London midday: Stocks edge lower amid growth, inflation woes

(Sharecast News) - London stocks had edged a little further into the red by midday on Wednesday amid concerns about rising inflation and slowing economic growth. The FTSE 100 was down 0.3% at 7,576.46.

CMC Markets analyst Michael Hewson said: "Sentiment continues to remain extremely fickle, prone to the ebb and flow of inflation expectations, followed by fears that central banks will over react in combatting said inflation, which is then followed by concern about what that might do to global growth.

"This argument which the market appears to be having with itself, over whether we see a recession, or a soft landing is likely to become a lot clearer, over the next week or so, starting with US CPI on Friday, followed by PPI and the Fed meeting a week from now."

On home turf, a survey showed that growth in the construction sector slowed in May as deteriorating consumer confidence and rising inflation led to the weakest rise in residential work for two years. The S&P Global/CIPS construction purchasing managers' index fell to 56.4 from 58.2 in April, hitting its lowest level in four months.

A reading above 50.0 signals expansion, while a reading below indicates contraction.

The decline was due mainly to weaker trends in housebuilding, with the index for the sub-sector down to 50.7 in May from 53.8 a month earlier, marking the worst performance for residential work since May 2020. Survey respondents said subdued consumer confidence and worries about the economic outlook had likely constrained demand.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: "Subdued client confidence affected new order levels with the slowest rise in pipelines of new work since December 2021. The housing sector in particular showed further signs of fragility with the worst performance since May 2020 and moving closer to the danger zone of negative territory.

"Affordability concerns will be weighing on the mind of potential house buyers grappling with escalating costs for everyday items, resulting in a postponement of big purchases until the UK economy shows more resilience."

Earlier, data from mortgage lender Halifax, which showed that house prices slowed again in May as the market showed signs of cooling, with soaring inflation starting to hit buyers.

The annual pace of house price increases slowed to 10.5% in May from 10.8% in April. Prices rose for the 11th consecutive month, up by 1.0% in May after a 1.2% increase in April. Housing shortages remained the key driver for prices, said Russell Galley, managing director at Halifax.

In equity markets, defence technology firm Chemring slid after the release of its interim results.

Low-cost airline Wizz Air flew lower after saying it expected to make a first-quarter loss despite strong summer demand as it deployed extra resources to minimise disruption due to staff shortages and supply chain issues.

Going the other way, Melrose Industries surged to the top of the FTSE 100 after the GKN owner announced the launch of a £500m share buyback following the agreed sale of its Ergotron business earlier in the week.

Information technology consultancy Aveva was also up despite saying it swung to a full-year loss.

Flexible office space provider Workspace rose after saying it swung to a full-year pre-tax profit, with customer demand now running at pre-Covid levels.

Market Movers

FTSE 100 (UKX) 7,576.46 -0.30% FTSE 250 (MCX) 20,349.71 -0.24% techMARK (TASX) 4,389.93 0.11%

FTSE 100 - Risers

Melrose Industries (MRO) 152.40p 7.25% Aveva Group (AVV) 2,345.00p 5.16% Rolls-Royce Holdings (RR.) 93.69p 1.99% Scottish Mortgage Inv Trust (SMT) 791.20p 1.88% Whitbread (WTB) 2,741.00p 1.48% GSK (GSK) 1,741.20p 1.26% JD Sports Fashion (JD.) 119.90p 1.22% British American Tobacco (BATS) 3,605.50p 1.11% BP (BP.) 449.95p 0.77% Imperial Brands (IMB) 1,826.00p 0.63%

FTSE 100 - Fallers

Royal Mail (RMG) 295.90p -3.71% Airtel Africa (AAF) 151.50p -3.26% Antofagasta (ANTO) 1,474.50p -3.15% Schroders (SDR) 2,844.00p -2.34% London Stock Exchange Group (LSEG) 6,960.00p -2.33% Intermediate Capital Group (ICP) 1,508.00p -2.24% Smurfit Kappa Group (CDI) (SKG) 3,147.00p -2.02% Sage Group (SGE) 646.00p -1.91% Rentokil Initial (RTO) 498.40p -1.89% Diageo (DGE) 3,587.00p -1.87%

FTSE 250 - Risers

PureTech Health (PRTC) 180.80p 4.15% Helios Towers (HTWS) 128.90p 3.20% Caledonia Investments (CLDN) 3,835.00p 2.68% Darktrace (DARK) 373.40p 2.67% HGCapital Trust (HGT) 395.50p 2.59% Ferrexpo (FXPO) 188.70p 2.44% Capricorn Energy (CNE) 218.40p 2.34% Tullow Oil (TLW) 54.95p 2.33% Allianz Technology Trust (ATT) 235.00p 2.17% Johnson Matthey (JMAT) 2,116.00p 1.98%

FTSE 250 - Fallers

Wizz Air Holdings (WIZZ) 2,560.00p -7.25% National Express Group (NEX) 230.20p -6.04% Chemring Group (CHG) 344.00p -6.01% Weir Group (WEIR) 1,561.50p -2.89% Provident Financial (PFG) 247.20p -2.37% Carnival (CCL) 968.60p -2.26% SSP Group (SSPG) 259.70p -2.26% Synthomer (SYNT) 299.20p -2.03% Currys (CURY) 81.80p -1.98% Hochschild Mining (HOC) 110.10p -1.96%