London midday: FTSE steady but Burberry surges on turnaround plans

(Sharecast News) - London stocks were still steady by midday on Wednesday as investors sifted through a raft of corporate news, but Burberry surged on cost-cutting plans. The FTSE 100 was flat at 8,603.77.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Stocks stateside have gone on a run as more trade deals are inked, but the baton hasn't been passed to the FTSE 100, which is flat in early trade.

"The more cautious sentiment may partly have been prompted by concerns that interest rates look set to stay higher for longer in the UK. Bank of England policymakers have been striking notes of wariness about the risk that inflation may stay stubbornly above target. Market expectations for further rate cuts this year have cooled off, with only one to two further reductions being priced in.

"Decision makers are worried that pay growth remains steamy, which could have a knock-on effect on broader price rises. In the three months to March, pay growth including bonuses, came in at 5.5%, above market forecasts. Huw Pill, the chief economist at the Bank of England, voted against cutting rates last week, favouring keeping them unchanged, and other members have stressed they are wary about going too fast."

In equity markets, Marks & Spencer was top performer on the FTSE 100 following recent heavy losses on the back of a cyber attack, after the retailer revealed on Tuesday that some customer information had been stolen in the incident three weeks ago.

Mondi rallied after an upgrade to 'overweight' from 'neutral' at JPMorgan, while Hikma gained after an initiation at 'outperform' by BNPP Exane.

Burberry jumped as investors welcomed the luxury brand's turnaround plans. Burberry said it swung to a full-year loss amid a slump in revenue and that 1,700 jobs could be at risk as part of its ongoing turnaround plan.

Russ Mould, investment director at AJ Bell, said: "Despite its results being slightly less bad than feared Burberry is not showing any complacency, with the luxury goods firm announcing some pretty radical steps in its continuing recovery effort.

"Having enjoyed a strong run going into these numbers as relations between two of its key markets - the US and China - seemed to thaw, the momentum has continued as investors reacted positively to the news.

"Former Coach and Jimmy Choo chief executive Joshua Schulman was brought into revive the company's fortunes last July and he is pulling the classic turnaround lever of cutting costs, including a drastic planned reduction in the firm's headcount.

"A strategy of trying to compete with higher-end rivals hasn't worked out so it makes sense that under Schulman the company is returning to its historic strengths in classic outerwear products like trench coats and scarves. On top of this, the company has also broadened the range of price tags on its products.

"There has also been speculation about the future of creative director Daniel Lee. Like a new football manager, Schulman may want to get his own backroom team in to support his strategy."

On the downside, Imperial Brands tumbled as its first-half adjusted operating profit missed expectations and the company announced the retirement of chief executive Stefan Bomhard, who will be succeeded by Lukas Paravicini.

Spirax was also in the red as the manufacturing group delivered a cautious outlook, saying that the uncertainty caused by trade tariffs is impacting customers' capital investment decisions.

Compass nudged lower as the catering firm held on to full-year guidance, which points to a slight slowdown in underlying revenue and profit growth, despite a strong first half.

Market Movers

FTSE 100 (UKX) 8,603.77 0.01% FTSE 250 (MCX) 20,785.91 0.13% techMARK (TASX) 4,688.55 0.34%

FTSE 100 - Risers

Marks & Spencer Group (MKS) 359.60p 4.11% Entain (ENT) 793.40p 3.85% Airtel Africa (AAF) 174.10p 2.96% Mondi (MNDI) 1,223.00p 2.90% Kingfisher (KGF) 314.90p 2.61% BAE Systems (BA.) 1,705.50p 1.91% Relx plc (REL) 4,021.00p 1.82% GSK (GSK) 1,381.50p 1.73% Next (NXT) 12,385.00p 1.52% JD Sports Fashion (JD.) 90.92p 1.31%

FTSE 100 - Fallers

Imperial Brands (IMB) 2,689.00p -6.96% Spirax Group (SPX) 6,140.00p -6.76% Croda International (CRDA) 3,072.00p -2.97% Melrose Industries (MRO) 469.30p -2.41% Taylor Wimpey (TW.) 116.90p -2.05% International Consolidated Airlines Group SA (CDI) (IAG) 316.10p -2.05% CRH (CDI) (CRH) 7,396.00p -2.01% Ashtead Group (AHT) 4,373.00p -1.77% Persimmon (PSN) 1,343.50p -1.65% Intermediate Capital Group (ICG) 2,034.00p -1.64%

FTSE 250 - Risers

Burberry Group (BRBY) 947.00p 14.54% Trainline (TRN) 267.60p 5.60% AO World (AO.) 99.20p 4.42% Ocado Group (OCDO) 277.30p 3.32% Lancashire Holdings Limited (LRE) 610.00p 2.35% Keller Group (KLR) 1,580.00p 2.33% Frasers Group (FRAS) 711.50p 2.08% Baltic Classifieds Group (BCG) 366.50p 1.81% QinetiQ Group (QQ.) 423.00p 1.63% Marshalls (MSLH) 292.00p 1.57%

FTSE 250 - Fallers

Pacific Horizon Inv Trust (PHI) 580.00p -2.85% TP Icap Group (TCAP) 261.50p -2.43% Vistry Group (VTY) 618.00p -2.40% Dr. Martens (DOCS) 58.40p -2.26% 4Imprint Group (FOUR) 3,480.00p -2.11% Bellway (BWY) 2,684.00p -2.04% Bytes Technology Group (BYIT) 521.50p -1.97% HICL Infrastructure (HICL) 110.80p -1.95% Future (FUTR) 743.00p -1.85% Victrex plc (VCT) 798.00p -1.85%