London midday: FTSE extends gains as investors mull borrowing, manufacturing data
London stocks had extended gains by midday on Tuesday as investors digested the latest UK borrowing and manufacturing figures.
The FTSE 100 was up 0.7% at 7,306.20.
Investors were digesting the latest Industrial Trends survey from the Confederation of British Industry, which showed that manufacturers experienced the worst rate of decline in output in nearly three years in the three months to August, with volumes falling in 15 out of 17 sub-sectors.
The CBI said the net percentage of companies reporting an increase in output volumes minus those reporting a decrease fell to -19% in the three-month period, compared with +3% in the three months to July - the sharpest decline since September 2020.
The declines were driven by motor vehicles and transport equipment, mechanical engineering, paper, printing and media, and chemicals sub-sectors.
The net percentage of manufacturers reporting order books as 'normal' in August dropped to -15%, from -9% in July.
"With output volumes contracting at their fastest pace since the COVID-19 pandemic and order books deteriorating, this survey makes for gloomy reading for manufacturers," said Martin Sartorius, principal economist at CBI. "However, easing price pressures will bring some relief to many manufacturing firms and the broader economy."
Expectations for average selling price inflation were just +8%, in line with the long-run average of +7%. This was down from +18% in July and the lowest level since February 2021 - having fallen for the past eight months.
Earlier, data from the Office for National Statistics showed that public sector net borrowing rose less than expected in July, to £4.3bn. This was up by £3.4bn on July 2022, but below the Office for Budget Responsibility’s forecast of £6bn and consensus expectations of £5bn.
Ruth Gregory, deputy chief UK economist at Capital Economics, said: "July’s public finances figures continued the recent run of better-than-expected news on the fiscal position.
"But with interest rates still rising and a mild recession on its way, we continue to think the Chancellor will struggle to unveil a large package of permanent tax cuts in the Autumn Statement while still adhering to his fiscal rules."
In equity markets, engineering and consultancy company Wood Group rallied after it posted better-than-expected adjusted interim earnings, driven by a strong order book, and said annual profit would be ahead of forecasts.
Revenue rose 16% to $3bn for the six months to June 30 with adjusted core earnings up 8.5% to $202m.
Looking forward, Wood said adjusted core earnings margin was expected to be flat in the nearer term at around 7%, partly reflecting investments being made in the business and the level of low margin pass-through revenue activity
"As such, adjusted EBITDA for full-year 2023 is expected to be ahead of our previous expectations and within our medium-term target of mid to high single digit growth," the company said.
RS Group - formerly Electrocomponents - and recruiter Hays were both lifted by an upgrade to ‘outperform’ at BNPP Exane.
Market Movers
FTSE 100 (UKX) 7,306.20 0.67%
FTSE 250 (MCX) 18,053.71 0.86%
techMARK (TASX) 4,210.35 0.64%
FTSE 100 - Risers
Fresnillo (FRES) 532.00p 4.31%
RS Group (RS1) 722.80p 3.20%
Glencore (GLEN) 432.00p 2.86%
Anglo American (AAL) 2,023.00p 2.69%
Rio Tinto (RIO) 4,732.00p 2.48%
Unite Group (UTG) 905.00p 2.03%
Antofagasta (ANTO) 1,416.50p 1.91%
CRH (CDI) (CRH) 4,499.00p 1.88%
Kingfisher (KGF) 230.80p 1.85%
Flutter Entertainment (CDI) (FLTR) 13,610.00p 1.83%
FTSE 100 - Fallers
JD Sports Fashion (JD.) 147.10p -2.65%
Ocado Group (OCDO) 731.40p -0.41%
Melrose Industries (MRO) 495.50p -0.26%
Spirax-Sarco Engineering (SPX) 9,788.00p -0.24%
Rentokil Initial (RTO) 582.40p -0.24%
Associated British Foods (ABF) 1,950.50p -0.23%
Phoenix Group Holdings (PHNX) 506.60p -0.12%
Reckitt Benckiser Group (RKT) 5,632.00p -0.11%
Airtel Africa (AAF) 107.50p -0.09%
Sainsbury (J) (SBRY) 260.30p -0.08%
FTSE 250 - Risers
Investec (INVP) 462.00p 4.98%
Wood Group (John) (WG.) 155.10p 4.73%
Mobico Group (MCG) 79.10p 3.81%
TI Fluid Systems (TIFS) 127.00p 3.59%
HGCapital Trust (HGT) 370.00p 3.50%
Hays (HAS) 102.20p 3.49%
Quilter (QLT) 79.55p 3.31%
Dr. Martens (DOCS) 156.20p 2.97%
Caledonia Investments (CLDN) 3,330.00p 2.94%
Wizz Air Holdings (WIZZ) 2,263.00p 2.91%
FTSE 250 - Fallers
W.A.G Payment Solutions (WPS) 85.00p -4.06%
Crest Nicholson Holdings (CRST) 173.80p -1.81%
Synthomer (SYNT) 66.60p -1.48%
NB Private Equity Partners Ltd. (NBPE) 1,490.00p -1.46%
Hill and Smith (HILS) 1,720.00p -1.38%
Trainline (TRN) 226.60p -1.13%
Coats Group (COA) 74.80p -1.06%
NCC Group (NCC) 97.10p -1.02%
Games Workshop Group (GAW) 10,740.00p -0.83%
Bridgepoint Group (Reg S) (BPT) 167.10p -0.77%