London midday: FTSE 100 inches closer to record highs as retailers jump

dl city of london generic paternoster square square mile finance 20240326 9 — Sharecast / public domain image

UK stocks were within touching distance of record highs on Monday, with the FTSE 100 outperforming the rest of Europe as it remains fairly insulated from concerns about weakness in the American tech sector.

“The FTSE 100 bounced back strongly on Monday amid relief that tensions in the Middle East seem to have been contained for now,” says AJ Bell investment director Russ Mould.

By the midday mark, the FTSE 100 was up 1.5% at 8,010.77, just a few points away from the 8,014.31 record closing high reached in February 2023. In contrast, the pan-European Stoxx 600 Index was trading just 0.4% higher.

Part of the reason behind the Footsie's outperformance was its lesser reliance on tech stocks than other indices, with the UK benchmark heavily exposed to "more stable, defensive and value stocks" compared to ultra-high-growth assets such as those in the US-listed tech sector, according to Richard Hunter, head of markets at Interactive Investor.

US markets have wobbled over the past week as corporate earnings seasons got into full swing and investors started to question sky-high valuations in the tech sector following eye-watering gains for any companies in the AI space.

Blue chips Tesla, Alphabet, Microsoft and Meta will all report their latest quarterly figures in the coming days.

Meanwhile, there will be a barrage of economic data later this week1, including manufacturing surveys across Europe, the UK and US, followed by key US GDP and inflation figures on Thursday and Friday, respectively.

Retailers gain, Tyman jumps

Retail stocks were performing after positive comments from RBC Capital Markets, which said that spending on travel, entertainment and clothing is likely to pick up. Marks & Spencer was among the biggest risers after RBC said the stock is its top pick in the sector "given it should be able to deliver moderate growth driven by structural improvements in food and womenswear". Others in the sector, such as Sainsbury, B&M, Tesco and Next were also putting in a decent performance.

Ocado meanwhile was up 3% on reports that the grocery delivery firm is under pressure from shareholders to switch to a US listing. According to the Sunday Telegraph, investors have suggested the idea of moving to the NYSE following a big fall in the stock price over recent years.

Tyman shares jumped 31% after the company agreed to be bought by US metal window and door manufacturer Quanex in a £788m cash and stock deal. Nicky Hartery, non-executive chair of Tyman, said: "This transformative and complementary transaction will strengthen the enlarged business for the benefit of all our customers, employees and other stakeholders."

The saga at Hipgnosis Songs Fund took a new twist on Monday when private equity outfit Blackstone made a potential $1.5bn offer to buy the troubled music rights investor, setting up a bidding war with Concord Chorus. Shares were up 10% by lunchtime.

Market Movers

FTSE 100 (UKX) 8,010.77 1.46%
FTSE 250 (MCX) 19,572.47 0.93%
techMARK (TASX) 4,448.72 1.09%

FTSE 100 - Risers

Marks & Spencer Group (MKS) 254.70p 3.62%
Sainsbury (J) (SBRY) 267.80p 3.48%
Ocado Group (OCDO) 358.50p 3.25%
Tesco (TSCO) 289.90p 3.02%
Associated British Foods (ABF) 2,518.00p 2.90%
Pershing Square Holdings Ltd NPV (PSH) 3,920.00p 2.83%
Persimmon (PSN) 1,322.00p 2.80%
B&M European Value Retail S.A. (DI) (BME) 524.60p 2.78%
HSBC Holdings (HSBA) 663.90p 2.74%
International Consolidated Airlines Group SA (CDI) (IAG) 173.95p 2.63%