London stocks were still in the black by midday on Wednesday, underpinned by solid results from Legal & General and Taylor Wimpey, as investors digested the latest reading on the UK services sector.
The FTSE 100 was 0.4% firmer at 7,134.05.
Russ Mould, investment director at AJ Bell, said: “What’s interesting is how demand for certain industries has remained strong post-lockdowns. There was a feeling that some sectors would see a drop-off as life starts to return to normal, but in many cases that hasn’t happened.
“Taylor Wimpey is saying that property demand remains strong despite the stamp duty holiday boost being withdrawn, and Marshall Motor says that people are still rushing to buy cars. There remains a fundamental lack of supply of houses versus demand, which is positive for property prices. Used vehicle prices have shot up over the pandemic and but in this case, it seems inevitable that they will drop back down at some point.”
On the macro front, a survey out earlier showed UK private sector growth slowed sharply in July and inflationary pressures increased as supply-chain issues and enforced worker absences due to Covid-19 isolation rules hit the economy.
The IHS Markit/CIPS services purchasing managers’ index sank to 59.6 in July, its lowest reading since March, from 62.4 in June.
Price pressures also rose by the most since the survey began 25 years ago, ahead of new inflation forecasts due on Thursday from the Bank of England.
The broader composite PMI, which includes Tuesday’s manufacturing PMI data, showed a similar drop, to 59.2 from 62.2.
“More businesses are experiencing growth constraints from supply shortages of labour and materials, while on the demand side we’ve already seen the peak phase of pent-up consumer spending,” said IHS Markit’s economics director, Tim Moore.
“Any re-acceleration of growth in August looks unlikely, however, as new orders increased at a much-reduced pace at the start of the third quarter.”
In equity markets, Taylor Wimpey rallied to the top of the FTSE 100 after it upgraded annual guidance and reinstated its dividend as it swung to a first-half profit on the back of a booming housing market. Other housebuilders followed suit, with Barratt and Persimmon also higher.
Legal & General gained as it lifted its interim dividend, posted a rise in first-half profit and said its performance was now “well above” pre-Covid levels. Operating profit jumped 14% from the first half of 2020 to £1.1bn, while pre-tax profit came in at £1.1bn, up from £290m the year before, amid at least double-digit growth in all of its businesses.
Rolls-Royce advanced after signing an agreement to sell its Bergen Engines medium speed liquid fuel and gas engines business to global engineering group Langley Holdings for an enterprise value of €63m.
On the downside, iron ore company Ferrexpo slid despite posting a 165% surge in first-half profit.
Market Movers
FTSE 100 (UKX) 7,134.05 0.40%
FTSE 250 (MCX) 23,344.86 0.24%
techMARK (TASX) 4,620.63 0.37%
FTSE 100 – Risers
Taylor Wimpey (TW.) 170.95p 3.70%
Legal & General Group (LGEN) 270.80p 2.65%
Flutter Entertainment (CDI) (FLTR) 12,250.00p 2.17%
Entain (ENT) 1,840.00p 2.08%
Burberry Group (BRBY) 2,170.00p 1.83%
Scottish Mortgage Inv Trust (SMT) 1,332.00p 1.72%
St James’s Place (STJ) 1,620.00p 1.63%
Rolls-Royce Holdings (RR.) 104.78p 1.59%
JD Sports Fashion (JD.) 936.00p 1.52%
Prudential (PRU) 1,398.50p 1.49%
FTSE 100 – Fallers
Fresnillo (FRES) 816.20p -2.65%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,258.00p -2.08%
Pearson (PSON) 802.60p -1.57%
Hikma Pharmaceuticals (HIK) 2,657.00p -1.23%
Ocado Group (OCDO) 1,820.00p -1.06%
Imperial Brands (IMB) 1,567.00p -0.60%
Smurfit Kappa Group (CDI) (SKG) 4,012.00p -0.55%
BT Group (BT.A) 174.05p -0.46%
Admiral Group (ADM) 3,411.00p -0.32%
Tesco (TSCO) 234.65p -0.32%
FTSE 250 – Risers
XP Power Ltd. (DI) (XPP) 5,360.00p 3.88%
Future (FUTR) 3,570.00p 3.42%
IntegraFin Holding (IHP) 554.00p 2.59%
Fidelity China Special Situations (FCSS) 364.00p 2.39%
Wizz Air Holdings (WIZZ) 5,164.00p 2.34%
Templeton Emerging Markets Inv Trust (TEM) 188.60p 2.28%
Convatec Group (CTEC) 230.30p 1.99%
Ibstock (IBST) 225.40p 1.99%
JPMorgan European Discovery Trust (JEDT) 520.00p 1.96%
Ashmore Group (ASHM) 393.60p 1.81%
FTSE 250 – Fallers
Ferrexpo (FXPO) 471.20p -4.85%
Cairn Energy (CNE) 125.20p -3.99%
Dr. Martens (DOCS) 413.20p -3.41%
Rotork (ROR) 327.80p -2.90%
SSP Group (SSPG) 251.70p -2.89%
Morgan Sindall Group (MGNS) 2,375.00p -2.66%
Direct Line Insurance Group (DLG) 307.90p -2.53%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,258.00p -2.08%
Mitchells & Butlers (MAB) 274.40p -2.00%
Cineworld Group (CINE) 63.60p -1.85%
