyJet (EZJ) 486.90p -1.42%
Fresnillo (FRES) 616.50p -1.36%
Rentokil Initial (RTO) 469.00p -1.14%
Schroders (SDR) 383.60p -1.13%
Prudential (PRU) 732.40p -1.00%
Scottish Mortgage Inv Trust (SMT) 895.80p -0.99%
SEGRO (SGRO) 937.60p -0.91%

FTSE 250 - Risers

Alpha Group International (ALPH) 2,545.00p 3.04%
Genus (GNS) 1,812.00p 2.49%
Moonpig Group (MOON) 203.00p 2.32%
Keller Group (KLR) 1,400.00p 2.19%
PureTech Health (PRTC) 186.00p 2.09%
Playtech (PTEC) 528.00p 1.93%
Crest Nicholson Holdings (CRST) 255.60p 1.91%
Harbour Energy (HBR) 314.70p 1.75%
Premier Foods (PFD) 171.20p 1.66%
TBC Bank Group (TBCG) 2,970.00p 1.54%

FTSE 250 - Fallers

Trustpilot Group (TRST) 218.00p -2.02%
Wood Group (John) (WG.) 200.60p -1.96%
Indivior (INDV) 827.00p -1.90%
Pagegroup (PAGE) 416.80p -1.84%
Morgan Advanced Materials (MGAM) 324.00p -1.82%
Future (FUTR) 1,084.00p -1.72%
Allianz Technology Trust (ATT) 399.50p -1.72%
Patria Private Equity Trust (PPET) 541.00p -1.64%
Syncona Limited NPV (SYNC) 121.00p -1.63%
Workspace Group (WKP) 635.00p -1.55%