London midday: Stocks bounce back after sell-off, IDS soars

(Sharecast News) - UK stocks were rising on Wednesday morning, rebounding slightly as investors went bargain-hunting after the FTSE 100 dropped to a four-week low the previous session. "European markets have enjoyed a welcome reprieve from the selling pressure that has dominated much of the week," said Joshua Mahony, chief market analyst at Scope Markets.

The FTSE 100 was up 0.6% at 7,864 just before the midday mark, after falling 1.8% to its lowest level since 20 March on Tuesday.

Fading hopes of imminent interest-rate cuts in the UK and US - in light of recent strong economic data - have been dampening sentiment across stock markets, along with rising tensions in the Middle East as Israel vows to respond to a missile and drone attack from Iran.

Comments from Federal Reserve chair Jerome Powell the previous evening will likely be weighing on investors' minds on Wednesday morning, after the head of the US central bank needed more confidence that inflation was on a downward trend before cutting interest rates. "Right now, given the strength of the labour market and progress on inflation so far, it's appropriate to allow restrictive policy further time to work," he said.

UK inflation eases less than expected

Data release on Wednesday morning showed that the annual rate of UK inflation eased less than hoped in March, falling from 3.4% to 3.2%, missing the 3.1% consensus forecast. Following strong wage-growth data reported on Tuesday, the figures will likely prompt caution from the Bank of England as they attempt to keep price pressures in check before cutting rates.

Scope Markets' Mahony said the slowdown in annual inflation "has helped highlight the continued downward trajectory that many hope will soon bring a return to target to facilitate a dovish shift from the Bank of England". But the 0.6% monthly gain in consumer prices in March "should be cause for concern", especially after a 0.6% increase in February.

"If 2% is the target [for annual inflation], a two-month gain of 1.2% does little to encourage the idea that the inflation issue has been largely resolved. In response we have seen markets reprice the first rate cut, with the elevated wage and inflation metrics driving expectations of a June cut down to a mere 29%. Instead, we may have to wait until August (50%) or September (67%) for that first pivot," Mahony said.

Miners provide a lift, IDS surges

Mining stocks headlined the FTSE 100 risers list early on, with Rio Tinto and Anglo American among the best performers. Rio Tinto announced on Wednesday that it was holding on to annual production guidance, despite a sharp fall in first-quarter iron ore shipments and production; while Anglo reported an improvement in rough diamond sales in the latest sales cycle at its De Beers division.

Sector peer Antofagasta was also higher after reiterating its full-year output targets even after a 11% drop in copper production in the first quarter. Glencore and Fresnillo were also performing well.

However, it was Royal Mail owner International Distribution Services that was the standout performer of the day, surging more than 20% on reports that Daniel Křetínský is preparing a takeover bid. According to reports in both Reuters and the FT, the Czech billionaire who is already IDS's largest shareholder, is looking to take over the company following a big drop in market value over recent months.

Struggling online fast-fashion retailer Asos jumped 4% after its first-half results weren't as bad as feared, and the company said underlying earnings in the 2024-25 financial year are set to be "significantly" higher than the previous two years as it cuts costs and slashes stock levels.

Stocks in defensive sectors such as utilities weakened as investor risk appetite returned, with SSE, Severn Trent and United Utilities among the worst performers on the FTSE 100.

Market Movers

FTSE 100 (UKX) 7,863.81 0.56% FTSE 250 (MCX) 19,451.86 0.55% techMARK (TASX) 4,398.61 0.06%

FTSE 100 - Risers

Anglo American (AAL) 2,178.50p 3.99% Rio Tinto (RIO) 5,415.00p 3.06% Fresnillo (FRES) 602.00p 2.99% Antofagasta (ANTO) 2,269.00p 2.76% Glencore (GLEN) 477.85p 2.41% Rolls-Royce Holdings (RR.) 406.80p 2.26% Burberry Group (BRBY) 1,158.50p 2.07% Standard Chartered (STAN) 647.60p 1.95% Smurfit Kappa Group (CDI) (SKG) 3,492.00p 1.87% Beazley (BEZ) 659.50p 1.85%

FTSE 100 - Fallers

GSK (GSK) 1,585.00p -1.58% Hikma Pharmaceuticals (HIK) 1,771.00p -0.84% Convatec Group (CTEC) 280.80p -0.71% Flutter Entertainment (DI) (FLTR) 14,895.00p -0.70% St James's Place (STJ) 399.20p -0.70% Kingfisher (KGF) 243.20p -0.49% Pershing Square Holdings Ltd NPV (PSH) 3,872.00p -0.46% AstraZeneca (AZN) 10,836.00p -0.39% Melrose Industries (MRO) 629.20p -0.38% Scottish Mortgage Inv Trust (SMT) 831.80p -0.34%

FTSE 250 - Risers

International Distributions Services (IDS) 257.40p 20.17% Ferrexpo (FXPO) 46.85p 6.12% Watches of Switzerland Group (WOSG) 353.00p 4.50% Hochschild Mining (HOC) 149.60p 3.46% Wizz Air Holdings (WIZZ) 2,026.00p 3.42% W.A.G Payment Solutions (WPS) 68.20p 3.33% Ithaca Energy (ITH) 119.00p 3.12% PZ Cussons (PZC) 85.40p 3.02% IntegraFin Holding (IHP) 299.50p 2.57% Savills (SVS) 1,058.00p 2.52%

FTSE 250 - Fallers

Dr. Martens (DOCS) 65.65p -2.01% Baillie Gifford Japan Trust (BGFD) 706.00p -1.81% Hargreaves Lansdown (HL.) 718.80p -1.53% Wood Group (John) (WG.) 140.60p -1.33% Trainline (TRN) 341.40p -1.27% Harbour Energy (HBR) 294.20p -1.24% Kainos Group (KNOS) 975.00p -1.22% TBC Bank Group (TBCG) 2,960.00p -1.17% Chemring Group (CHG) 350.50p -1.13% TUI AG Reg Shs (DI) (TUI) 569.00p -1.04%