London midday: Stocks extend gains as investors digest construction data

by | Sep 6, 2021

westminster

London stocks had extended gains by midday on Monday as investors digested the latest reading on the UK construction sector, with last week’s non-farm payrolls miss helping to alleviate concerns about Fed tapering.
The FTSE 100 was up 0.7% at 7,189.16.

Joshua Mahony, senior market analyst at IG, said: “US misfortune appears to come to the benefit of global markets if Asian and European markets are anything to go by. With US non-farm payrolls coming in at a seven-month low of 235k, expectations for a hawkish September FOMC meeting have subsided. The decline in unemployment and rising wages do provide some reason for optimism, yet the rise in Delta cases certainly appear to be dealing the recovery a blow according to Friday’s payrolls figure.

“While the US Labor day holiday ensures lower volumes, volatility appears to be elevated given the sharp gains seen overnight and into the European session. Dollar strength seen this morning help drive GBPUSD lower, to the benefit of the internationally-focused FTSE 100.”

On home shores, a survey out earlier showed growth in the construction sector eased in August amid supply constraints.

The IHS/Markit CIPS construction purchasing mangers’ index fell to 55.2 in August from 58.7 in July, missing expectations for a reading of 56.0 and signalling the slowest expansion rate since February. A reading the 50.0 indicates expansion, while a reading below signals contraction.

Companies widely noted sustained, and severe, supply chain disruption in August, which contributed to an accelerated rise in input prices, and one that was the second sharpest in the history of the survey.

The new orders index fell to a five-month low of 59.4 in August from 60.3 in July.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “Formidable supply chain pressures restrained purchasing activity and building projects across the board in August as 68% of construction companies reported even longer delivery times for materials compared to July. A combination of ongoing covid restrictions, Brexit delays and shipping hold-ups were responsible as builders were unable to complete some of the pipelines of work knocking on their door.

“Material and staff costs went through the roof as job hiring accelerated to fill the gaps in capacity left behind by employee moves, overseas worker availability and brought on by skills shortages. Paying higher wages for experienced staff along with low stocks of materials at suppliers meant inflationary pressure rose at a rate almost on a par with June’s survey record. 84% of supply chain managers reported paying more for their purchases.”

In equity markets, broadcaster ITV was the standout gainer on the FTSE 100, closely followed by JD Sports and Burberry.

On the downside, Veterinary drug maker Dechra Pharmaceuticals slid despite reporting a surge in profits and lifting its dividend as people spent more on pet welfare during Covid-19 lockdowns. The company said underlying operating profit increased by 29.2% to £162.2m on the back of revenue growth of 21.0% to £608.0m. The full-year dividend rose 18.1% to 40.50p a share.

The losses came as Stifel cuts its rating on Dechra to hold, noting little upside in the stock.

Housebuilder Berkeley Group was also sharply lower as it went ex-dividend.

Market Movers

FTSE 100 (UKX) 7,189.16 0.71%
FTSE 250 (MCX) 24,234.61 0.17%
techMARK (TASX) 4,860.29 0.20%

FTSE 100 – Risers

ITV (ITV) 116.95p 2.45%
JD Sports Fashion (JD.) 1,054.00p 2.08%
Burberry Group (BRBY) 1,931.00p 2.06%
Glencore (GLEN) 339.60p 1.97%
Rolls-Royce Holdings (RR.) 113.82p 1.90%
Legal & General Group (LGEN) 284.10p 1.83%
WPP (WPP) 1,008.50p 1.83%
Prudential (PRU) 1,565.00p 1.82%
Standard Chartered (STAN) 461.60p 1.81%
BT Group (BT.A) 164.90p 1.76%

FTSE 100 – Fallers

Berkeley Group Holdings (The) (BKG) 4,769.00p -7.65%
Rio Tinto (RIO) 5,374.00p -0.63%
Whitbread (WTB) 3,194.00p -0.37%
Smith & Nephew (SN.) 1,395.00p -0.32%
National Grid (NG.) 938.60p -0.31%
British Land Company (BLND) 540.20p -0.30%
Fresnillo (FRES) 860.20p -0.26%
Land Securities Group (LAND) 734.20p -0.16%
Coca-Cola HBC AG (CDI) (CCH) 2,632.00p -0.15%
Flutter Entertainment (CDI) (FLTR) 14,560.00p -0.14%

FTSE 250 – Risers

Auction Technology Group (ATG) 1,486.00p 5.09%
Bytes Technology Group (BYIT) 549.50p 2.81%
Biffa (BIFF) 407.50p 2.64%
Baillie Gifford Shin Nippon (BGS) 260.00p 2.56%
PureTech Health (PRTC) 354.50p 2.46%
JPMorgan Japanese Inv Trust (JFJ) 695.00p 2.36%
Contour Global (GLO) 195.80p 2.19%
Civitas Social Housing (CSH) 101.80p 2.11%
Baillie Gifford Japan Trust (BGFD) 1,072.00p 2.10%
Hilton Food Group (HFG) 1,192.00p 1.88%

FTSE 250 – Fallers

Discoverie Group (DSCV) 1,178.00p -5.76%
Dechra Pharmaceuticals (DPH) 4,812.00p -5.37%
888 Holdings (888) 398.60p -2.35%
Hammerson (HMSO) 35.35p -2.05%
Petropavlovsk (POG) 21.64p -1.81%
Network International Holdings (NETW) 368.40p -1.76%
Shaftesbury (SHB) 647.50p -1.75%
Capital & Counties Properties (CAPC) 175.90p -1.62%
Workspace Group (WKP) 940.00p -1.57%
Syncona Limited NPV (SYNC) 188.20p -1.47%

Related articles

Trending stories

Join our mailing list

Subscribe to our mailing list to receive regular updates!

x