London midday: Stocks gain as sterling falls after Bailey comments

London stocks were off earlier highs but still in the black by midday on Thursday, helped along by well-received updates from the likes of AB Foods and Aveva, as investors mulled the latest UK manufacturing data.
The FTSE 100 was up 0.6% at 7,076.79, while sterling was off 0.2% against the dollar after Bank of England governor Andrew Bailey said the Bank should not overreact to a “temporary” rise in inflation.

IG analyst Chris Beauchamp said: “After a couple of days of weakness it looks like we are off higher once again, investors being content to continue buying into stocks in expectation that earnings will improve as the year goes on and indeed as 2021 turns into 2022. Despite fears that the rally would turn sour as the summer went on it seems that 2021 will be another of those years where stocks keep going up, and in a fairly quiet fashion.

“With a whole six months behind us investors have been reminded of how noisy years like 2020 are often followed by quiet ones, and so far comparisons with 2013 and 2017 are still the most appropriate for 2021.”

Investors were also digesting the latest reading on the UK manufacturing sector, which showed that growth slowed in June. The IHS Markit CIPS manufacturing purchasing managers’ index fell to 63.9 from May’s record high of 65.6, coming in below the flash estimate of 64.2. A level below 50.0 signals contraction, while a level above indicates expansion.

The survey found that the industry was still beset by supply-chain and distribution issues, leading to longer vendor lead times and disruption to production schedules.

Duncan Brock, group director at the Chartered Institute of Procurement & Supply, said: “As global markets opened up still further in June, the manufacturing sector continued to enjoy a swell of new orders from home and abroad with work coming in from Asia, the US and Europe.

“Overall productivity however, showed some signs of slowing compared to the previous month as snarled supply chains were in danger of seizing up and operating capacity tightened.

“Supply chain managers worked around the clock to source ever-dwindling resources of raw materials, and building stock, resulting in supplier delivery times worsening again. The glut of purchases served only to exacerbate the shortages in transport and staff along with materials such as food and timber.”

In equity markets, industrial software firm Aveva rallied after saying it had a good start to FY22, achieving approximately 10% revenue growth in the first two months of the financial year on an organic constant currency basis.

Associated British Foods was also on the rise after saying it expected annual profit to be in line with the year before as sales at Primark outstripped forecasts in the third quarter.

JD Sports gained after it said it was on track to deliver annual profits of at least £550m as it pledged to split the roles of chief executive and chairman and would consider paying back government furlough cash.

On the downside, Micro Focus fell despite saying that its first-half revenue performance was ahead of expectations.

AO World was trading little changed even as the online electricals retailer reported a jump in full-year profits and revenue as it continues to benefit to a shit to online shopping since the pandemic.

Market Movers

FTSE 100 (UKX) 7,076.79 0.56%
FTSE 250 (MCX) 22,490.36 0.51%
techMARK (TASX) 4,444.56 -0.02%

FTSE 100 – Risers

Fresnillo (FRES) 808.20p 4.74%
Associated British Foods (ABF) 2,306.00p 4.06%
International Consolidated Airlines Group SA (CDI) (IAG) 180.56p 3.64%
Compass Group (CPG) 1,561.50p 2.60%
JD Sports Fashion (JD.) 942.20p 2.52%
Aveva Group (AVV) 3,797.00p 2.40%
BP (BP.) 322.25p 2.30%
Hikma Pharmaceuticals (HIK) 2,502.00p 2.29%
Evraz (EVR) 605.00p 2.20%
Barclays (BARC) 174.78p 2.14%

FTSE 100 – Fallers

B&M European Value Retail S.A. (DI) (BME) 558.00p -2.65%
Burberry Group (BRBY) 2,031.00p -1.69%
London Stock Exchange Group (LSEG) 7,838.00p -1.66%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,607.00p -1.27%
Spirax-Sarco Engineering (SPX) 13,475.00p -1.03%
SEGRO (SGRO) 1,084.00p -0.96%
Ocado Group (OCDO) 1,984.00p -0.95%
Croda International (CRDA) 7,306.00p -0.84%
Admiral Group (ADM) 3,118.00p -0.83%
Sage Group (SGE) 678.60p -0.82%

FTSE 250 – Risers

FirstGroup (FGP) 86.90p 6.11%
Cairn Energy (CNE) 154.00p 5.70%
Herald Investment Trust (HRI) 2,290.00p 5.05%
Hochschild Mining (HOC) 160.10p 4.37%
Cineworld Group (CINE) 80.66p 4.16%
Grafton Group Ut (CDI) (GFTU) 1,194.00p 4.10%
Indivior (INDV) 160.40p 3.75%
LXI Reit (LXI) 137.40p 3.15%
Just Group (JUST) 96.05p 3.11%
WH Smith (SMWH) 1,657.50p 3.05%

FTSE 250 – Fallers

Micro Focus International (MCRO) 508.20p -7.09%
Chrysalis Investments Limited NPV (CHRY) 236.00p -4.07%
Auction Technology Group (ATG) 1,120.00p -2.78%
Morrison (Wm) Supermarkets (MRW) 239.90p -2.76%
Watches of Switzerland Group (WOSG) 822.00p -1.67%
AJ Bell (AJB) 426.60p -1.66%
Liontrust Asset Management (LIO) 1,850.00p -1.60%
Homeserve (HSV) 941.00p -1.52%
Oxford Instruments (OXIG) 2,275.00p -1.52%
Trustpilot Group (TRST) 337.00p -1.29%

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