London midday: Stocks edge up as miners, Prudential rally
London stocks had edged up by midday on Monday as a further easing of some Covid restrictions in China boosted Prudential and the mining sector, helping to offset a grim warning from the Confederation of British Industry.
The FTSE 100 was up 0.3% at 7,576.53.
A downbeat outlook from the CBI failed to dent the mood, as it warned in its latest economic forecast that the UK faces a potential "lost decade", as stagflation left the economy braced for a year-long recession in 2023.
The business organisation said that after a "turbulent year, both politically and economically", the UK likely fell into recession in the third quarter, when GDP shrank by 0.2%.
As a result, it has now slashed its GDP forecasts for 2023, to -0.4% from 1.0% previously, with the recession likely to last until the end of the year.
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: "Although their forecast for a 0.4% contraction in output next year is more optimistic than the Bank of England’s bleak prediction, it is the outlook for the decade ahead which makes for difficult reading. The CBI warns that companies will face significant challenges through a long period of elevated inflation and stagnant growth, unless fresh investment can be unlocked.
"Finding the key to do that is proving a big challenge, with the UK government hesitant about bringing in further tax incentives, while some companies appear to be battening down the hatches amid global uncertainty."
Market participants were also digesting the latest reading on the UK services sector, which showed that activity contracted again in November amid the fastest decline in new business volumes since January 2021.
The S&P Global/CIPS purchasing managers’ index for the sector was unchanged versus October at 48.8. A reading below 50.0 indicates contraction, while a reading above signals expansion.
The composite PMI remained at 48.2 in November, coming in a touch below the initial estimate of 48.3.
Once again, firms attributed the decline to a reduction in new sales volumes amid reports of ongoing caution among businesses and belt-tightening among households as the cost-of-living crisis takes its toll.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: "A further economic contraction signalled by the PMI surveys hints at a growing recession risk for the UK. A change of government and its new economic policies may have helped arrested some of the financial market volatility after September’s ‘mini-budget’ but the economic picture remains stubbornly unchanged.
"The overall rate of economic contraction has held steady compared to October, indicative of GDP falling at a quarterly rate of 0.4%. As such, this is the toughest spell the UK economy has faced since the global financial crisis excluding only the height of the pandemic."
In equity markets, Asia-focused Prudential surged to the top of the FTSE 100, likely lifted by the further easing of Covid restrictions in China.
Miners - which are heavily dependent on demand from China - were also on the front foot - with Rio Tinto, Glencore, Anglo American and Antofagasta all up.
Vodafone pared earlier gains to trade flat after saying that chief executive Nick Read would step down at the end of the year. Chief financial officer Margherita Della Valle has been appointed interim CEO.
On the downside, housebuilder Persimmon fell after a downgrade to ‘hold’ from ‘buy’ at Jefferies.
Savills was under the cosh after Peel Hunt downgraded the shares to ‘add’ from ‘buy’ as it pointed to "tougher times".
Market Movers
FTSE 100 (UKX) 7,576.53 0.27%
FTSE 250 (MCX) 19,440.66 0.40%
techMARK (TASX) 4,416.43 -0.09%
FTSE 100 - Risers
Prudential (PRU) 1,103.00p 7.04%
Fresnillo (FRES) 933.60p 4.24%
Rio Tinto (RIO) 5,758.00p 3.12%
Anglo American (AAL) 3,387.00p 2.76%
Frasers Group (FRAS) 909.00p 2.36%
Ocado Group (OCDO) 683.40p 1.94%
Glencore (GLEN) 568.40p 1.81%
Airtel Africa (AAF) 123.80p 1.64%
Antofagasta (ANTO) 1,458.00p 1.64%
Legal & General Group (LGEN) 258.50p 1.41%
FTSE 100 - Fallers
London Stock Exchange Group (LSEG) 8,120.00p -1.84%
Coca-Cola HBC AG (CDI) (CCH) 1,997.50p -1.55%
Pearson (PSON) 938.20p -1.39%
Reckitt Benckiser Group (RKT) 5,958.00p -1.32%
GSK (GSK) 1,407.00p -1.19%
Rolls-Royce Holdings (RR.) 89.25p -1.11%
Unilever (ULVR) 4,132.00p -1.10%
Burberry Group (BRBY) 2,143.00p -0.97%
Diageo (DGE) 3,810.50p -0.95%
Sage Group (SGE) 794.40p -0.92%
FTSE 250 - Risers
Fidelity China Special Situations (FCSS) 235.50p 4.67%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 460.00p 4.07%
Hammerson (HMSO) 24.50p 4.03%
Ferrexpo (FXPO) 157.00p 3.43%
Jupiter Fund Management (JUP) 133.30p 3.41%
Molten Ventures (GROW) 420.00p 3.09%
Tritax Eurobox (GBP) (EBOX) 67.40p 2.90%
Abrdn Private Equity Opportunities Trust (APEO) 434.00p 2.84%
Hochschild Mining (HOC) 74.35p 2.62%
Mitchells & Butlers (MAB) 147.90p 2.57%
FTSE 250 - Fallers
Savills (SVS) 857.00p -8.73%
Plus500 Ltd (DI) (PLUS) 1,860.00p -3.88%
Auction Technology Group (ATG) 724.00p -3.08%
Quilter (QLT) 99.36p -1.96%
Aston Martin Lagonda Global Holdings (AML) 140.00p -1.79%
SSP Group (SSPG) 214.60p -1.78%
International Distributions Services (IDS) 230.50p -1.71%
Home Reit (HOME) 52.10p -1.51%
National Express Group (NEX) 169.40p -1.40%
Playtech (PTEC) 551.50p -1.34%