London midday: Stocks flat as investors eye Powell speech

(Sharecast News) - London stocks were steady by midday on Tuesday as investors mulled a dip in retail sales and erred on the side of caution ahead of a speech by Federal Reserve chair Jerome Powell. The FTSE 100 was flat at 8,189.13.

Richard Hunter, head of markets at Interactive Investor, said: "Federal Reserve Chair Powell is set to testify before Congress today and tomorrow and his comments on recent data will be closely monitored.

"Although there have been signs of a slowing jobs market, contracting growth and cooling inflation, the Fed could well stand by its guns on the "higher for longer" narrative, until such time as it is comfortable that inflation is not only on a path to its 2% target, but also that the likelihood of its reigniting is minimal.

"This will then feed into the consumer price index print on Thursday, where headline inflation is expected to have risen by 3.1%, down from the previous month's 3.3% level. Such a reading would consolidate the current market opinion, if not necessarily that of the Fed, that an interest rate cut will come in September."

Hunter pointed out that at the same time, earnings season begins in earnest towards the end of the week, with estimates of a 10% increase in aggregate earnings per share expected in the second quarter, as compared to a rise of 8.2% in the first.

"The release of bank earnings could also confirm whether any cracks are beginning to appear in the face of higher interest rates, most notably with regard to consumer debt default levels," he said.

On home shores, industry data revealed a dip in June retail sales as a result of a markedly cooler summer so far.

According to the latest BRC-KPMG Retail Sales Monitor overall sales decreased 0.2% year-on-year, comparing unfavourably with the 4.9% growth seen in June last year, but still above the three-month average decline of 1.1%.

"Retail sales performed poorly in June as the cooler weather during the first half of the month dulled consumer spending," said British Retail Consortium chief executive officer Helen Dickinson.

"Sales of weather-sensitive categories such as clothing and footwear, as well as DIY and gardening were hit particularly hard, especially compared to the surge in spending during last June's heatwave."

Dickinson added that electronics sales had a better month as football fans upgraded their home entertainment systems and people replaced pandemic purchases.

"Retailers remain hopeful that as the summer social season gets into full swing and the weather improves, sales will follow suit."

In equity markets, BP slumped after saying it would take a hit of up to $2bn in the second quarter relating to asset impairments and onerous contract provisions, including charges relating to the ongoing review of its Gelsenkirchen refinery in Germany.

The oil and gas giant also forecast flat upstream production in the second quarter, while its gas marketing and trading result was also expected to be average following a strong result in the first quarter.

Recruiter PageGroup was under the cosh as it warned on full-year profits, citing geopolitical and macroeconomic uncertainty and a more cautious view for the second half. It now expects FY24 operating profit of around £60m, down from £118.8m a year earlier and below estimates of £90m. Fellow recruiters SThree and Hays also lost ground.

Indivior tanked as the opioid addiction treatment maker downgraded its FY24 adjusted operating profit forecast to between $285m and $320m from $330m to $380m, and said it was cutting around 130 jobs.

Housebuilder Vistry reversed earlier gains to trade a smidgen lower despite backing its full-year expectations as it hailed a "strong" first half and said profit was expected to have risen 7%.

On the upside, engineering and consulting firm Wood Group ticked up after saying it had signed a six-year contract with energy giant Shell to provide brownfield engineering, procurement, and construction management for the latter's Prelude floating liquefied natural gas platform facility in Western Australia.

Capita surged as the outsourcer announced the sale of its public sector software business for £200m.

Elsewhere, B&Q owner Kingfisher and electricals retailer Currys both pushed higher after upgrades to 'buy' at Deutsche Bank.

Market Movers

FTSE 100 (UKX) 8,189.13 -0.05% FTSE 250 (MCX) 20,785.71 -0.06% techMARK (TASX) 4,764.19 0.33%

FTSE 100 - Risers

Severn Trent (SVT) 2,568.00p 2.68% Entain (ENT) 644.00p 1.93% CRH (CDI) (CRH) 5,908.00p 1.86% Kingfisher (KGF) 263.70p 1.58% United Utilities Group (UU.) 1,046.50p 1.50% Halma (HLMA) 2,679.00p 1.40% Airtel Africa (AAF) 118.70p 1.37% Fresnillo (FRES) 589.50p 1.29% Smith & Nephew (SN.) 1,075.50p 1.27% SEGRO (SGRO) 911.60p 1.24%

FTSE 100 - Fallers

BP (BP.) 455.90p -3.95% Smurfit Westrock (DI) (SWR) 3,498.50p -2.11% NATWEST GROUP (NWG) 323.20p -1.88% Barclays (BARC) 218.15p -1.76% Lloyds Banking Group (LLOY) 58.06p -1.63% Frasers Group (FRAS) 855.00p -1.33% B&M European Value Retail S.A. (DI) (BME) 450.50p -1.31% Rolls-Royce Holdings (RR.) 456.00p -1.15% Marks & Spencer Group (MKS) 293.90p -1.08% Standard Chartered (STAN) 710.40p -0.98%

FTSE 250 - Risers

Trustpilot Group (TRST) 237.00p 4.18% Pennon Group (PNN) 613.50p 2.85% Diversified Energy Company (DEC) 1,118.00p 2.66% Ocado Group (OCDO) 354.10p 2.37% Auction Technology Group (ATG) 480.50p 2.23% Hill and Smith (HILS) 2,115.00p 1.93% Workspace Group (WKP) 606.00p 1.85% Endeavour Mining (EDV) 1,773.00p 1.84% JPMorgan Japanese Inv Trust (JFJ) 556.00p 1.83% Alpha Group International (ALPH) 2,440.00p 1.67%

FTSE 250 - Fallers

Indivior (INDV) 744.50p -36.96% Pagegroup (PAGE) 399.80p -5.40% Hays (HAS) 91.35p -3.49% Ibstock (IBST) 181.80p -2.68% Bakkavor Group (BAKK) 147.50p -2.32% XPS Pensions Group (XPS) 315.00p -2.17% Hiscox Limited (DI) (HSX) 1,240.00p -2.13% W.A.G Payment Solutions (WPS) 64.00p -1.84% Bank of Georgia Group (BGEO) 4,300.00p -1.83% 4Imprint Group (FOUR) 6,090.00p -1.62%