London close: Stocks higher even as private sector growth slows
London stocks managed a positive finish on Wednesday, underpinned by solid results from Legal & General and Taylor Wimpey, as investors digested the latest reading on the UK services sector.
The FTSE 100 ended the session up 0.26% at 7,123.86, and the FTSE 250 was ahead 0.25% at 23,347.73.
Sterling was in a mixed state, last trading 0.09% weaker against the dollar at $1.3904, as it gained 0.14% on the euro to €1.1744.
“The FTSE 100 has continued to edge higher, notching another three-week high,” said CMC Markets chief market analyst Michael Hewson.
“Today’s gainers have been led by Ladbrokes and Coral bookmakers’ owner Entain whose shares have also hit record highs on speculation that MGM Resorts might return with a renewed bid for the firm, having freed up $4.4bn in selling its Aria and Vdara resorts to Blackstone.
“Flutter Entertainment and 888 Holdings shares are also higher on a read across.”
Hewson described the UK housing market, meanwhile, as “on fire”, with Taylor Wimpey’s first half numbers reflecting that as the company upgraded its full year guidance and reinstated its dividend.
“Revenues came in just shy of £2.2bn, a big rise on the same period last year, however last year saw operations seriously disrupted as a result of the first lockdown.
“The house builder announced completions of 7,303 homes, a record number, while operating margins rose to 19.3%.”
On the economic front, a survey out earlier showed UK private sector growth slowed sharply in July and inflationary pressures increased as supply-chain issues and enforced worker absences due to Covid-19 isolation rules hit the economy.
The IHS Markit/CIPS services purchasing managers' index sank to 59.6 in July, its lowest reading since March, from 62.4 in June.
Price pressures also rose by the most since the survey began 25 years ago, ahead of new inflation forecasts due on Thursday from the Bank of England.
The broader composite PMI, which includes Tuesday's manufacturing PMI data, showed a similar drop, to 59.2 from 62.2.
"More businesses are experiencing growth constraints from supply shortages of labour and materials, while on the demand side we've already seen the peak phase of pent-up consumer spending," said IHS Markit's economics director, Tim Moore.
"Any re-acceleration of growth in August looks unlikely, however, as new orders increased at a much-reduced pace at the start of the third quarter."
In equity markets, Taylor Wimpey closed up 2.24% after it upgraded annual guidance and reinstated its dividend as it swung to a first-half profit on the back of a booming housing market.
Other housebuilders were in the red, however, with Barratt Developments down 0.34% and Persimmon off 0.55%.
Legal & General gained 3.18% after it lifted its interim dividend, posted a rise in first-half profit and said its performance was now "well above" pre-Covid levels.
Operating profit jumped 14% from the first half of 2020 to £1.1bn, while pre-tax profit came in at £1.1bn, up from £290m the year before, amid at least double-digit growth in all of its businesses.
Rolls-Royce managed to rise 0.83% after signing an agreement to sell its Bergen Engines medium speed liquid fuel and gas engines business to global engineering group Langley Holdings for an enterprise value of €63m.
On the downside, iron ore company Ferrexpo slid 9.21%, even after it posted a 165% surge in first-half profit.
FTSE 100 - Risers
Entain (ENT) 1,912.50p 6.10%
SSE (SSE) 1,525.00p 4.02%
Legal & General Group (LGEN) 271.50p 2.92%
Abrdn (ABDN) 295.00p 2.90%
Scottish Mortgage Inv Trust (SMT) 1,341.50p 2.44%
SEGRO (SGRO) 1,247.50p 2.42%
Flutter Entertainment (CDI) (FLTR) 12,265.00p 2.29%
JD Sports Fashion (JD.) 942.20p 2.19%
3i Group (III) 1,307.00p 2.11%
Relx plc (REL) 2,173.00p 1.97%
FTSE 100 - Fallers
Pearson (PSON) 786.20p -3.58%
Fresnillo (FRES) 811.40p -3.22%
Just Eat Takeaway.Com N.V. (CDI) (JET) 6,252.00p -2.33%
Ocado Group (OCDO) 1,794.50p -2.15%
Johnson Matthey (JMAT) 2,949.00p -1.48%
Hikma Pharmaceuticals (HIK) 2,652.00p -1.30%
Sainsbury (J) (SBRY) 288.30p -1.27%
Royal Dutch Shell 'A' (RDSA) 1,462.80p -1.11%
Evraz (EVR) 611.20p -1.07%
BP (BP.) 303.00p -1.01%
FTSE 250 - Risers
Future (FUTR) 3,586.00p 4.11%
Man Group (EMG) 210.20p 3.96%
JPMorgan European Discovery Trust (JEDT) 530.00p 3.92%
Trustpilot Group (TRST) 369.40p 3.76%
888 Holdings (888) 382.20p 3.63%
Oxford Instruments (OXIG) 2,550.00p 3.43%
Herald Investment Trust (HRI) 2,420.00p 3.42%
XP Power Ltd. (DI) (XPP) 5,330.00p 3.29%
ICG Enterprise Trust (ICGT) 1,140.00p 3.26%
CLS Holdings (CLI) 260.50p 3.17%
FTSE 250 - Fallers
Ferrexpo (FXPO) 449.00p -9.33%
Morgan Sindall Group (MGNS) 2,305.00p -6.56%
Dr. Martens (DOCS) 409.20p -4.35%
SSP Group (SSPG) 248.30p -4.21%
Rotork (ROR) 324.00p -4.03%
Cairn Energy (CNE) 125.60p -3.68%
Moonpig Group (MOON) 368.80p -3.00%
Cineworld Group (CINE) 62.86p -2.99%
IWG (IWG) 318.30p -2.90%
Mitchells & Butlers (MAB) 272.60p -2.64%