London stocks had reversed earlier losses to trade up by midday on Thursday, but gains were fairly muted as recession fears continued to weigh on sentiment and as investors sifted through a raft of UK data.
The FTSE 100 was up 0.2% at 7,101.61.
Investors were still digesting comments made on Wednesday by US Federal Reserve chair Jerome Powell.
Danske Bank said: “Fed Chairman Powell acknowledged yesterday testifying before the Senate Banking Committee, that there is a clear risk that the quick tightening of US monetary policy could tip the US economy into recession and that the narrative of a ‘soft landing’ will be ‘very challenging’.
“Powell was quite outspoken that the Fed cannot fail the task of getting back to 2%. This is probably the most explicit warning from Powell that the current tightening cycle could end in tears. The market continues to price a high probability of a 75bp hike by the Fed July 27.”
On home shores, the latest survey from S&P Global/CIPS showed that economic activity stalled in May, weighed down by a slowdown in manufacturing.
The PMI Composite output index was 53.1 in June, unchanged on April’s 15-month low. Consensus had been for a fall to 52.4.
Within that, the services PMI business activity index was unchanged at 53.4, also ahead of consensus. But manufacturing output edged lower to 51.2, a 16-month low, from 51.6, while the manufacturing PMI fell from 54.6 to a 23-month low of 53.4, marginally below expectations.
Rising costs and concerns about the wider economic outlook also meant optimism continued to decline, leaving it at its lowest level for just over two years, while the new orders index fell to 50.8 – the lowest since February 2021.
Chris Williamson, chief business economist at S&P Global Market Intelligence, said: “The economy is starting to look like it is running on empty.
“Current business growth is being supported by orders placed in prior months, as companies report a near-stalling in demand. Manufacturers in particular are struggling with falling orders, especially for exports, and the service sector is already seeing signs of the recent growth support from pent-up pandemic demand move into reverse amid the rising cost of living.”
Williamson argued that the UK looked set for a “troubling combination of recession and elevated inflation as we move into the second half of the year”.
Earlier, figures from the Office for National Statistics showed that public sector borrowing exceeded forecasts in May after surging inflation pushed up debt interest costs.
Also on Thursday, a survey from the Confederation of British Industry revealed that retail sales fell in June as surging inflation weighed heavily on demand.
In equity markets, online supermarket Ocado was the standout gainer on the FTSE 100, having tumbled on Wednesday, likely on expectations that it will lose out to discounters such as Aldi and Lidl as the cost-of-living crisis intensifies.
Elsewhere, Rentokil was boosted by an upgrade to ‘buy’ at Deutsche Bank while Capricorn Energy was lifted by an upgrade to ‘buy’ at Stifel.
On the downside, gambling and gaming group 888 Holdings tumbled as it said it expects interim revenues to be “broadly” in line with expectations, and down on the previous year.
Trainline slid on news that chief financial officer Shaun McCabe was stepping down to join fast-fashion retailer Boohoo.
Intertek was knocked lower by a downgrade to ‘sell’ at Deutsche Bank, while FirstGroup was weaker after a downgrade to ‘hold’ at HSBC.
United Utilities and British Land were both in the red as they traded without entitlement to the dividend.
Market Movers
FTSE 100 (UKX) 7,101.61 0.17%
FTSE 250 (MCX) 18,809.46 -0.43%
techMARK (TASX) 4,233.03 0.11%
FTSE 100 – Risers
Ocado Group (OCDO) 857.00p 4.54%
BT Group (BT.A) 185.55p 2.20%
BAE Systems (BA.) 774.80p 1.95%
B&M European Value Retail S.A. (DI) (BME) 378.50p 1.67%
Entain (ENT) 1,328.50p 1.61%
Rentokil Initial (RTO) 467.10p 1.54%
Prudential (PRU) 948.00p 1.54%
Glencore (GLEN) 456.05p 1.49%
BP (BP.) 388.85p 1.45%
Berkeley Group Holdings (The) (BKG) 3,726.00p 1.36%
FTSE 100 – Fallers
British Land Company (BLND) 484.10p -4.21%
United Utilities Group (UU.) 979.00p -3.74%
Fresnillo (FRES) 786.60p -3.27%
Pershing Square Holdings Ltd NPV (PSH) 2,400.00p -3.03%
Endeavour Mining (EDV) 1,758.00p -2.44%
Halma (HLMA) 1,906.50p -1.98%
NATWEST GROUP PLC ORD 100P (NWG) 223.60p -1.93%
Ashtead Group (AHT) 3,333.00p -1.83%
Intertek Group (ITRK) 4,261.00p -1.82%
Airtel Africa (AAF) 134.90p -1.82%
FTSE 250 – Risers
ASOS (ASC) 898.50p 4.54%
Capricorn Energy (CNE) 219.00p 3.40%
Auction Technology Group (ATG) 912.00p 3.17%
Indivior (INDV) 299.60p 2.60%
Frasers Group (FRAS) 642.00p 2.07%
Moonpig Group (MOON) 233.20p 1.92%
Bellevue Healthcare Trust (Red) (BBH) 143.80p 1.70%
Mediclinic International (MDC) 447.80p 1.68%
Ninety One (N91) 202.00p 1.66%
Wizz Air Holdings (WIZZ) 2,066.00p 1.52%
FTSE 250 – Fallers
Trainline (TRN) 282.80p -10.70%
Aston Martin Lagonda Global Holdings (AML) 506.80p -4.45%
Discoverie Group (DSCV) 606.00p -4.11%
TR Property Inv Trust (TRY) 370.50p -3.77%
FirstGroup (FGP) 134.80p -3.37%
JPMorgan European Discovery Trust (JEDT) 368.50p -2.90%
Tritax Big Box Reit (BBOX) 184.50p -2.89%
Mitie Group (MTO) 60.00p -2.60%
Centamin (DI) (CEY) 81.86p -2.48%
Helios Towers (HTWS) 124.30p -2.28%
