London midday: Rolls-Royce paces gains after rating upgrade

(Sharecast News) - London stocks were still firmly in the black by midday on Monday, with Rolls-Royce pacing the gains after a rating upgrade, with well-received results from Bunzl and a guidance upgrade from AB Foods underpinning the mood. The FTSE 100 was up 0.8% at 7,941.95. Stocks in the UK and US fell on Friday after the release of hotter-than-expected PCE inflation data.

Russ Mould, investment director at AJ Bell, said: "The FTSE 100 made a strong start to the week as investors shrugged off the inflation and interest rate concerns which bedevilled markets last week.

"This went against the prevailing mood in Asia which followed in the footsteps of the US in seeing material declines after a key inflation reading closely watched by the US Federal Reserve came in ahead of expectations.

"The obvious concern is that sticky inflation will prompt the Fed to keep rates higher for longer and turn waiting for a pivot to rate cuts into a modern-day version of Waiting for Godot.

"There was volatility in the pound early on Monday as traders waited to see if a deal might be done on the Northern Ireland protocol in the face of opposition from the euro-sceptic wing of the Conservative party and the DUP."

In equity markets, Rolls-Royce surged to the top of the FTSE 100 after an upgrade to 'buy' from 'underperform' at Bank of America Merrill Lynch, while Shell was boosted by an upgrade to 'buy' from 'neutral' at Goldman Sachs.

Elsewhere, Trainline rose after an upgrade to 'buy' at Deutsche Bank.

International distribution group Bunzl advanced after it reported a rise in annual earnings, driven by product cost inflation, volume recovery in the first half and growth from acquisitions.

Pre-tax profit for 2022 rose 11.6% to £634.6m, as revenue grew 9.8% at constant exchange rates to £12bn. Shareholders were rewarded with a 10% rise in the total dividend to 62.7p a share.

Bunzl also revealed it had bought a business in Germany and completed the acquisition of another in Canada.

Primark owner Associated British Foods rallied after it lifted full-year guidance as consumer spending proved to be more resilient in the first half and inflationary volatility eased.

The group said it now expects adjusted operating profit to be broadly in line with the prior year, having previously forecast adjusted operating profit below the €1.44bn made in 2021-22.

On the downside, Dechra Pharmaceuticals tumbled after it warned that based on the recent US de-stocking and current exchange rates, it now expects full-year underlying operating profit to be at the lower end of analyst expectations.

Quilter and Hargreaves Lansdown were both lower after downgrades to 'sell' at Citi.

Market Movers

FTSE 100 (UKX) 7,941.95 0.80% FTSE 250 (MCX) 19,808.92 0.57% techMARK (TASX) 4,636.70 0.45%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 144.44p 6.17% Antofagasta (ANTO) 1,578.50p 2.50% Bunzl (BNZL) 3,087.00p 2.46% Beazley (BEZ) 690.50p 2.22% Prudential (PRU) 1,243.50p 2.22% Smith (DS) (SMDS) 337.40p 2.15% Flutter Entertainment (CDI) (FLTR) 13,345.00p 2.14% Burberry Group (BRBY) 2,448.00p 2.13% Tesco (TSCO) 252.00p 2.07% Smurfit Kappa Group (CDI) (SKG) 3,124.00p 2.06%

FTSE 100 - Fallers

M&G (MNG) 208.10p -1.51% Airtel Africa (AAF) 122.00p -1.29% Hargreaves Lansdown (HL.) 834.00p -1.00% Abrdn (ABDN) 208.90p -1.00% Smith & Nephew (SN.) 1,206.50p -0.70% London Stock Exchange Group (LSEG) 7,502.00p -0.48% SEGRO (SGRO) 823.80p -0.24% HSBC Holdings (HSBA) 634.50p -0.19% BAE Systems (BA.) 917.00p -0.09% Imperial Brands (IMB) 2,070.00p 0.00%

FTSE 250 - Risers

Trainline (TRN) 256.40p 4.23% Wizz Air Holdings (WIZZ) 2,621.00p 3.93% National Express Group (NEX) 125.10p 3.56% Darktrace (DARK) 266.20p 3.30% Senior (SNR) 167.60p 3.20% Aston Martin Lagonda Global Holdings (AML) 200.10p 3.14% FirstGroup (FGP) 105.00p 3.14% ASOS (ASC) 846.00p 2.92% Apax Global Alpha Limited (APAX) 181.00p 2.72% Tullow Oil (TLW) 34.66p 2.61%

FTSE 250 - Fallers

Dechra Pharmaceuticals (DPH) 2,670.00p -13.98% Quilter (QLT) 91.40p -4.41% Jupiter Fund Management (JUP) 140.70p -2.83% Capricorn Energy (CNE) 248.40p -1.97% Drax Group (DRX) 630.50p -1.87% 888 Holdings (DI) (888) 67.80p -1.81% Helios Towers (HTWS) 101.90p -1.55% RHI Magnesita N.V. (DI) (RHIM) 2,618.00p -1.36% Man Group (EMG) 241.70p -1.27% Moneysupermarket.com Group (MONY) 225.40p -1.05%