London midday: Stocks rise after encouraging service sector reading

(Sharecast News) - London stocks had risen by midday on Wednesday as investors digested an encouraging reading on the UK services sector, although worries about a US slowdown continued to play on investors' minds. The FTSE 100 was up 0.4% at 7,665.28.

Danni Hewson, head of financial analysis at AJ Bell, said: "The FTSE 100 is heading into Easter with a spring in its step despite weaker than expected data from the US.

"Figures on job openings and factory orders are pointing towards a potential recession for the world's largest economy, but the upside might be a pause in interest rates which would typically be a positive for stocks.

"The concern is the Federal Reserve might have to sound the retreat before its war on inflation is truly done. This could leave us with the worst of all worlds - the dreaded stagflation where the economy is shrinking but prices are continuing to surge higher."

On home shores, a survey showed that activity in the services sector grew for the second month in a row in March.

The S&P Global/CIPS services purchasing managers' index edged down to 52.9 from 53.5 in February but remained above the 50.0 level that separates contraction from expansion.

S&P pointed to the fastest increase in new order volumes for a year, reflecting greater confidence among clients in both domestic and international markets. In addition, the latest figures signalled the strongest rise in new export sales since data collection for the series began in September 2014.

Tim Moore, economics director at S&P Global Market Intelligence, said: "March data confirmed that the UK service sector returned to growth during the first quarter of 2023, supported by a sustained rebound in new orders as business and consumer confidence improved from the lows seen last autumn.

"Export sales provided an additional boost to the service economy during March as the ongoing recovery in business travel and events helped to drive the fastest rise in new orders from abroad for at least eight-and-a-half years.

"Tight labour market conditions remained a constraint on business capacity across the service sector and fuelled another month of historically steep wage pressures. However, overall business expenses increased at the slowest pace since May 2021 as lower transport bills and falling commodity prices helped to offset rising staff costs."

In equity markets, utilities were among the top performers on the FTSE 100, with United Utilities, Centrica, National Grid, Severn Trent and SSE all higher.

Catering group Compass rose following well-received results from France's Sodexo, which said earlier that it plans to spin off and list its Benefits and Rewards Services business next year.

Insurer Direct Line surged after a double upgrade to 'buy' from 'sell' at Citi. It said the share price decline of around 40% year-to-date and 32% reduction in 2023 consensus earnings per share estimates mean the risk is now skewed to the upside.

Engineering firm Wood Group also racked up strong gains after it said late on Tuesday that it would "continue to engage with its shareholders" after private equity firm Apollo Global Management made a fifth and final takeover offer at £1.66bn.

On the downside, RS Group fell as it said it expects annual adjusted operating profit to be slightly ahead of estimates after a 1% rise in fourth-quarter like-for-like revenue despite weak electronics sales.

Hilton Foods was also weaker as it posted a drop in full-year profit and announced the appointment of a new chief executive.

Market Movers

FTSE 100 (UKX) 7,665.28 0.40% FTSE 250 (MCX) 18,742.09 -0.39% techMARK (TASX) 4,537.33 0.62%

FTSE 100 - Risers

United Utilities Group (UU.) 1,073.50p 3.07% Endeavour Mining (EDV) 2,102.00p 2.64% Compass Group (CPG) 2,060.00p 2.44% Haleon (HLN) 338.85p 2.37% Centrica (CNA) 109.95p 2.18% Severn Trent (SVT) 2,905.00p 2.14% Admiral Group (ADM) 2,121.00p 2.07% Flutter Entertainment (CDI) (FLTR) 14,685.00p 1.77% Barclays (BARC) 148.98p 1.69% National Grid (NG.) 1,121.00p 1.63%

FTSE 100 - Fallers

RS Group (RS1) 851.80p -4.83% Weir Group (WEIR) 1,785.50p -3.12% Kingfisher (KGF) 250.20p -2.65% CRH (CDI) (CRH) 3,923.00p -2.44% Ashtead Group (AHT) 4,522.00p -2.33% Rightmove (RMV) 549.40p -2.28% Auto Trader Group (AUTO) 606.60p -2.10% St James's Place (STJ) 1,182.50p -1.95% Johnson Matthey (JMAT) 1,900.00p -1.71% Antofagasta (ANTO) 1,500.00p -1.67%

FTSE 250 - Risers

Direct Line Insurance Group (DLG) 150.30p 4.78% Wood Group (John) (WG.) 209.20p 4.60% Ithaca Energy (ITH) 157.00p 4.39% Abrdn Private Equity Opportunities Trust (APEO) 435.50p 3.69% Centamin (DI) (CEY) 107.70p 3.26% QinetiQ Group (QQ.) 339.20p 2.85% Network International Holdings (NETW) 248.40p 2.64% Carnival (CCL) 706.60p 2.35% Caledonia Investments (CLDN) 3,395.00p 2.26% Edinburgh Worldwide Inv Trust (EWI) 156.00p 2.23%

FTSE 250 - Fallers

Molten Ventures (GROW) 266.80p -3.61% Genuit Group (GEN) 260.50p -3.34% Hilton Food Group (HFG) 672.00p -3.31% RHI Magnesita N.V. (DI) (RHIM) 2,134.00p -3.18% Future (FUTR) 1,074.00p -3.07% TUI AG Reg Shs (DI) (TUI) 557.20p -3.03% Liontrust Asset Management (LIO) 966.00p -2.91% AJ Bell (AJB) 338.80p -2.81% Marshalls (MSLH) 301.60p -2.71% Currys (CURY) 56.65p -2.66%