London stocks were still in the black by midday on Monday as investors digested a slew of UK data releases, with Sainsbury’s lifted by takeover speculation.
The FTSE 100 was 0.4% firmer at 7,117.49.
Richard Hunter, head of markets at Interactive Investor, said: “Markets enter the new week with some renewed optimism, having ended the previous week’s tumultuous ride in positive fashion.
“Although volatility is likely to persist given lighter summer volumes, the weakness which the markets endured for the majority of the previous trading sessions tempted some investors to buy on the dips, with big tech in the US a notable investment destination.
“Amid a quiet week for company and economic updates, the Jackson Hole symposium in the US will take on extra significance, with investors focusing sharply on any comments from the Federal Reserve on its current policy. The more recent economic numbers emanating from the US have suggested that the Fed has some additional breathing space before tapering begins, given the mixed messages which the data has provided.
“Even so, any variance from the message will unsettle investors, whether that be in terms of the timeline for the withdrawal of tapering or a more hawkish view on inflationary trends.”
On home shores, a survey out earlier showed the recovery lost momentum in August amid shortages of staff and materials.
The IHS Markit/CIPS composite purchasing managers’ index – which measures activity in the services and manufacturing sectors – fell to 55.3 from 59.2 in July, hitting its lowest level since February and coming in below expectations for a reading of 58.4.
The PMI declined for the third month and signalled the slowest expansion of output since the UK returned to growth in March. Still, it was above the 50 mark that separates contraction from expansion.
Chris Williamson, chief business economist at IHS Markit, said: “Although the PMI indicates that the economy continues to expand at a pace slightly above the pre-pandemic average, there are clear signs of the recovery losing momentum in the third quarter after a buoyant second quarter.
“Despite Covid-19 containment measures easing to the lowest since the pandemic began, rising virus case numbers are deterring many forms of spending, notably by consumers, and have hit growth via worsening staff and supply shortages.
A separate survey from the Confederation of British Industry showed that manufacturers saw the worst stock shortages on record in August, while manufacturing output growth eased.
The CBI’s index for stock adequacy declined to -14 from -11 in July, coming at its weakest level since records began in 1977 and marking the third month in a row in which a new record-low outturn was set. The weakness was driven by the electronic engineering and plastic products sub-sectors.
Meanwhile, the CBI’s index for industrial output growth in August fell from a record high of +37 in July to +22. The index for total order books ticked up to +18 from +17.
In equity markets, Sainsbury’s shares surged following a report that US private equity firm Apollo is considering a bid for the UK supermarket chain. According to The Sunday Times, Apollo is circling Sainsbury’s with a view to possibly launching bids of more than £7bn, after scouring the industry for takeover targets.
WPP gained after saying it had bought Satalia, a technology company offering artificial intelligence solutions for clients, for an undisclosed sum.
Mitie was also trading up after agreeing to sell its document management business to Swiss Post Solutions for £40m.
Budget airline easyJet flew higher after appointing former RBS CEO Stephen Hester as its new chairman.
Shaftesbury nudged higher as the West End property owner reported a recovery in rent collection and said footfall was also showing signs of improvement as shoppers returned after the easing of Covid restrictions.
In broker note action, education publisher Pearson was boosted by an upgrade to ‘overweight’ from ‘neutral’ at JPMorgan, while Pennon was hit by a downgrade to ‘underperform’ from ‘neutral’ at Credit Suisse.
Market Movers
FTSE 100 (UKX) 7,117.49 0.42%
FTSE 250 (MCX) 23,793.78 0.18%
techMARK (TASX) 4,823.55 -0.22%
FTSE 100 – Risers
Sainsbury (J) (SBRY) 335.00p 13.67%
Burberry Group (BRBY) 1,886.50p 3.37%
Pearson (PSON) 783.20p 3.32%
Glencore (GLEN) 319.05p 3.05%
BP (BP.) 296.05p 2.85%
International Consolidated Airlines Group SA (CDI) (IAG) 163.42p 2.83%
Prudential (PRU) 1,493.50p 2.68%
Rolls-Royce Holdings (RR.) 113.10p 2.67%
Tesco (TSCO) 252.05p 2.25%
Evraz (EVR) 555.40p 2.06%
FTSE 100 – Fallers
BT Group (BT.A) 168.20p -3.00%
Hikma Pharmaceuticals (HIK) 2,530.00p -1.94%
Berkeley Group Holdings (The) (BKG) 4,805.00p -1.33%
SSE (SSE) 1,646.00p -1.23%
Phoenix Group Holdings (PHNX) 617.00p -1.12%
United Utilities Group (UU.) 1,073.00p -0.97%
Persimmon (PSN) 2,820.00p -0.91%
Halma (HLMA) 2,986.00p -0.90%
Barratt Developments (BDEV) 708.80p -0.89%
Avast (AVST) 597.40p -0.86%
FTSE 250 – Risers
Harbour Energy (HBR) 335.20p 5.74%
Hochschild Mining (HOC) 153.00p 5.23%
Helios Towers (HTWS) 169.60p 4.82%
Tullow Oil (TLW) 43.24p 4.42%
Auction Technology Group (ATG) 1,480.00p 3.79%
Ibstock (IBST) 233.80p 3.09%
Wizz Air Holdings (WIZZ) 5,012.00p 3.09%
Micro Focus International (MCRO) 425.50p 2.65%
Marks & Spencer Group (MKS) 166.90p 2.52%
Pantheon International (PIN) 2,775.00p 2.40%
FTSE 250 – Fallers
Pennon Group (PNN) 1,258.00p -4.12%
Drax Group (DRX) 405.60p -2.59%
Workspace Group (WKP) 948.00p -2.37%
Vietnam Enterprise Investments (DI) (VEIL) 663.00p -1.78%
Morgan Sindall Group (MGNS) 2,495.00p -1.77%
Tyman (TYMN) 411.00p -1.67%
Wickes Group (WIX) 237.40p -1.66%
Grafton Group Ut (CDI) (GFTU) 1,320.00p -1.64%
Sirius Real Estate Ltd. (SRE) 122.80p -1.60%
RHI Magnesita N.V. (DI) (RHIM) 3,740.00p -1.48%
