London stocks were holding on to gains by midday on Tuesday, underpinned by a strong showing in the property sector, but gains were limited as investors eyed a speech by US Federal Reserve chair Jerome Powell.
The FTSE 100 was up 0.3% at 7,082.31.
IG market analyst Joshua Mahony said: “European markets are largely treading water in early trade, with the sharp gains seen in US and Asian markets failing to transmit into another positive session for the FTSE.
“Recent fears around Fed tightening remain prevalent despite yesterday’s surge, with Jerome Powell due to broach the topic once again when he provides testimony this evening. Clearly the widely anticipated rise in inflation has been over and above the levels anticipated by the Fed, and with the economy on the rise markets will be fixated on just how that dynamic will change the outlook for monetary policy.
“Nonetheless, despite the recent dot plot shift at the Fed, they are expected to remain accommodative for some time yet.”
On home shores, figures released earlier by the Office for National Statistics showed government borrowing was lower than expected in May as the reopening of the economy supported government receipts and the state spent less than forecast.
Public sector net borrowing, excluding public sector banks, was £24.3bn. Borrowing was £19.4bn less than a year earlier and better than the £28.5bn forecast by the Office for Budget Responsibility. Analysts had on average expected borrowing of £25.5bn.
The ONS estimated central government receipts were £56.9bn in May, £7.2bn more than a year earlier as VAT and income tax outstripped forecasts. Central government spent £81.8bn – lower than a year earlier and less than the OBR’s £84.9bn forecast as support for businesses and households eased.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: “Public borrowing is continuing to decline more rapidly than the OBR expected, with the main measure of borrowing in May undershooting its £28.5bn forecast by £4.2bn.”
In equity markets, commercial landlords British Land and Land Securities rallied after an upgrade to ‘overweight’ from ‘neutral’ at JPMorgan, which argued that UK retail was turning a corner. Hammerson and Shaftesbury followed suit.
Rolls-Royce gained after Bloomberg reported that private equity firms Bain Capital and Cinven are battling it out in the final bidding for its ITP Aero division, which could fetch around €1.5bn.
Shell and BP both gushed higher after crude oil prices breached $75 a barrel for the first time in two years.
GKN owner Melrose Industries rose after it said it will return around £730m in cash to shareholders after completing the sale of its Nortek Air Management business.
On the downside, packaging group DS Smith fell as it said the current financial year had started well but reported a sharp drop in annual profit caused mainly by higher costs and lower prices during the pandemic.
Aston Martin was also in the red after saying it is suing Swiss car dealer Nebula Project and its board members for failing to pay some customer deposits for orders of the £2.5m Valkyrie sports car and that this will dent full-year profits by up to £15m.
Market Movers
FTSE 100 (UKX) 7,082.31 0.28%
FTSE 250 (MCX) 22,570.27 0.50%
techMARK (TASX) 4,468.08 0.12%
FTSE 100 – Risers
Land Securities Group (LAND) 709.80p 4.75%
British Land Company (BLND) 516.20p 4.60%
Melrose Industries (MRO) 162.20p 2.40%
Royal Dutch Shell ‘B’ (RDSB) 1,392.80p 2.23%
Royal Dutch Shell ‘A’ (RDSA) 1,445.60p 1.52%
Rolls-Royce Holdings (RR.) 110.86p 1.46%
BP (BP.) 321.20p 1.37%
Admiral Group (ADM) 3,234.00p 1.32%
International Consolidated Airlines Group SA (CDI) (IAG) 200.15p 1.19%
Burberry Group (BRBY) 2,247.00p 1.17%
FTSE 100 – Fallers
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,339.00p -1.71%
Hargreaves Lansdown (HL.) 1,605.00p -1.59%
Smith (DS) (SMDS) 427.30p -1.18%
Standard Chartered (STAN) 466.10p -1.17%
Entain (ENT) 1,818.50p -0.90%
Phoenix Group Holdings (PHNX) 695.00p -0.83%
Intermediate Capital Group (ICP) 2,168.00p -0.82%
HSBC Holdings (HSBA) 423.30p -0.76%
Kingfisher (KGF) 351.30p -0.65%
GlaxoSmithKline (GSK) 1,406.00p -0.64%
FTSE 250 – Risers
C&C Group (CDI) (CCR) 246.00p 3.80%
Hammerson (HMSO) 40.89p 3.70%
Restaurant Group (RTN) 126.40p 3.27%
Shaftesbury (SHB) 617.00p 3.26%
Grafton Group Ut (CDI) (GFTU) 1,161.00p 3.20%
Beazley (BEZ) 330.40p 2.90%
888 Holdings (888) 393.80p 2.87%
National Express Group (NEX) 285.60p 2.73%
GCP Student Living (DIGS) 170.00p 2.66%
Capital & Counties Properties (CAPC) 173.60p 2.54%
FTSE 250 – Fallers
Capita (CPI) 39.71p -3.33%
Aston Martin Lagonda Global Holdings (AML) 1,898.50p -1.86%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,339.00p -1.71%
Mediclinic International (MDC) 312.60p -1.70%
SSP Group (SSPG) 297.40p -1.69%
AJ Bell (AJB) 414.80p -1.57%
Biffa (BIFF) 287.00p -1.54%
Essentra (ESNT) 323.00p -1.37%
Mitie Group (MTO) 69.10p -1.29%
Dixons Carphone (DC.) 125.60p -1.26%
