LONDON MARKET MIDDAY: FTSE Listless As BT Weighs; UK Politics In Focus

Wed, 06th Nov 2019 11:55

(Alliance News) - The FTSE 100 index was flat at midday on Wednesday, with BT its biggest faller, as London's leading index lagged European counterparts.

By contrast, the DAX in Frankfurt strengthened on some promising German data.

The FTSE 100 was 10.15 points lower, or 0.1%, at 7,377.93 Wednesday midday. The FTSE 250 was down just 5.85 points at 20,289.14, and the AIM All-Share was down 0.2% at 889.48.

The Cboe UK 100 index was down 0.2% at 12,508.45. The Cboe UK 250 was flat at 18,207.85, and the Cboe UK Small Companies was 0.1% lower at 11,248.58.

In European equities, the CAC 40 index in Paris was up 0.3% and the DAX 30 in Frankfurt up 0.1% in early afternoon trade.

"In a fashion reminiscent of last month's advance in the pound, stocks are rallying more on upbeat rhetoric rather than concrete developments. The FTSE continues to lag its peers with the benchmark struggling to break decisively up through the 7,400 mark, as the German DAX this morning posted a new 16-month high," said David Cheetham at XTB.

The DAX was higher following two key data points out of Germany this morning.

The first was manufacturing orders, which returned to growth in September.

Manufacturing orders were 1.3% higher in September on August, after August's orders declined by 0.4% on July. This 0.4% fall for August has been revised from a provisional 0.6% dip.

Then, it was revealed that Germany's services output recovered from a three-year low in October. The seasonally-adjusted services purchasing managers' index for October rose to 51.6, up slightly from September's three-year low of 51.4 and also above the flash reading of 51.2. However, October's reading was still one of the weakest seen since the current upturn began in 2013.

In the UK, politics continue to dominate on Wednesday.

"Even though it's only just a little more than 24 hours until the Bank of England announce the outcome of their latest policy decision, politics is unlikely to drift far from the front of investors' minds with the general election campaigns set to begin today," said Cheetham.

UK Prime Minister Boris Johnson, who visited Buckingham Palace for an audience with the Queen before announcing the start of the election drive in Downing Street, faces a first official day of campaigning marred by his party having to defend controversial remarks.

Brexiteer Jacob Rees-Mogg faced widespread criticism after suggesting that Grenfell victims should have used "common sense" and ignored fire service guidance not to leave the burning tower block.

Elsewhere, the shadow secretary of state for Wales, Christina Rees, accused Welsh Secretary Alun Cairns of "brazenly lying" about his knowledge of an allegation that a Conservative candidate had sabotaged a rape trial, and called on him to resign.

Johnson is expected to put Britain's withdrawal from the EU, the NHS, and law and order at the centre of the Tories' campaign.

In perhaps a sign of the tone that can be expected from this election, Johnson in a Daily Telegraph column compared Labour leader Jeremy Corbyn with Joseph Stalin, claiming he shares the Soviet dictator's "hatred" of wealth creators.

Corbyn, meanwhile, said on Wednesday that Labour will end the need for food banks if it takes power. He is using a speech in Telford, Shropshire, on Wednesday to insist the party will deliver "real change" and that he will be a different kind of prime minister if elected on December 12.

Stocks in the US are pointed to a flat open on Wednesday, with the Dow Jones, S&P 500 and Nasdaq Composite all pointed towards a lifeless start.

In London, BT was down 3.9%.

FTSE 100-listed Vodafone Group said its UK unit has agreed a five-year deal with Virgin Media to bring new services, including 5G, to more than three million mobile customers.

The new mobile virtual network operator agreement, which runs until 2026, will see Vodafone supply wholesale mobile network services, including both voice and data, to Virgin Mobile and Virgin Media Business.

Vodafone noted Virgin Media's current agreement with BT Enterprise, which has been in place since January 2017, will come to an end in late 2021, at which point Virgin Media's mobile offering will transition to Vodafone.

Vodafone shares were up 0.7% at midday.

In the FTSE 250, Marks & Spencer shares were up 2.2% after recording Food sales growth in the first half, though its Clothing & Home arm continued to struggle.

Revenue for the half-year to September 28 fell 2.1% to GBP4.86 billion, though pretax profit jumped 52% to GBP153.5 million. Profit before tax and adjusting items fell, however, by 17% to GBP176.5 million.

M&S booked just GBP23.0 million in adjusting items in the recent half year, compared to GBP111.7 million a year ago. This includes costs relating to strategic programmes in areas such as its UK store estate and IT restructure.

Like-for-like sales growth in the Food unit was 0.9% in the half-year, driven by volume. Clothing & Home like-for-like sales, meanwhile, fell 5.5%.

M&S said it saw an improved Clothing & Home performance in October following a "difficult" first half.

"There was certainly some good news for investors but today's rally in the share price may be more out of relief than anything else. While the GBP75mn in cost savings is welcome, the shares are still down 20% on the year and the market will want to see the improved performance feed through clearly into rising profits and better dividends," said Ian Forrest, investment research analyst at The Share Centre.

Hammerson was at the bottom of the mid-caps, down 4.3% after suffering a negative-across from an update put out by peer intu Properties.

Shopping centre owner intu Properties slumped 17% after warning like-for-like net rental income will fall in 2019.

intu said leasing activity slowed in the period to September 30, with customers more reluctant to dig into their coffers due to prevailing political and economic uncertainty.

intu footfall was up 1.2% year-on-year in the third quarter, and the company's rental income was lifted by 4% after 34 rent reviews during the period.

However, intu said: "We anticipate that like-for-like net rental income for 2019 will be down by around 9%, with more than half the reduction coming from the impact of CVAs such as Arcadia and Monsoon."

By Lucy Heming; lucyheming@alliancenews.com

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