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LONDON MARKET MIDDAY: Stocks little moved as UK manufacturing recovers

Stocks in London did not move much at midday Thursday, as data showed UK manufacturing returned to growth and to a 22-month high.

The FTSE 100 index was up 3.15 points at 8,373.48. The FTSE 250 was up 17.41 points, 0.1%, at 20,727.48, and the AIM All-Share was up 0.66 of a point, 0.1%, at 804.53.

The Cboe UK 100 was flat at 835.48, the Cboe UK 250 was flat at 18,129.05, and the Cboe Small Companies was flat at 16,696.03.

In European equities on Thursday, the CAC 40 in Paris was up 0.2%, while the DAX 40 in Frankfurt was up 0.3%.

On Wednesday, UK Prime Minister Rishi Sunak surprised the nation by calling a general election for July 4.

The decision came amongst improved inflation figures. The UK consumer price index rose by 2.3% in April from a year before, slowing from a 3.2% annual increase in March, according to the Office for National Statistics.

‘While politics has moved to the top of the agenda as the UK general election campaigning machine prepares to get underway, the only shock for investors is the date of the big vote. It’s sooner than expected but until we get full election manifestos from the Conservatives and Labour, markets have stayed calm,’ said Russ Mould, investment director at AJ Bell.

In early economic news, the UK manufacturing sector returned to growth in May, flash purchasing managers’ index survey results showed.

The headline seasonally adjusted S&P Global flash UK PMI composite output index - including both services and manufacturing - fell to 52.8 points in May from 54.1 in April. This was behind market consensus, with FXStreet citing a forecast of 54 points.

The services PMI business activity index fell to 52.9 points from 55.0.

More positively, the manufacturing PMI rose to 51.3 points from 49.1. This signals a return to growth and a 22-month high.

Ebury’s Roman Ziruk commented: ‘Overall, the data, while somewhat disappointing, continues to point to expansion in the British economy in the second quarter. Investors largely shrugged off the news, with the pound selling off marginally after the release. Today’s report is unlikely to sway the BoE one way or the other as it lacks very strong undertones, and markets are primarily focused on inflation.’

The pound was quoted at $1.2728 at midday on Thursday in London, lower compared to $1.2732 at the equities close on Wednesday. The euro stood at $1.0846, higher against $1.0840. Against the yen, the dollar was trading at JP¥156.69, higher compared to JP¥156.55.

In the FTSE 100, National Grid lost 11%, pushing it to the bottom of the index.

National Grid launched a £7.0 billion rights issue to support plans for £60 billion of investment in UK and US energy infrastructure.

The London-based multinational electricity and gas utility said the investment from financial 2025 to 2029 will be nearly double that of the previous five-year period and will deliver a ‘significant step-change’ in critical energy infrastructure in the UK and US.

Also on Thursday, National Grid reported pretax profit fell 15% to £3.05 billion in the financial year that ended March 31 from £3.59 billion the year before. Operating profit fell 8.1% to £4.48 billion from £4.88 billion.

In the FTSE 250, Qinetiq jumped 13%.

The Farnborough, Hampshire-based company raised its financial outlook after delivering ‘strong’ annual results in the face of ‘difficult market conditions in the US.’

For the year ending March, QinetiQ said pretax profit fell 4.8% to £182.7 million from £192.0 million a year prior. Revenue, however, rose 21% to £1.91 billion from £1.58 billion.

Hargreaves Lansdown jumped 10%.

The wealth management platform on Wednesday rejected a takeover approach from a group of private equity firms including CVC Advisers.

In a brief statement, the consortium which includes CVC Advisers Ltd, Nordic Capital XI Delta, and Platinum Ivy B 2018 RSC Ltd, a wholly-owned subsidiary of Abu Dhabi Investment Authority confirmed making a bid for the investment platform and financial services company.

Hargreaves Lansdown Thursday said the proposal ‘substantially undervalues’ it and its futures prospects.

Amongst London’s small-caps, Capital & Regional shot up 11%.

Vukile Property Fund confirmed it had made a ‘non-binding indicative proposal’ to acquire Capital & Regional PLC in a possible cash-share deal. Meanwhile, NewRiver REIT made a proposal to Growthpoint Properties, which has a 68% stake in Capital & Regional.

Vukile, a Johannesburg-based real estate investment trust, which indicated this offer is at an early stage, has until June 22 to make a firm offer to Capital & Regional.

On AIM, Eqtec rose 20%.

The thermochemical conversion technology company has secured refinancing of its existing secured lending facility. The new funding replaces the previous funding with a non-convertible secured term loan facility with no scheduled repayments until May 2026.

Stocks in New York were called higher. The Dow Jones Industrial Average was called up 0.1%, the S&P 500 index up 0.5%, and the Nasdaq Composite up 0.9%.

Brent oil was quoted at $82.59 a barrel at midday in London on Thursday, up from $82.21 late Wednesday.

Gold was quoted at $2,365.70 an ounce, lower against $2,389.20.

Still to come on Thursday’s economic calendar, there is the weekly US initial jobless claims reading out at 1330 BST.

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