London open: Stocks edge higher as investors eye services data

London stocks rose in early trade on Wednesday following a stellar performance on Wall Street, but gains were muted as investors eyed the latest reading on the UK services sector.

At 0840 BST, the FTSE 100 was up 0.1% at 7,224.72, while the pound was 0.1% lower against the dollar and the euro at 1.2692 and 1.1275, respectively.

Overnight in the US, the Dow rallied more than 500 points in what turned out to be its second-best trading session of the year, after Federal Reserve chairman Jerome Powell signalled that the US central bank stands ready to ease monetary policy to protect the economy from the impact of trade wars.

Neil Wilson, chief market analyst at Markets.com, said: "Stocks rebounded sharply yesterday as the market turned risk-on. The cue was the Fed chair Jerome Powell giving a hint that he would be prepared to cut rates should the economy suffer a slowdown, suggesting the FOMC will act to sustain the recovery. Not an explicit reference to a cut but enough for this market to latch on to it."

"However markets are in a state of flux right now, so we are seeing broader swings without a directional shift. I’d be cautious about any rally like this when it seems to be on nothing but fumes. There is still plenty of pessimism out there. Yields are off south again having firmed up yesterday."

"Having bounced off its 20-month low, the US 10yr Treasury was back down at 2.097%. There’s a lot of push and pull - trade war and recession risks on the one hand, and hopes for a dovish central bank on the other. But those betting the farm on the Fed cutting rates this year may be left with a small harvest. I still don’t see the Fed ready to cut."

On home shores, Markit's services PMI for May is due at 0930 BST, with a reading of 50.6 expected.

In equity markets, Aviva rallied as it announced that chief financial officer Tom Stoddard will step down on June 30.

Card Factory was in the green after the retailer maintained full-year profit expectations as it reported a positive start to the year, with first quarter sales up 6.4%, despite Britons spending less due to Brexit worries.

Doorstep lender Provident Financial surged after smaller rival Non-Standard Finance said it had abandoned its £1.3bn bid for the company. NSF said in a statement late on Tuesday that the offer would lapse after it learned that the Prudential Regulation Authority had concluded it would not meet minimum regulatory capital levels.

Babcock gained ground as the aerospace and defence group set out its medium-term targets, which include earnings of 3% to 4% compound annual growth rate and for margins to be sustained at around 11%.

Bus and rail operator Go-Ahead saw its share rise after it said interim chief financial officer Elodie Brian will take on the role on a permanent basis.

In broker note action, IMI was upgraded to 'buy' at Goldman Sachs, but Qinetiq was cut to 'sell'.

International Consolidated Airlines Group was initiated at 'overweight' by JPMorgan Cazenove.

Market Movers

FTSE 100 (UKX) 7,224.72 0.14%
FTSE 250 (MCX) 19,067.98 0.31%
techMARK (TASX) 3,531.24 0.39%

FTSE 100 - Risers

Micro Focus International (MCRO) 1,928.60p 3.76%
Carnival (CCL) 3,992.00p 2.78%
Ocado Group (OCDO) 1,143.00p 2.74%
Auto Trader Group (AUTO) 591.00p 2.04%
easyJet (EZJ) 901.60p 1.88%
Ferguson (FERG) 5,260.00p 1.82%
Taylor Wimpey (TW.) 169.00p 1.78%
Barratt Developments (BDEV) 563.60p 1.73%
Sage Group (SGE) 745.00p 1.61%
International Consolidated Airlines Group SA (CDI) (IAG) 469.80p 1.47%

FTSE 100 - Fallers

Hargreaves Lansdown (HL.) 2,076.00p -2.35%
Barclays (BARC) 152.54p -1.01%
Royal Bank of Scotland Group (RBS) 216.60p -0.82%
Hikma Pharmaceuticals (HIK) 1,598.00p -0.78%
GlaxoSmithKline (GSK) 1,520.40p -0.65%
Lloyds Banking Group (LLOY) 57.53p -0.63%
Rio Tinto (RIO) 4,581.50p -0.53%
Schroders (SDR) 2,919.00p -0.48%
NMC Health (NMC) 2,359.00p -0.46%
Johnson Matthey (JMAT) 3,183.00p -0.41%

FTSE 250 - Risers

Provident Financial (PFG) 487.96p 9.41%
Kier Group (KIE) 170.97p 6.00%
Metro Bank (MTRO) 695.00p 4.51%
Stobart Group Ltd. (STOB) 107.40p 3.87%
Card Factory (CARD) 200.20p 3.73%
Funding Circle Holdings (FCH) 258.33p 3.33%
IMI (IMI) 960.80p 3.18%
Centamin (DI) (CEY) 100.40p 2.83%
Derwent London (DLN) 3,220.00p 2.81%
PZ Cussons (PZC) 206.50p 2.74%

FTSE 250 - Fallers

Premier Oil (PMO) 75.70p -2.90%
Woodford Patient Capital Trust (WPCT) 68.97p -2.86%
Fisher (James) & Sons (FSJ) 1,958.00p -2.59%
Bakkavor Group (BAKK) 126.80p -2.46%
TBC Bank Group (TBCG) 1,522.00p -2.44%
CYBG (CYBG) 177.70p -2.39%
Genesis Emerging Markets Fund Ltd Ptg NPV (GSS) 703.00p -2.23%
Wood Group (John) (WG.) 405.50p -1.89%
Daejan Holdings (DJAN) 5,530.00p -1.78%
St. Modwen Properties (SMP) 416.00p -1.42%