London midday: Stocks dip despite barrage of positive readings on the economy

Stocks are holding lower at the end of the week despite very positive news out on the UK economy, after Bloomberg reported that Democrats on Capitol Hill want to double the US capital gains tax to nearly 39.6%.

"European markets are on the back foot in early trade, with valuations taking a dive in the wake of Joe Biden’s proposal to implement a near 50% stamp duty rate on high earners. With the past year having seen traders react with glee over repeated bouts of stimulus, traders are gradually seeing the uncomfortable truth that those debts have to be paid one way or another," said Josh Mahony, senior market analyst at IG.

"Quite whether Biden manages to garner enough support to pass this bill remains to be seen, with the president likely to require almost unanimous support from the Democrats given the expected widespread rejection from the GOP."

Another key consideration according to experts was whether any tax hikes would be applied retroactively to 2021.

Against that backdrop, as of 1205 BST the FTSE 100 was trading lower by 0.48% or 33.12 points to 6,905.04, while the second-tier index was down by 0.22% or 49.39 points at 22,315.48.

Futures tracking the S&P 500 on the other hand were now bouncing back by 11.5 points to 4,139.25.

Sterling was higher alongside too, adding 0.33% to 1.3885.

Barrage of positive economic data

The news on the economic front nevertheless was surprisingly positive.

According to the Office for National Statistics, UK retail sales surged at a month-on-month pace of 5.4% in March (consensus: 1.5%).

That was despite non-essential stores having remained shut until 12 April.

IHS Markit's Purchasing Managers Indices for factory and services also came in ahead of forecasts for April, with record levels of optimism for the year ahead "setting the scene for a bumper second quarter for the economy".

Consultancy GfK meanwhile reported an improvement in its UK consumer confidence index from -16 for March to -15 in April, although shoppers appeared to be returning "quite tentatively" to stores, said Samuel Tombs at Pantheon Macroeconomics.

Public sector net borrowing data for March also came in better than expected, at £28.0bn (consensus: £22.0bn), for total 2020/21 fiscal year borrowing £303.1bn or 14.5% of GDP, the most since WWII, but in any case than the OBR's projection for £354.6bn in the March budget.

First Group sells US assets to lower debt pile

FirstGroup has agreed to sell its First Student and First Transit US bus businesses to EQT Infrastructure for an enterprise value of £3.3bn. The UK transport group said it would use £2.19bn of initial net proceeds to cut debt, pay into its pension schemes and return £365m, or 30p a share, to shareholders during 2021.

GlaxoSmithKline said the US Food and Drug Administration (FDA) has approved ‘Jemperli’, or dostarlimab-gxly, based on its Biologics License Application. The AIM-traded firm said dostarlimab, a programmed death receptor-1 (PD-1) blocking antibody, is indicated for the treatment of adult patients with mismatch repair-deficient recurrent or advanced endometrial cancer, as determined by an FDA-approved test, that have progressed on or following prior treatment with a platinum-containing regimen. It said the indication was given accelerated approval based on tumour response rate and durability of response.

LondonMetric Property has sold two long income assets let to Marks & Spencer and Wickes in Derby for a combined £11.1m to unnamed buyers. The sale represents a blended net initial yield of 6% and a 7% surplus to the last reported book value. One property is a M&S Foodhall, sold by way of a forward commitment to an overseas private investor for £6.2m and the other a Wickes store, sold to an overseas property company for £4.9m.

Market Movers

FTSE 100 (UKX) 6,908.47 -0.43%
FTSE 250 (MCX) 22,309.18 -0.25%
techMARK (TASX) 4,346.48 -0.39%

FTSE 100 - Risers

Intertek Group (ITRK) 6,252.00p 1.86%
Taylor Wimpey (TW.) 187.55p 1.49%
Evraz (EVR) 639.40p 1.46%
Just Eat Takeaway.Com N.V. (CDI) (JET) 7,956.00p 1.26%
Glencore (GLEN) 295.90p 1.16%
Flutter Entertainment (CDI) (FLTR) 15,075.00p 1.14%
Smith (DS) (SMDS) 417.10p 0.97%
Anglo American (AAL) 3,119.50p 0.82%
InterContinental Hotels Group (IHG) 5,148.00p 0.82%
WPP (WPP) 960.00p 0.80%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 196.08p -2.20%
Next (NXT) 7,880.00p -2.11%
Hargreaves Lansdown (HL.) 1,667.50p -1.74%
Diageo (DGE) 3,260.00p -1.70%
Hikma Pharmaceuticals (HIK) 2,396.00p -1.68%
Reckitt Benckiser Group (RKT) 6,691.00p -1.62%
Smith & Nephew (SN.) 1,470.00p -1.47%
United Utilities Group (UU.) 953.40p -1.47%
Sainsbury (J) (SBRY) 245.30p -1.37%
Auto Trader Group (AUTO) 569.00p -1.35%

FTSE 250 - Risers

FirstGroup (FGP) 92.55p 8.75%
SSP Group (SSPG) 337.90p 2.83%
Network International Holdings (NETW) 430.00p 2.38%
National Express Group (NEX) 324.00p 2.02%
Crest Nicholson Holdings (CRST) 415.80p 2.01%
Fidelity China Special Situations (FCSS) 438.00p 1.86%
Mitchells & Butlers (MAB) 310.80p 1.83%
Restaurant Group (RTN) 124.80p 1.79%
Vistry Group (VTY) 1,232.00p 1.73%
XP Power Ltd. (DI) (XPP) 5,230.00p 1.55%

FTSE 250 - Fallers

Workspace Group (WKP) 801.50p -4.13%
AO World (AO.) 285.80p -3.18%
AJ Bell (AJB) 437.00p -2.85%
Capita (CPI) 42.73p -2.67%
easyJet (EZJ) 984.80p -2.64%
Beazley (BEZ) 328.30p -2.55%
Carnival (CCL) 1,637.20p -2.28%
CMC Markets (CMCX) 491.00p -2.00%
IWG (IWG) 349.90p -1.85%
Allianz Technology Trust (ATT) 2,940.00p -1.84%