London midday: Stocks maintain gains after raft of UK data; French elections in focus
London stocks were off earlier highs but still in the black by midday on Monday as investors mulled a raft of UK data and French election results suggesting the Far Right will fall short of an absolute majority in the second round of voting.
The FTSE 100 was up 0.3% at 8,191.46.
Over the weekend, Marine Le Pen’s National Rally got 33% of the votes in the first round of parliamentary elections. The left wing New Popular Front alliance was second with 28% of the votes, while President Macron’s centrist Together coalition got 20%.
French stocks were off earlier highs but still up sharply, with the CAC 40 1.5% higher. Germany’s DAX was up 0.3% and the benchmark Stoxx 600 index was ahead 0.5%.
Russ Mould, investment director at AJ Bell, said: "Elections dominate the agenda this week. Overnight results saw the far-right Rassemblement National (RN) take a significant lead in the first round of French parliamentary elections. However, the lead was somewhat lower than expected and there was something of a relief rally in the euro and French stocks.
"The second-round election run-offs are now anticipated to result in a hung parliament rather than an absolute majority for RN. The big risk exercising the market is higher public spending, which puts pressure on France’s strained public finances.
"UK elections at the end of this week look set to produce a more predictable result, with the market only likely to be disturbed in the short term if polling is a long way off and Labour fail to claim a majority, given the implications this might have for further political instability and uncertainty."
On home shores, data from the Bank of England showed that mortgage approvals dipped in May as higher mortgage rates continued to take their toll.
Net mortgage approvals for house purchases edged down to 60,000 from 60,800 in April. Economists were expecting a figure of 59,900. Meanwhile, approvals for remortgaging came in at 29,600, down from 29,900.
Figures also showed that consumer borrowing came in at £1.5bn in May, up from £800m in April.
Peter Arnold, EY UK chief economist, said: "The strong recovery in mortgage demand seen in the early part of the year has petered out of late, in keeping with the rise in quoted mortgage rates over the past few months. Net secured lending also fell to £1.2bn from £2.2bn in April, although that was due to a significant rise in repayments. Gross lending continued to increase, reflecting the pickup in approvals at the start of the year.
"Swap rates have remained broadly stable over the past couple of months, and they should remain close to these levels if - as the EY ITEM Club expects - the Monetary Policy Committee (MPC) begins gradually cutting interest rates from August. This, in turn, points to quoted mortgage rates remaining close to current levels, so the relative stability in mortgage demand should also continue."
Separately, a survey revealed that growth in the UK manufacturing sector slowed slightly in June.
The S&P Global manufacturing purchasing managers’ index nudged down to 50.9 from a 22-month high of 51.2 in May. It came in above the 50.0 mark that separates contraction from expansion but below the flash estimate of 51.4.
The survey showed that optimism remained close to May's 27-month high, with 57% of firms expecting output to rise over the coming year.
Rob Dobson, director at S&P Global Market Intelligence, said: "The UK manufacturing sector is enjoying its strongest spell of growth for over two years, with June seeing output and new order growth sustained at robust rates similar to May's recent highs. The performance of the domestic market remains a real positive, providing a ripe source of new contract wins. In contrast, the ongoing weak export performance is concerning, with manufacturers reporting difficulties in securing new business in several key markets including the US, China and mainland Europe."
Earlier, data from Nationwide showed house price growth was broadly stable in June.
On the year, house prices rose 1.5% following 1.3% growth in May. On the month, meanwhile, prices were 0.2% higher in June, down from 0.4% growth a month earlier. The average price of a home stood at £266,604, versus 264,249 in May.
In equity markets, British Gas owner Centrica rallied after an upgrade to ‘buy’ from ‘hold’ at Berenberg, on the expectation that the group will use £1bn of its cash to extend its share buyback programme.
Land Securities and British Land were higher after HSBC upgraded the shares to ‘buy’ and ‘hold’, respectively. Assura and Primary Health Properties also gained after an upgrade to ‘buy’ by the same outfit.
Trustpilot advanced after JPMorgan Cazenove placed the shares on ‘positive catalyst watch’ ahead of the first-half trading update on 11 July, saying it expects another period of adjusted EBITDA ahead of expectations.
On the downside, mining giant Anglo American slumped after saying it had been forced to suspend production at its Grosvenor steelmaking coal mine in Queensland after an underground coal gas ignition incident at the weekend.
No injuries were reported and all workers were evacuated safely. Grosvenor is expected to contribute 3.5m tonnes of steelmaking coal to Anglo’s 15-17m total in 2024 - though the company said it will update the market with guidance “once more information is available”.
Market Movers
FTSE 100 (UKX) 8,191.46 0.33%
FTSE 250 (MCX) 20,358.45 0.36%
techMARK (TASX) 4,723.93 0.18%
FTSE 100 - Risers
Smurfit Kappa Group (CDI) (SKG) 3,624.00p 2.66%
Centrica (CNA) 138.40p 2.59%
Phoenix Group Holdings (PHNX) 534.00p 2.40%
Land Securities Group (LAND) 634.00p 2.34%
Standard Chartered (STAN) 732.40p 2.29%
Lloyds Banking Group (LLOY) 55.92p 2.16%
Glencore (GLEN) 460.55p 2.09%
Barratt Developments (BDEV) 481.50p 1.97%
Sainsbury (J) (SBRY) 259.60p 1.80%
Taylor Wimpey (TW.) 144.70p 1.79%
FTSE 100 - Fallers
Anglo American (AAL) 2,447.00p -2.20%
BAE Systems (BA.) 1,292.00p -2.12%
Beazley (BEZ) 694.00p -1.98%
Relx plc (REL) 3,593.00p -1.26%
Experian (EXPN) 3,650.00p -0.98%
Admiral Group (ADM) 2,592.00p -0.88%
Hikma Pharmaceuticals (HIK) 1,876.00p -0.79%
Croda International (CRDA) 3,917.00p -0.79%
Burberry Group (BRBY) 871.20p -0.75%
Sage Group (SGE) 1,080.50p -0.73%
FTSE 250 - Risers
W.A.G Payment Solutions (WPS) 64.40p 5.57%
Aston Martin Lagonda Global Holdings (AML) 150.10p 4.45%
Investec (INVP) 594.50p 3.66%
Trustpilot Group (TRST) 222.50p 3.49%
Helios Towers (HTWS) 120.40p 3.44%
XPS Pensions Group (XPS) 309.00p 3.34%
Ninety One (N91) 172.40p 2.99%
Trainline (TRN) 323.00p 2.74%
Pets at Home Group (PETS) 303.20p 2.64%
FirstGroup (FGP) 162.20p 2.46%
FTSE 250 - Fallers
Baillie Gifford US Growth Trust (USA) 198.40p -1.78%
Wizz Air Holdings (WIZZ) 2,200.00p -1.61%
Pagegroup (PAGE) 418.80p -1.55%
Lancashire Holdings Limited (LRE) 606.00p -1.30%
Allianz Technology Trust (ATT) 391.50p -1.26%
HarbourVest Global Private Equity Limited A Shs (HVPE) 2,440.00p -1.21%
Auction Technology Group (ATG) 495.00p -1.20%
Moonpig Group (MOON) 188.40p -1.15%
Edinburgh Worldwide Inv Trust (EWI) 145.60p -1.09%
Wood Group (John) (WG.) 204.00p -1.07%