London stocks had extended gains by midday on Wednesday as worries about the banking sector continued to recede, but Next was under the cosh as it struck a cautious note on its outlook.
The FTSE 100 was 0.8% firmer at 7,540.50.
Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: “‘With banking worries put on the back burner for now, with no further stresses in the system emerging, investors’ appetite for a bit more risk is returning.”
On the macro front, investors were digesting the latest data from the Bank of England, which showed that mortgage approvals rose in February for the first time since last summer as the UK housing market started to shake off last autumn’s mini budget.
According to the latest Money and Credit report, net mortgage lending to individuals decreased to £700m last month from £2bn in January. That is the lowest level since July 2021, or since April 2016 if the pandemic is excluded.
The effective interest rate – the actual interest rate paid – on newly drawn mortgages was 4.24%, a 36 basis point increase.
However, net approvals for house purchases, an indicator of future borrowing, increased to 43,500 from 39,600 in January, the first monthly uptick since August 2022 and above consensus expectations of 42,000.
The figure remains well below the 2015 to 2019 average of 66,500, however, and is down sharply on February 2022, when it was 69,100.
Mortgage rates soared following the government’s disastrous mini budget last September, which featured £45bn of unfunded tax cuts. But they started to ease after most of the measures were scrapped and the political landscape stabilised.
Interest rates, meanwhile, have increased 11 times since December 2021 to now stand at 4.25%.
The Money and Credit report also showed that consumers had borrowed an additional £1.4bn net in consumer credit in February, down on January’s £1.7bn but above the consensus, for around £1.2bn. Around £600m of that was borrowing on credit cards.
In equity markets, Ocado was the standout gainer on the FTSE 100, having slumped on Tuesday after it issued a trading update for Ocado Retail, its 50:50 joint venture with Marks & Spencer.
WPP advanced after an upgrade to ‘outperform’ at Exane, while Tesco was boosted by an upgrade to ‘overweight’ from ‘equalweight’ at Morgan Stanley.
Essentra rallied after it confirmed its £150m return to shareholders and maintained guidance as it posted lower full-year profits following the disposal of its packaging business.
On the downside, retailer Next slumped after it posted a better-than-expected jump in full-year profit and said selling price inflation was set to be more benign than previously thought, but warned the year ahead will be “difficult” and that it continues to expect a decline in profit.
In the year to January 2023, pre-tax profit rose 5.7% to £870.4m, coming in ahead of company guidance of £860m. Total trading sales were up 8.4% to £5.1bn.
Smith & Nephew was knocked lower by a downgrade to ‘underweight’ from ‘overweight’ at Barclays.
Market Movers
FTSE 100 (UKX) 7,540.50 0.75%
FTSE 250 (MCX) 18,529.41 0.72%
techMARK (TASX) 4,527.22 0.52%
FTSE 100 – Risers
Ocado Group (OCDO) 469.10p 5.65%
M&G (MNG) 186.20p 3.82%
Prudential (PRU) 1,079.00p 3.30%
Tesco (TSCO) 262.10p 2.82%
WPP (WPP) 943.80p 2.70%
Endeavour Mining (EDV) 1,932.00p 2.60%
British Land Company (BLND) 372.80p 2.53%
3i Group (III) 1,649.50p 2.42%
Unite Group (UTG) 904.00p 2.38%
Legal & General Group (LGEN) 234.60p 2.18%
FTSE 100 – Fallers
Next (NXT) 6,356.00p -5.50%
Smith & Nephew (SN.) 1,118.50p -1.28%
Associated British Foods (ABF) 1,936.00p -0.82%
Mondi (MNDI) 1,299.50p -0.76%
BAE Systems (BA.) 984.60p -0.34%
British American Tobacco (BATS) 2,872.00p -0.31%
Sage Group (SGE) 743.00p -0.24%
Melrose Industries (MRO) 161.95p -0.18%
Imperial Brands (IMB) 1,891.50p -0.13%
GSK (GSK) 1,420.40p -0.04%
FTSE 250 – Risers
Synthomer (SYNT) 118.20p 7.95%
Bellway (BWY) 2,156.00p 5.63%
Inchcape (INCH) 735.50p 4.40%
ASOS (ASC) 744.50p 3.55%
Dr. Martens (DOCS) 135.30p 3.52%
Bridgepoint Group (Reg S) (BPT) 211.40p 3.12%
Vistry Group (VTY) 754.00p 2.79%
PureTech Health (PRTC) 222.00p 2.78%
Spirent Communications (SPT) 175.50p 2.69%
Octopus Renewables Infrastructure Trust (ORIT) 91.80p 2.57%
FTSE 250 – Fallers
Digital 9 Infrastructure NPV (DGI9) 64.80p -4.00%
Baltic Classifieds Group (BCG) 150.40p -2.34%
Auction Technology Group (ATG) 591.00p -2.15%
Hunting (HTG) 227.00p -1.94%
TUI AG Reg Shs (DI) (TUI) 688.40p -1.94%
W.A.G Payment Solutions (WPS) 90.80p -1.84%
HICL Infrastructure (HICL) 148.40p -1.59%
Barr (A.G.) (BAG) 501.00p -1.57%
Liontrust Asset Management (LIO) 1,008.00p -1.18%
Genus (GNS) 2,810.00p -0.92%
