London midday: Stocks push higher; Shell gains after update

(Sharecast News) - London stocks had extended gains by midday on Thursday as investors mulled UK construction and house price data, and looked ahead to key US jobs figures. The FTSE 100 was up 0.7% at 7,715.89.

A survey out earlier showed that growth in the UK construction sector slowed last month as higher borrowing costs hit residential demand.

The S&P Global CIPS construction purchasing managers' index came in at 50.7 in March, down notably on February's 54.6 although it remains above the neutral 50.0 threshold. A reading above 50.0 indicates growth, while one below it suggests contraction. It was, however, well below consensus expectations of 53.8.

Civil engineering was the best-performing sub-category, at 52.0, boosted by work on the HS2 rail project and robust demand from other transport-related construction.

But housing activity came in a 44.2, falling from 47.4 in February and the fastest rate of decline since May 2020. Respondents blamed fewer tender opportunities due to higher borrowing costs and a subsequent shut down in new house building projects.

Commercial building work was also softer. While still in positive territory at 51.1, the sub-sector saw the rate of expansion ease from February's high.

However, optimism among builders rose to the highest level since February 2022, with 46% of the panel forecasting an increase total construction output in the year ahead and only 11% expecting a reduction.

Tim Moore, economics director at S&P Global Market Intelligence, said: "Despite worries about the near-term outlook for housing activity, expectations for total construction output for the year ahead where relatively update. Growth projections were boosted by the fastest improvement in suppliers' delivering times for a more than a decade."

Investors were also digesting the latest figures from Halifax, which showed that house prices increased for a third consecutive month in a row in March. House prices rose by 0.8% from February, taking the average sale price to £287,880 in March.

However, this increase was slower than the 1.2% recorded in February. On an annual basis, the rate of price growth slowed to 1.6% from 2.1% recorded in the previous month and the lowest since October 2019.

Market participants were also mulling the latest figures out of China, which showed that activity in the services sector grew at the fastest pace in two and a half years in March.

The Caixin services purchasing managers' index rose to 57.8 from 55.0 in February, coming in ahead of expectations for it to be unchanged. This marked the third increase in a row and the fastest rate of expansion since November 2020.

Increased activity levels were linked to sustained improvements in operating conditions and new order intakes following the recent easing of Covid measures. Caixin said new export business expanded at the quickest rate on record.

Looking ahead to the rest of the day, US initial jobless claims are due at 1330 BST. On Friday, the all-important non-farm payrolls report will be released.

Richard Hunter, head of markets at Interactive Investor, said: "The expectation is for 240,000 jobs to have been added in March, following a blowout number in January and a higher than expected 311,000 number in February.

"The closure of the market on Friday means that equity traders will be unable to react to the release until next week which, coupled with the long weekend, has seen some traders squaring positions and being unwilling to open new ones given the extended break."

On the corporate front, oil giant Shell gained after a first-quarter update. Danni Hewson, head of financial analysis at AJ Bell, said: "In its usual teaser ahead of quarterly results Shell is flagging a big loss - but there is a reason investors are brushing this news off.

"The anticipated loss is a quirk of accounting - reflecting one-off tax charges which could well be the result of booking the impact of future windfall taxes upfront. Based on the performance of the company's other business units you would still expect Shell to be generating plenty of cash to fund its dividend.

"Volumes in its liquefied natural gas business are expected to be higher and its oil products division is also performing well."

Ferrexpo rallied after saying it more than doubled iron ore pellet production in the first quarter.

Tui surged to the top of the FTSE 250 after the travel firm said bookings and trends for Easter holidays confirm strong demand for sunshine destinations and that it expects a "good" summer this year.

On the downside, Melrose, Barratt Developments, Reckitt, Rentokil, ConvaTec, Smiths Group, Savills, Man Group and Howden Joinery all lost ground as they traded without entitlement to the dividend.

Market Movers

FTSE 100 (UKX) 7,715.89 0.69% FTSE 250 (MCX) 18,685.11 0.45% techMARK (TASX) 4,564.30 0.89%

FTSE 100 - Risers

Legal & General Group (LGEN) 241.30p 2.77% BT Group (BT.A) 149.65p 2.64% Entain (ENT) 1,286.00p 2.55% Barclays (BARC) 151.24p 2.38% Admiral Group (ADM) 2,182.00p 2.35% GSK (GSK) 1,521.20p 2.29% Aviva (AV.) 418.20p 2.25% InterContinental Hotels Group (IHG) 5,336.00p 2.14% Hargreaves Lansdown (HL.) 782.60p 2.09% Persimmon (PSN) 1,229.00p 2.08%

FTSE 100 - Fallers

Melrose Industries (MRO) 156.90p -4.24% Convatec Group (CTEC) 222.00p -2.20% Reckitt Benckiser Group (RKT) 6,210.00p -1.99% Smiths Group (SMIN) 1,637.00p -1.77% Ashtead Group (AHT) 4,401.00p -1.50% CRH (CDI) (CRH) 3,756.00p -1.16% JD Sports Fashion (JD.) 165.45p -0.96% Pershing Square Holdings Ltd NPV (PSH) 2,744.00p -0.94% Bunzl (BNZL) 3,054.00p -0.65% Burberry Group (BRBY) 2,471.00p -0.56%

FTSE 250 - Risers

TUI AG Reg Shs (DI) (TUI) 628.60p 12.81% Ferrexpo (FXPO) 116.00p 4.88% Bridgepoint Group (Reg S) (BPT) 225.00p 4.07% Hilton Food Group (HFG) 685.00p 3.79% Hammerson (HMSO) 26.18p 2.83% Assura (AGR) 50.30p 2.65% Darktrace (DARK) 245.60p 2.63% Liontrust Asset Management (LIO) 970.00p 2.59% International Distributions Services (IDS) 224.10p 2.52% Spirent Communications (SPT) 179.50p 2.45%

FTSE 250 - Fallers

Man Group (EMG) 208.00p -3.66% Savills (SVS) 925.00p -3.29% Baltic Classifieds Group (BCG) 147.60p -3.15% Bakkavor Group (BAKK) 100.00p -2.91% RIT Capital Partners (RCP) 1,812.00p -2.89% Howden Joinery Group (HWDN) 646.80p -2.68% Travis Perkins (TPK) 885.00p -2.58% IMI (IMI) 1,430.00p -2.46% FDM Group (Holdings) (FDM) 676.00p -2.31% International Public Partnerships Ltd. (INPP) 145.00p -2.29%