London midday: Stocks stay down; construction data in focus

(Sharecast News) - London stocks were still in the red by midday on Wednesday as a jump in oil prices sparked worries about inflation. The FTSE 100 was down 0.7% at 7,388.84.

Russ Mould, investment director at AJ Bell, said: "If central bankers thought energy prices were an area they could relax on a bit, then the move higher through June has firmly disabused them of that notion.

"The extension of output cuts by Russia and Saudi Arabia through to the end of the year has helped oil prices regain the $90 per barrel mantle for the first time in 2023 and this is likely to add to inflationary pressures. It may force the likes of the Federal Reserve to keep interest rates higher for longer and this is helping to undercut the more comfortable narrative that the trajectory for rates is on the way to shifting.

"Markets are reacting negatively as we await the next decisions from the Bank of England and Fed later this month. The recent improvement in sentiment was always fragile and the cracks are now firmly on show."

On home shores, a survey showed that construction activity rose only marginally in August, as growth slowed from the previous month, with housebuilding struggling and new orders dropping at their fastest rate in over three years.

The S&P Global/CIPS UK construction purchasing managers' index fell to 50.8 last month from 51.7 in July, signalling only a slight increase in overall construction output.

Any reading above 50 indicates an expansion in activity. The consensus estimate was for a reading of 50.7.

Commercial building was strong, at 54.2, holding close to July's five-month high of 54.4, while civil engineering growth slowed from 53.9 to 52.4, its lowest since April. However, housebuilding weakened from 43 to 40.7 due to subdued market conditions and cutbacks to new build projects. This was the second-fastest decline registered in housebuilding since May 2020.

Tim Moore, economics director at S&P Global Market Intelligence, said: "Resilient demand for commercial work and infrastructure projects are helping to keep the construction sector in expansion mode for now, but the survey's forward-looking indicators worsened in August."

Following strong growth in the spring, new order volumes were down. The data said that the downturn in order books was the steepest since May 2020. "Construction companies noted that rising interest rates and concerns about the near-term economic outlook had led to more cautious spending among clients, especially in the residential building segment," the press release said.

In equity markets, housebuilder Barratt slumped as it reported a fall in annual profits, cut its dividend and said there would be no share buyback this year as higher borrowing costs hit mortgage affordability. Persimmon and Berkeley were also lower.

Darktrace slid as its full-year results met analysts' estimates but the cybersecurity firm cut guidance for full-year 2024 adjusted EBITDA margins to between 17% and 19%.

Stationery and books retailer WH Smith was weaker despite saying that full-year figures will be in line with expectations as strong trading at its airport and train station locations offset a weak performance on the high street.

Ashmore traded down after it reported a fall in annual profits as assets under management declined 13% as customers withdrew their cash amid volatile markets.

On the upside, B&M European Value Retail rose, having tumbled on Tuesday on the back of a downgrade by JPMorgan. Shore Capital raised the shares to 'buy' from 'hold' as it said the acquisition of up to 51 Wilko stores is expected to enhance the company's presence and growth potential.

Bridgepoint gained as it announced the acquisition of Energy Capital Partners Holdings for an initial £835m.

Bakkavor was also up after the food company lifted full-year guidance as higher prices and volumes in China helped it post a rise in profit and revenue for the half-year.

Market Movers

FTSE 100 (UKX) 7,388.84 -0.66% FTSE 250 (MCX) 18,392.23 -0.54% techMARK (TASX) 4,248.01 -0.40%

FTSE 100 - Risers

Johnson Matthey (JMAT) 1,749.00p 1.77% B&M European Value Retail S.A. (DI) (BME) 554.40p 1.20% Sage Group (SGE) 981.40p 0.86% SEGRO (SGRO) 719.20p 0.59% Airtel Africa (AAF) 114.80p 0.44% Convatec Group (CTEC) 230.20p 0.35% Weir Group (WEIR) 1,901.00p 0.24% Pershing Square Holdings Ltd NPV (PSH) 3,022.00p 0.20% Diageo (DGE) 3,151.50p 0.13% Bunzl (BNZL) 2,769.00p 0.11%

FTSE 100 - Fallers

Prudential (PRU) 929.80p -2.62% Persimmon (PSN) 1,017.00p -2.54% Abrdn (ABDN) 157.10p -2.45% Barratt Developments (BDEV) 432.90p -2.35% 3i Group (III) 1,941.50p -2.12% Hiscox Limited (DI) (HSX) 975.00p -2.11% Smurfit Kappa Group (CDI) (SKG) 3,190.00p -1.97% St James's Place (STJ) 857.20p -1.92% Burberry Group (BRBY) 2,146.00p -1.92% Berkeley Group Holdings (The) (BKG) 3,934.00p -1.87%

FTSE 250 - Risers

Bridgepoint Group (Reg S) (BPT) 184.80p 5.66% Bakkavor Group (BAKK) 102.00p 3.03% International Distributions Services (IDS) 248.80p 3.02% Balanced Commercial Property Trust Limited (BCPT) 70.50p 2.62% Empiric Student Property (ESP) 87.40p 1.04% Grainger (GRI) 234.40p 1.03% Mitie Group (MTO) 101.60p 0.99% Diploma (DPLM) 3,140.00p 0.96% Greencoat UK Wind (UKW) 139.60p 0.94% Babcock International Group (BAB) 390.00p 0.83%

FTSE 250 - Fallers

WH Smith (SMWH) 1,389.00p -6.40% Ferrexpo (FXPO) 76.10p -4.40% Future (FUTR) 739.50p -4.27% PureTech Health (PRTC) 197.00p -3.67% Darktrace (DARK) 356.00p -3.58% NCC Group (NCC) 95.60p -3.14% Capita (CPI) 16.63p -2.86% Liontrust Asset Management (LIO) 624.50p -2.42% Baltic Classifieds Group (BCG) 203.00p -2.40% Mobico Group (MCG) 85.05p -2.35%