London midday: Stocks stay up as housebuilders rally, but US futures red
Shares in London held onto most of their early gains by midday on Wednesday, bouncing back from heavy losses in the previous session following a late rally on Wall Street, with housebuilders on the up after solid first-half numbers from Redrow.
The FTSE 100 was up 0.6% to 7,185.53, having ended Tuesday's session at around eight-month lows after what analysts were saying was a technical correction in US stocks, likely sparked by concerns that rising inflation might force the Federal Reserve to hike rates more than expected this year.
But Wednesday's trading was underpinned by a more solid, if volatile, performance in the US, where all the major indices managed to close higher, recovering from the sharp falls seen on Monday.
London equity markets were off earlier highs however, as US futures retreated.
Fiona Cincotta, senior market analyst at City Index, said: "Whilst we don’t expect this sell off to continue for an extended period of time, given that the fundamentals remain strong and unchanged, it is difficult to call the bottom and judge whether stocks have fallen sufficiently for investors to see value once again."
In currency markets, sterling was down 0.2% against the euro at 1.1249 and 0.4% versus the dollar at 1.3890 ahead of Super Thursday, which sees the release of the Bank of England's quarterly Inflation Report, minutes from the latest meeting and a rate announcement.
Cincotta pointed out that there has been very little in the way of positive UK data recently, with cracks once again appearing in the Conservative party as it tries to establish what the UK relationship with the EU should look like post Brexit.
"These are not favourable conditions for the pound, however GBP/USD has held up reasonably well given the challenges it is facing. With no high impacting data from the UK or the UK this afternoon, investors will start to position themselves for the Bank of England’s Super Thursday releases."
On the data front, the latest survey from lender Halifax was a showed UK house prices unexpectedly declined in January. Prices fell 0.6% on the month following a 0.8% drop in December, missing expectations for a 0.2% increase.
Meanwhile, prices in the three months to January were up 2.2% compared to the same three months a year ago, slowing down from a 2.7% rise in December and marking the slowest rate since July last year. Economists had been expecting a 2.4% increase.
Housebuilders racked up healthy gains despite the disappointing data, boosted by good results from Redrow, which rose after posting record interim profit and revenue as completions increased amid "robust" demand. Taylor Wimpey, Persimmon and Hammerson were higher.
Imperial Brands edged up after cautioning that first-half revenues will be hit by new tobacco laws in the UK and an adverse sales mix abroad, but said it was "significantly stepping up" its activities in vaping and e-cigarettes.
Corrugated packaging company Smurfit Kappa was up after saying that earnings rose 10% in the fourth quarter as strong growth in Europe offset reduced earnings in the Americas while mining giant Rio Tinto rose as it declared a record full-year dividend, posted a 69% jump in profit and announced an additional $1bn share buyback.
Severn Trent advanced as the water company reiterated its full-year earnings expectations and said it is still on track to earn at least £50m in outperformance payments.
Residential property group Grainger gained after saying it had a "positive" start to the financial year, with good demand for rental homes and strong rental growth, ahead of last year, while Tullow Oil rallied after it reported its first annual profit in three years thanks in part to rising oil prices.
On the downside, Tesco declined on news that thousands of mainly female shop workers are launching legal action to claim back up to £4bn in back pay, saying they earned as much as £3 less an hour than male workers.
Precious metals miners Randgold Resources, Fresnillo, Hochschild and Acacia were under pressure as gold prices dropped.
Johnson Matthey ticked a touch lower after the specialty chemicals group said that it will recognise a charge of £50m after settling a lawsuit, but also announced that changes to the US tax system would have a positive impact on the group.
Sales, marketing and support services group DCC reversed earlier gains after it said operating profit for the period to 31 December was in line with expectations and ahead of the prior year, and announced the acquisition of US-based Elite, a provider of contract manufacturing and related services to the healthcare and dietary supplements market.
In broker note action, Rentokil Initial was boosted by an upgrade to 'outperform' at Credit Suisse, while Sanne and UDG Healthcare were hit by downgrades from Liberum.
Market Movers
FTSE 100 (UKX) 7,185.53 0.62%
FTSE 250 (MCX) 19,488.32 1.17%
techMARK (TASX) 3,243.80 0.81%
FTSE 100 - Risers
Scottish Mortgage Inv Trust (SMT) 446.80p 5.83%
Old Mutual (OML) 232.10p 4.22%
Prudential (PRU) 1,809.50p 2.12%
Taylor Wimpey (TW.) 188.30p 1.92%
Schroders (SDR) 3,511.00p 1.74%
Persimmon (PSN) 2,475.00p 1.64%
3i Group (III) 909.40p 1.54%
Pearson (PSON) 687.80p 1.39%
Royal Dutch Shell 'A' (RDSA) 2,316.98p 1.36%
ITV (ITV) 162.75p 1.28%
FTSE 100 - Fallers
Randgold Resources Ltd. (RRS) 6,320.00p -2.14%
Smurfit Kappa Group (SKG) 2,400.00p -2.04%
Fresnillo (FRES) 1,259.70p -1.97%
Micro Focus International (MCRO) 2,015.00p -1.80%
Antofagasta (ANTO) 905.40p -0.79%
DCC (DCC) 6,955.00p -0.64%
easyJet (EZJ) 1,633.50p -0.58%
Anglo American (AAL) 1,632.20p -0.54%
International Consolidated Airlines Group SA (CDI) (IAG) 614.60p -0.52%
CRH (CRH) 2,439.00p -0.49%
FTSE 250 - Risers
Investec (INVP) 591.40p 5.83%
Stobart Group Ltd. (STOB) 239.00p 5.29%
AA (AA.) 133.40p 5.00%
IP Group (IPO) 120.20p 4.34%
Genus (GNS) 2,318.00p 4.32%
BGEO Group (BGEO) 3,484.00p 4.25%
Polar Capital Technology Trust (PCT) 1,110.75p 4.20%
UDG Healthcare Public Limited Company (UDG) 773.00p 4.18%
F&C Global Smaller Companies (FCS) 1,314.95p 3.95%
Sirius Minerals (SXX) 22.80p 3.83%
FTSE 250 - Fallers
Hochschild Mining (HOC) 213.70p -2.91%
Cineworld Group (CINE) 226.40p -2.41%
Sanne Group (SNN) 675.73p -2.35%
Ferrexpo (FXPO) 278.80p -2.31%
Acacia Mining (ACA) 172.55p -2.18%
RPC Group (RPC) 784.50p -2.13%
Ocado Group (OCDO) 469.00p -1.57%
Polymetal International (POLY) 765.00p -1.39%
Petrofac Ltd. (PFC) 461.00p -1.28%
Pets at Home Group (PETS) 165.10p -1.14%