London close: Stocks end mixed after soft data
London stocks ended the day in mixed fashion, as investors mulled a surge in public borrowing and news that UK business output fell in January at the fastest rate in two years.
"European markets have undergone a bit of a pullback after some mixed flash PMI numbers painted a patchy outlook for certain parts of the economy in the UK and Europe," said Michael Hewson, chief market analyst at CMC Markets UK.
The FTSE 100 was down 0.35% at 7,757.36 but the second-tier index edged up 0.27% to 19,855.31, while sterling was 0.33% lower versus the dollar at 1.2338.
A survey out earlier showed that private sector business activity fell sharply in January as higher interest rates and weakening demand weighed heavily.
The latest S&P Global CIPS flash UK PMI composite output index fell to 47.8 in January, from 49.0 a month previously and below consensus for 48.8. It was also the lowest reading for two years, and the sixth consecutive month it has stayed below 50.0.
A reading below the neutral 50.0 threshold indicates contraction, while one above suggests growth.
On a slightly positive note, Gabriella Dickens, senior economist at Pantheon Macroeconomics, saw signs in the survey that hiring was set to continue easing and that consumer prices were on their way back down to target, so that bank would stop hiking rates in March after a 50 basis point hike in February to 4.0%.
Within that, the UK services PMI business activity index fell to 48.0 from 49.9 in December, also a two-year low. Service providers reported a marked loss of momentum since December, due to higher interest rates and falling consumer confidence.
Elsewhere, data from the Office for National Statistics showed government borrowing hit a fresh high in December, mostly due to the household energy support scheme and high debt interest costs.
But Dickens believed that initial impressions were deceptive and that full-year borrowing would come in at about £160bn, beneath the OBR's £177bn projection.
In equity markets, Primark owner Associated British Foods fell even as it posted a 20% rise in sales during the Christmas period as consumers continued to hunt for bargains amid the cost-of-living crisis. The company, which also has agriculture, sugar and food ingredients operations, said revenue in the 16 weeks to January 7 rose to £6.7bn, with Primark sales up 18% to £3.1bn. Group full-year expectations remain unchanged.
Senior surged to the top of the FTSE 250 after it said adjusted pre-tax profit for 2022 was set to be above the top end of the range of consensus expectations following a strong performance from its Flexonics division. The range is between £16.2m and £18m.
Private equity firm Bridgepoint also rallied after it announced a share buyback programme of up to £50m.
In broker note action, Direct Line was hit by a downgrade to ‘sell’ at Citi, while DS Smith was boosted by an upgrade to ‘outperform’ at Davy. Sage was weaker after a downgrade to ‘add’ from ‘buy’ at Numis.
FTSE 100 - Risers
Rolls-Royce Holdings (RR.) 111.40p 2.96%
Scottish Mortgage Inv Trust (SMT) 765.20p 2.49%
International Consolidated Airlines Group SA (CDI) (IAG) 166.32p 2.43%
Entain (ENT) 1,559.50p 2.16%
WPP (WPP) 937.60p 2.11%
Taylor Wimpey (TW.) 115.85p 2.07%
Flutter Entertainment (CDI) (FLTR) 12,915.00p 2.01%
Whitbread (WTB) 3,089.00p 1.88%
Smith (DS) (SMDS) 357.90p 1.85%
Pearson (PSON) 939.40p 1.60%
FTSE 100 - Fallers
AstraZeneca (AZN) 10,710.00p -2.97%
Tesco (TSCO) 243.90p -2.36%
Glencore (GLEN) 565.60p -2.16%
Associated British Foods (ABF) 1,832.00p -2.01%
GSK (GSK) 1,387.00p -1.69%
Reckitt Benckiser Group (RKT) 5,696.00p -1.39%
BP (BP.) 475.25p -1.15%
Sainsbury (J) (SBRY) 242.10p -1.10%
Convatec Group (CTEC) 243.60p -1.06%
Smith & Nephew (SN.) 1,143.50p -1.00%
FTSE 250 - Risers
Senior (SNR) 146.60p 7.48%
Bridgepoint Group (Reg S) (BPT) 245.00p 7.46%
TBC Bank Group (TBCG) 2,330.00p 5.15%
PureTech Health (PRTC) 268.50p 4.87%
Baltic Classifieds Group (BCG) 151.00p 4.14%
Future (FUTR) 1,569.00p 4.11%
easyJet (EZJ) 468.00p 4.00%
Hammerson (HMSO) 27.00p 3.69%
Ascential (ASCL) 208.00p 3.48%
ASOS (ASC) 768.50p 3.36%
FTSE 250 - Fallers
Harbour Energy (HBR) 314.50p -3.59%
Wood Group (John) (WG.) 145.05p -3.53%
Tullow Oil (TLW) 36.36p -3.04%
Hikma Pharmaceuticals (HIK) 1,665.50p -2.80%
Volution Group (FAN) 383.00p -2.79%
International Distributions Services (IDS) 225.80p -2.67%
Digital 9 Infrastructure NPV (DGI9) 92.00p -2.44%
Auction Technology Group (ATG) 711.00p -2.34%
Supermarket Income Reit (SUPR) 98.20p -2.29%
CLS Holdings (CLI) 143.60p -2.05%