London midday: FTSE, sterling maintain gains amid energy bills freeze hopes

(Sharecast News) - London stocks were still in the black by midday as sterling was boosted by news that Liz Truss is planning to freeze energy bills. The FTSE 100 was 0.4% firmer at 7,.97312. Meanwhile, the pound was up 0.6% against the dollar and the euro at 1.1587and 1.1668, respectively, amid reports that new prime minister Liz Truss has drafted plans to fix annual electricity and gas bills for a typical UK household at or below the current level of £1,971.

According to Bloomberg, Truss has settled on a mechanism that will avert the big jump in energy bills that is due to kick in at the start of next month under the existing pricing system. The policy could cost as much as £130bn over the next 18 months.

Energy bills were due to rise 80% from October to £3,548 a year for the average household. Under the plans drawn up by Truss's team, that pricing regime will effectively be abolished and the energy regulator Ofgem will be sidelined, Bloomberg said. Instead, ministers will set a new unit price that households will pay for electricity and gas.

Neil Wilson, chief market analyst at Markets.com, said: "Capping energy prices - albeit kicking the can down the road again - would certainly help rein in inflation expectations and help shove the genie back in the bottle."

Investors were also digesting the latest reading on the UK construction sector, which showed that activity contracted again in August amid cost pressures and economic uncertainty.

The S&P Global/CIPS construction purchasing managers' index nudged up to 49.2 from 48.9 in July, but remained below the 50.0 mark that separates contraction from expansion. Analysts had been expecting a decline to 48.0.

Andrew Harker, economics director at S&P Global Market Intelligence, said: "The UK construction sector looks set to be in for a challenging period, according to the latest PMI data. Not only did construction activity fall for the second month running, but a range of indicators from the survey pointed to further weakness ahead. New orders slowed to a crawl, while concerns about the sector and the wider economy led to a drop in confidence.

"Price and supply pressures showed further signs of easing as waning demand throughout the sector lifted pressure on suppliers. Meanwhile, the main positive from the latest survey was a solid increase in employment. That said, hiring at least in part reflects an ongoing catch-up following the pandemic. If activity continues to fall, firms will likely soon feel that their staffing capacity is sufficient and pause hiring."

In equity markets, Berkeley Group gained after saying it was on track to meet full-year profit guidance despite a "volatile" operating environment. Taylor Wimpey and Persimmon also rose.

Retailers and pub chains rallied on news of the potential energy price freeze, with JD Sports, Next, B&Q owner Kingfisher, Marks & Spencer, Dunelm, Mitchells & Butlers and Wetherspoons all up. Domino's and Greggs also advanced.

Centrica was up following a Financial Times report suggesting the energy supplier is in talks to secure billions in additional financing amid rising collateral demands.

On the downside, equipment rental company Ashtead fell despite posting a rise in revenue and profits for the three months ended 31 July, driven by "ongoing momentum" in supportive end markets.

BT was also weaker after a downgrade to 'hold' from 'buy' at Berenberg.

Market Movers

FTSE 100 (UKX) 7,.97312 0.35% FTSE 250 (MCX) 18,883.28 1.36% techMARK (TASX) 4,259.78 0.37%

FTSE 100 - Risers

Lloyds Banking Group (LLOY) 45.46p 4.63% Hargreaves Lansdown (HL.) 833.40p 4.44% JD Sports Fashion (JD.) 128.05p 4.28% Berkeley Group Holdings (The) (BKG) 3,594.00p 4.26% St James's Place (STJ) 1,114.50p 4.11% Next (NXT) 6,282.00p 4.08% Howden Joinery Group (HWDN) 575.40p 4.01% Kingfisher (KGF) 249.20p 4.01% Taylor Wimpey (TW.) 108.10p 3.94% Abrdn (ABDN) 153.25p 3.90%

FTSE 100 - Fallers

Harbour Energy (HBR) 469.80p -3.19% Shell (SHEL) 2,298.50p -2.11% BP (BP.) 454.40p -1.93% BT Group (BT.A) 142.25p -1.66% Ashtead Group (AHT) 4,257.00p -1.28% National Grid (NG.) 1,079.00p -1.05% B&M European Value Retail S.A. (DI) (BME) 370.00p -0.96% AstraZeneca (AZN) 10,562.00p -0.81% Antofagasta (ANTO) 1,112.50p -0.76% Airtel Africa (AAF) 131.70p -0.60%

FTSE 250 - Risers

Mitchells & Butlers (MAB) 167.40p 8.98% Greggs (GRG) 1,978.00p 7.38% Polymetal International (POLY) 214.70p 7.35% Domino's Pizza Group (DOM) 247.60p 7.28% Wetherspoon (J.D.) (JDW) 523.00p 7.04% Dunelm Group (DNLM) 727.50p 6.67% Trainline (TRN) 337.00p 6.34% Countryside Partnerships (CSP) 253.00p 5.42% Baltic Classifieds Group (BCG) 137.00p 5.38% Wizz Air Holdings (WIZZ) 2,101.00p 5.29%

FTSE 250 - Fallers

Tullow Oil (TLW) 49.58p -2.59% JPMorgan Japanese Inv Trust (JFJ) 453.50p -1.84% Fidelity China Special Situations (FCSS) 241.00p -1.43% Bridgepoint Group (Reg S) (BPT) 292.80p -1.35% Drax Group (DRX) 652.50p -1.29% Energean (ENOG) 1,276.00p -1.24% Petrofac Ltd. (PFC) 114.40p -1.04% Clarkson (CKN) 2,785.00p -0.89% Baillie Gifford Japan Trust (BGFD) 729.00p -0.82% RHI Magnesita N.V. (DI) (RHIM) 1,772.00p -0.78%