London stocks finished just above the waterline on a globally-quiet Thursday, as investors digested the latest minutes from the US Federal Reserve, while traders across the pond were enjoying their day off for the Thanksgiving holiday.
The FTSE 100 ended the session up 0.02% at 7,466.60, and the FTSE 250 was ahead 0.2% at 19,540.34.
Sterling was also in the green, last trading up 0.56% on the dollar at $1.2123, as it gained 0.45% against the euro to change hands at €1.1649.
“European markets have enjoyed a relatively positive day, as the Thanksgiving celebrations brought lower volumes and volatility,” said IG senior market analyst Joshua Mahony.
“The latest German Ifo business climate survey released in the morning provided grounds for optimism just a day after the release of PMI surveys that eased fears of a sharp recession in the region.
“While the ‘current assessment’ element of the Ifo survey fell back, traders have clearly felt emboldened by the upside move for both ‘business climate’ and ‘expectations’ despite widespread calls for a 2023 recession.”
Mahony also noted the continued climb for sterling against the dollar and euro, which came despite hints from Bank of England deputy governor Sir Dave Ramsden that the Old Lady could look to cut rates once inflation reversed its course.
“Markets appear relatively unmoved by his view, with the current rate of 11.1% for headline consumer price index inflation providing little ground for a dovish turn in monetary policy.
“While the outlook for the UK looks bleak, we will continue to see the Bank of England stifle economic growth as long as inflation remains elevated.
“For the bulls, there is no doubt a future sweet spot where central banks feel able to once again step in to lift economic growth and market sentiment once again.”
In economic news, manufacturing output in the UK weakened a touch in November, according to the latest survey from the Confederation of British Industry.
The total orders balance fell to -5 in November from -4 in October, but was above consensus expectations of -9 and the long-run average of -13.
CBI deputy chief economist Anna Leach said the rise in manufacturing output appeared to be at least partly driven by improvements to supply chains, with several companies reporting that they were able to fulfil orders as materials and components became more readily available.
“Total order books remained much weaker than earlier in the year, however, and output is expected to fall again in the quarter ahead,” she said
“Against a difficult economic backdrop, manufacturers welcomed aspects of last week’s Autumn Statement, notably business rates relief and commitments to research and development and infrastructure spending.
“But little was said about two of the most pressing issues that are currently holding the sector back: the future of the business energy support scheme and access to skills.”
That, Leach said, left “big question marks” hanging over the competitiveness of UK manufacturing.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, commented that the survey continued to suggest that the downturn in the manufacturing sector was relatively mild.
“The total orders balance remained slightly above its 1992-to-2019 average in November and is much stronger than the equivalent measure of the S&P’s PMI survey,” he noted.
“In addition, a net balance of +18 manufacturers reported that output had risen over the previous three months, though a much lower net balance of -10 expected output to rise over the next three months.”
On London’s equity markets, property stocks got a boost after US real estate investor AEW said in its European annual outlook for next year that the UK was ranked most attractive out of the 168 covered market segments for the second year in a row, on a relative value basis over the next five years.
It said UK stocks were less vulnerable to rate hikes than European peers.
Assura was up 0.53%, Big Yellow Group added 1.61%, Derwent London advanced 1.74%, Hammerson jumped 4.57%, and LondonMetric Property managed gains of 0.22%.
NewRiver REIT, Primary Health Properties, Segro and Shaftesbury were ahead a respective 0.7%, 0.51%, 2.6% and 0.59%, while Tritax Big Box REIT, UK Commercial Property REIT, Unite Group and Workspace added 2.16%, 2.32%, 1.49% and 1.22%, respectively.
Safestore Holdings joined its property peers on the upside, being lifted 1.46% after reporting a 10.8% improvement in fourth-quarter revenue at constant exchange rates, and 11.2% at actual exchange rates.
It also said in its morning update that trading in the new financial year thus far was showing “solid” enquiry and new let growth compared to last year, with rates paid by new customers continuing to rise.
Home REIT was also in the green, rising 4.5% after slumping on Wednesday on the back of a critical report from Delaware-based short-selling firm Viceroy.
Elsewhere, testing, inspection and certification company Intertek rallied 4.56% after it posted a jump in revenue, hailing robust demand for its ATIC Solutions business and a recovery in China.
In an update on trading between 1 January and 31 October, it said total revenue rose 9% at constant currency, driven by like-for-like revenue growth of 5.2%, with its three recent acquisitions contributing £120m.
On the downside, Vodafone was 2.1% lower, Imperial Brands lost 3.89%, National Grid was off 1.55%, British Land slid 2.17%, and Diversified Energy was 3.16% weaker as they all traded without entitlement to the dividend.
B&Q and Screwfix owner Kingfisher was in the red by 1.62% after it narrowed its full-year profit guidance, despite an improvement in third-quarter sales.
Iconic bootmaker Dr. Martens plunged 22.7% after it warned of lower core profit margins, following a fall in interim profit on weaker direct-to-consumer sales in the second quarter.
The company said it would raise prices to offset inflation.
“The main reason the company has lost a bit of shine and polish is news that margins are under significant pressure,” said AJ Bell’s Russ Mould.
“While external factors such as a stronger dollar are playing a part, the company is also suffering from weakening demand and there are at least hints that its pricing power isn’t what many might have hoped given the apparent strength of the brand.
“Growth in the lucrative direct-to-consumer sales channel is slipping and that matters because building out this part of the business is a key thread of the strategy.”
Mould said hopes that a hefty increase in the dividend would keep the market sweet proved “forlorn”, though one item hitting profitability – but which should earn Dr. Martens “a bit of credit” – was the investment in the business.
“Taking a short-term hit to profit now to support growth in the future is what any business should be doing, and Dr. Martens will hope this will help it put its best foot forward from here.”
Reporting by Josh White for Sharecast.com. Additional reporting by Michele Maatouk and Iain Gilbert.
FTSE 100 (UKX) 7,466.60 0.02%
FTSE 250 (MCX) 19,540.34 0.20%
techMARK (TASX) 4,413.29 -0.04%
FTSE 100 – Risers
Intertek Group (ITRK) 4,036.00p 4.56%
United Utilities Group (UU.) 1,086.00p 3.23%
Rolls-Royce Holdings (RR.) 91.05p 2.99%
Airtel Africa (AAF) 120.60p 2.81%
SEGRO (SGRO) 837.20p 2.60%
Intermediate Capital Group (ICP) 1,231.50p 2.45%
Hargreaves Lansdown (HL.) 863.40p 2.18%
Rightmove (RMV) 569.60p 1.97%
Schroders (SDR) 464.70p 1.86%
NATWEST GROUP (NWG) 258.70p 1.73%
FTSE 100 – Fallers
Imperial Brands (IMB) 2,100.00p -3.89%
British Land Company (BLND) 406.00p -2.17%
Vodafone Group (VOD) 92.67p -2.10%
London Stock Exchange Group (LSEG) 8,080.00p -1.85%
RS Group (RS1) 958.00p -1.79%
Kingfisher (KGF) 249.50p -1.62%
National Grid (NG.) 1,016.00p -1.55%
Spirax-Sarco Engineering (SPX) 11,360.00p -1.05%
Frasers Group (FRAS) 878.00p -0.90%
Smurfit Kappa Group (CDI) (SKG) 3,034.00p -0.78%
FTSE 250 – Risers
TUI AG Reg Shs (DI) (TUI) 147.50p 4.61%
Hammerson (HMSO) 25.42p 4.57%
Home Reit (HOME) 65.00p 4.50%
Bridgepoint Group (Reg S) (BPT) 207.80p 4.16%
Supermarket Income Reit (SUPR) 107.50p 3.85%
Future (FUTR) 1,575.00p 3.62%
Abrdn (ABDN) 212.30p 3.61%
Carnival (CCL) 741.00p 3.35%
888 Holdings (DI) (888) 101.60p 3.20%
Tritax Eurobox (GBP) (EBOX) 66.50p 3.10%
FTSE 250 – Fallers
Dr. Martens (DOCS) 221.40p -22.70%
Discoverie Group (DSCV) 779.00p -14.77%
Petrofac Ltd. (PFC) 97.70p -4.87%
Syncona Limited NPV (SYNC) 181.20p -4.13%
Diversified Energy Company (DEC) 122.70p -3.16%
Kainos Group (KNOS) 1,687.00p -3.05%
Octopus Renewables Infrastructure Trust (ORIT) 105.60p -2.58%
Coats Group (COA) 66.50p -2.21%
HICL Infrastructure (HICL) 165.20p -2.14%
Drax Group (DRX) 611.00p -1.85%