London midday: Stocks flat as investors eye US consumer confidence, inflation

dl city of london square mile office buildings shard financial district london stock exchange lse view houses daytime pb 20230221 — Sharecast / Nicholas Demetriades via Pixabay

London stocks were little changed by midday on Tuesday as investors eyed a key US consumer confidence reading and inflation data due later in the week.

The FTSE 100 was flat at 7,916.90.

Russ Mould, investment director at AJ Bell, said: “The FTSE 100 dipped at the open but remains within striking distance of its all-time highs above 8,000 as investors eye a reading of US consumer confidence this afternoon.

"This could reinforce or undermine the ‘soft landing’ narrative - with the Federal Reserve looking to tame inflation without causing too much economic damage in the process."

On home shores, Bank of England policy maker Catherine Mann said in an interview with Bloomberg TV that financial markets are pricing in too many interest rate cuts this year and that it’s unlikely the UK will move before the Federal Reserve.

Markets are currently expecting three quarter-point rate cuts this year, starting in August.

"They’re pricing in too many cuts - that would be my personal view - and so in some sense, I don’t have to cut because the market already is," Mann said. "Wage dynamics in the UK are stronger and more persistent than the wage dynamics in either the United States or the euro area.

"Underlying services dynamics are also stickier more persistent than either the US or the euro area. So on that basis, it’s hard to argue that the BoE would be ahead of the other two regions particularly the United States."

Investors were also mulling the latest data from Kantar, which showed that UK grocery price inflation fell to 4.5% in the year to mid-March - its lowest level since February 2022. However, 23% of British households still identify themselves as struggling financially.

The data showed that Ocado was the fastest-growing retailer in Britain this month, while Morrisons has now been in consistent growth for over one year.

In equity markets, Ocado jumped to the top of the FTSE 100 as it said that in the first quarter of 2024, its Ocado Retail operation saw an 8.1% increase in total item volumes, leading to a 10.6% rise in revenue to £645.3m.

The company said the division - a joint venture with Marks and Spencer - saw its online market share climb to 13.5%, driven by a 6.4% rise in active customers, reaching 1.02 million.

Engineering group Smiths reversed earlier losses to trade up as it reaffirmed annual guidance after a rise in half-year earnings and order growth.

IT infrastructure products and services provider Softcat and Irn-Bru maker AG Barr both rose after results.

On the downside, Auto Trader slumped as JPMorgan Cazenove put the shares on ‘negative catalyst watch’ ahead of full-year results.

Wood Group fell despite an upgrade to its current-year outlook, as the engineering company reported wider-than-expected losses and increased debt levels for 2023.

Dr Martens was under the cosh after a downgrade to ‘sell’ at Goldman Sachs.

Mobico - formerly National Express - was hit by a downgrade to ‘sector perform’ from outperform’ at RBC Capital Markets.

Paddy Power owner Flutter Entertainment reversed earlier gains to trade marginally lower, as it posted a widening of its full-year losses due to one-off costs, but said revenue surged and guided to 30% growth in 2024 core profit thanks to a strong performance in the US.

Market Movers

FTSE 100 (UKX) 7,916.90 -0.01%
FTSE 250 (MCX) 19,690.28 0.39%
techMARK (TASX) 4,501.85 0.00%

FTSE 100 - Risers

Ocado Group (OCDO) 488.30p 7.89%
Smiths Group (SMIN) 1,713.50p 3.60%
Kingfisher (KGF) 246.70p 2.96%
Standard Chartered (STAN) 689.60p 2.10%
Marks & Spencer Group (MKS) 258.60p 1.77%
International Consolidated Airlines Group SA (CDI) (IAG) 164.85p 1.45%
InterContinental Hotels Group (IHG) 8,272.00p 1.15%
Rolls-Royce Holdings (RR.) 425.70p 1.09%
Frasers Group (FRAS) 800.00p 1.07%
Smith (DS) (SMDS) 354.30p 0.94%