London stocks were still in the red by midday on Wednesday as investors mulled hawkish Fed comments and the latest reading on the UK construction sector, and considered the impact of further sanctions against Russia.
The FTSE 100 was down 0.3% at 7,592.18.
Overnight, Federal Reserve governor Lael Brainard said the US central bank could start reducing its balance sheet as soon as next month and that it was prepared to take stronger action on raising interest rates. These comments were echoed by San Francisco Fed President Mary Daly.
Investors will be eyeing further clues form the latest Fed minutes due later in the day.
Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: “Looking beyond policies, the wider macro picture is also being rocked by the ongoing situation in Ukraine. With allegations ramping up and new western sanctions against Russia in the pipeline, further Russian economic retaliation looks inevitable. These concerns have no doubt fed into the oil price trending higher, with volatility expected to continue as the geopolitical situation unfolds in the coming weeks and months.
“Supply chain issues are also unlikely to be smoothed out any time soon, with Ukrainian commodities in the spotlight. These issues are of course also being compounded by China’s lockdowns, which is causing delays for firms around the globe. This is doing little to ease the inflation issues the world is already grappling with.”
On home shores, a survey showed construction sector growth was unchanged in March despite inflationary pressures.
The S&P Global/CIPS construction purchasing managers’ index printed at 59.1, in line with February and comfortably above the 50.0 mark that separates contraction from expansion. Analysts were expecting a drop to 57.8.
Commercial work was the best-performing segment in March, with projects restarting as pandemic restrictions were lifted. However, the recoveries in civil engineering and residential work lost momentum last month.
The survey found that order books rose at the fastest pace for seven months, but the overall rate of input price inflation accelerated sharply since February and was the highest for six months.
It also showed that escalating inflationary pressures and concerns about the economic impact of the war in Ukraine contributed to a sharp deterioration in business optimism, with confidence about the growth outlook at its weakest since October 2020 amid concerns that clients will cut back spending.
In equity markets, Hilton Foods fell even as it reported a rise in annual adjusted profit, driven by higher revenues across its global markets.
Royal Mail was down after Barclays cut its price target on the overweight-rated stock. It said current uncertainties and active union negotiations are weighing on the shares and cut its FY23 EBIT estimate by 40% to reflect weaker trading for both UK and GLS.
Housebuilder Redrow was weaker after saying it had signed the UK government’s pledge to make properties safe following the Grenfell Tower fire and that it expects to make an additional provision of £164m as a result.
On the upside, tobacco company Imperial Brands rallied after saying it had made “good progress” in delivering on its strategic objectives in the six months ended 31 March, with the group continuing to perform in line with the five-year strategy launched in 2021. The company said it was on track to deliver full-year results in line with revised guidance issued on 15 March. British American Tobacco also rose.
Educational publisher Pearson was a high riser after an upgrade to ‘buy’ at Citi, while IWG was boosted by an upgrade to ‘buy’ at Peel Hunt.
Market Movers
FTSE 100 (UKX) 7,592.18 -0.28%
FTSE 250 (MCX) 21,163.99 -0.90%
techMARK (TASX) 4,374.58 -0.26%
FTSE 100 – Risers
Imperial Brands (IMB) 1,666.50p 3.13%
Pearson (PSON) 777.00p 1.65%
Informa (INF) 619.00p 1.64%
British American Tobacco (BATS) 3,277.50p 1.52%
Diageo (DGE) 4,020.00p 1.02%
Spirax-Sarco Engineering (SPX) 12,940.00p 0.86%
Shell (SHEL) 2,138.00p 0.80%
London Stock Exchange Group (LSEG) 8,414.00p 0.65%
Berkeley Group Holdings (The) (BKG) 3,886.00p 0.54%
Dechra Pharmaceuticals (DPH) 4,260.00p 0.52%
FTSE 100 – Fallers
Smurfit Kappa Group (CDI) (SKG) 3,207.00p -3.72%
Next (NXT) 5,962.00p -3.12%
Scottish Mortgage Inv Trust (SMT) 1,000.00p -3.10%
International Consolidated Airlines Group SA (CDI) (IAG) 135.40p -3.06%
Burberry Group (BRBY) 1,624.00p -3.04%
Intermediate Capital Group (ICP) 1,759.50p -2.55%
Royal Mail (RMG) 324.20p -2.50%
Sainsbury (J) (SBRY) 240.70p -2.39%
ITV (ITV) 80.08p -2.34%
Whitbread (WTB) 2,804.00p -2.30%
FTSE 250 – Risers
Premier Foods (PFD) 124.80p 6.30%
Ascential (ASCL) 344.20p 2.93%
IWG (IWG) 274.70p 2.69%
Plus500 Ltd (DI) (PLUS) 1,455.00p 2.39%
Harbour Energy (HBR) 478.40p 2.05%
Indivior (INDV) 310.00p 2.04%
Provident Financial (PFG) 298.80p 1.84%
Chemring Group (CHG) 334.00p 1.67%
BH Macro Ltd. GBP Shares (BHMG) 4,205.00p 1.57%
Telecom Plus (TEP) 1,578.00p 1.41%
FTSE 250 – Fallers
Moonpig Group (MOON) 210.60p -7.14%
Polymetal International (POLY) 315.00p -6.80%
Baltic Classifieds Group (BCG) 146.60p -5.42%
Ferrexpo (FXPO) 173.50p -5.19%
Future (FUTR) 2,476.00p -3.88%
Dr. Martens (DOCS) 229.40p -3.69%
AJ Bell (AJB) 303.00p -3.69%
Marks & Spencer Group (MKS) 152.55p -3.54%
Aston Martin Lagonda Global Holdings (AML) 942.80p -3.48%
Synthomer (SYNT) 294.00p -3.48%
