London midday: Stocks dip but airlines boosted by Ryanair results

(Sharecast News) - London stocks had dipped into the red by midday on Monday, but airlines rallied after well-received results from Ryanair. The FTSE 100 was down 0.1% at 7,409.46.

Stocks rose last week after the US Federal Reserve and the Bank of England stood pat on interest rates, sparking hopes that rates have peaked. A softer-than-expected US non-farm payrolls report on Friday added to those hopes.

Joshua Mahony, chief market analyst at Scope Markets, said: "European markets have kicked off the week on a hesitant tone, with traders left wondering whether last week's dramatic surge represents an opportunity to sell or a sign that the bulls are back at the helm.

"In a week that was dominated by central bank activity, Friday's jobs report appears to have provided a goldilocks scenario for those hoping for an end to the Federal Reserve's tightening process. Weak payrolls data, higher unemployment, and lower-than-expected wage growth figures saw the Fedwatch December hike expectations fall back below 10%, having stood around the 30% mark earlier in the week."

On home shores, a survey out earlier showed that output in the construction sector fell again in October, weighed down by weakness in housebuilding.

The S&P Global/CIPS construction purchasing managers' index ticked up to 45.6 in October from 45.0 in September.

This was still well below the 50.0 mark that separates contraction from expansion, below consensus expectations of 46.0 and marked the second-lowest reading since May 2020.

The survey showed that house building fell for the 11th month in a row and at a much steeper pace than elsewhere in the construction sector, with the index printing at 38.5. This was attributed to a lack of demand and subsequent cutbacks to new projects.

Meanwhile, output in the civil engineering sector all fell sharply, with the index printing at 43.7 in October, and the rate of decline the fastest since July 2022.

There were signs of stabilisation in the commercial building segment, however, with activity falling only marginally and at a slower pace than in September.

Tim Moore, economics director at S&P Global Market Intelligence, said the data highlighted "another solid reduction in UK construction output as elevated borrowing costs and a wait-and-see approach to new projects weighed on activity".

In equity markets, airlines were in the black after Ryanair said it will pay its first ever dividend and posted a 59% jump in first-half profit after tax to €2.18bn, thanks to a strong Easter in the first quarter, record summer traffic and higher fares. IAG, easyjet and Wizz all rose.

EasyJet also got a lift after the Information Commissioner's Office confirmed on Sunday that it had dropped an investigation into a hack that affected millions of customers.

Victoria Scholar, head of investment at Interactive Investor, said: "Ryanair has been able to pass on additional cost pressures to consumers through higher airfares with ticket prices likely to continue to go up next year. Plus, it has been enjoying a tailwind from strong demand post pandemic which it expects will be even stronger next year, despite cost-of-living pressures with elevated inflation and interest rates. Ryanair has also been more focussed than rivals on keeping its debt down - the airline expects it will be debt-free by the end of 2026.

"Investors have lots to be cheerful about in this set of results including its better-than-expected earnings, its outlook, and its dividend announcement."

Aerospace group Melrose gained as it signed a new $5bn aftermarket services agreement with engines giant GE Aerospace.

On the downside, Prudential edged down after the insurer said new business sales and profits slowed slightly from the half-year stage in the third quarter.

Music rights owner Hipgnosis was under the cosh as it said that having undertaken a review of its financial position, it will not declare dividends before the new financial year as it looks to ensure it has sufficient cash resources.

In broker note action, RBC Capital Markets upgraded its stance on homeware retailer Dunelm to 'sector perform' from 'underperform' and increased the price target to 1,100p from 1,000p. It said the company remains "a strong player" in UK retail, with good execution in recent years and a strong track record of market share gains across the last decade.

However, it downgraded Next to 'sector perform' from 'outperform' and reduced the price target to 7,700p from 8,000p as it argued there is less scope for positive surprises.

"We continue to view Next as a blue-chip UK consumer proxy offering longer-term growth potential from its Total Platform," it said. "However, we see more valuation upside for some other retailers, hence we have downgraded our rating to sector perform."

JD Sports was a high riser after Citi initiated coverage of the stock at 'buy'. "We see a significant opportunity for JD Sports to deploy capital, generating returns above its WACC, with cash generation supported by working capital control," it said.

Market Movers

FTSE 100 (UKX) 7,409.46 -0.11% FTSE 250 (MCX) 17,898.10 -0.48% techMARK (TASX) 4,071.65 -0.49%

FTSE 100 - Risers

Melrose Industries (MRO) 505.60p 3.23% Entain (ENT) 937.20p 1.91% Standard Chartered (STAN) 629.80p 1.71% Rolls-Royce Holdings (RR.) 224.30p 1.54% JD Sports Fashion (JD.) 133.20p 1.41% International Consolidated Airlines Group SA (CDI) (IAG) 152.55p 1.40% Fresnillo (FRES) 566.60p 1.36% NATWEST GROUP (NWG) 189.05p 1.12% M&G (MNG) 204.70p 1.04% Anglo American (AAL) 2,227.00p 0.86%

FTSE 100 - Fallers

Croda International (CRDA) 4,434.00p -2.72% Unite Group (UTG) 932.00p -2.10% Airtel Africa (AAF) 115.90p -2.03% Bunzl (BNZL) 2,861.00p -1.95% Experian (EXPN) 2,599.00p -1.89% SEGRO (SGRO) 770.40p -1.68% Kingfisher (KGF) 219.20p -1.48% Auto Trader Group (AUTO) 616.00p -1.47% DCC (CDI) (DCC) 4,585.00p -1.46% Land Securities Group (LAND) 607.60p -1.43%

FTSE 250 - Risers

CAB Payments Holdings (CABP) 71.35p 4.62% easyJet (EZJ) 408.00p 4.29% Aston Martin Lagonda Global Holdings (AML) 220.40p 3.96% North Atlantic Smaller Companies Inv Trust (NAS) 3,650.00p 3.11% Marshalls (MSLH) 219.80p 2.42% Wizz Air Holdings (WIZZ) 1,869.50p 2.35% Bank of Georgia Group (BGEO) 3,505.00p 1.74% TBC Bank Group (TBCG) 2,810.00p 1.44% Hilton Food Group (HFG) 664.00p 1.37% HGCapital Trust (HGT) 393.00p 1.29%

FTSE 250 - Fallers

Volution Group (FAN) 366.20p -4.69% Tritax Eurobox (GBP) (EBOX) 48.65p -3.66% W.A.G Payment Solutions (WPS) 87.80p -3.52% Hipgnosis Songs Fund Limited NPV (SONG) 70.30p -3.03% International Distributions Services (IDS) 247.50p -2.94% Ceres Power Holdings (CWR) 223.80p -2.70% OSB Group (OSB) 344.00p -2.55% Playtech (PTEC) 413.80p -2.50% Persimmon (PSN) 1,088.00p -2.47% Man Group (EMG) 223.30p -2.45%