London midday: Stocks maintain modest gains as investors mull services data
London stocks were still moderately higher by midday on Tuesday, helped along by strong performances from the likes of Vodafone and GVC as investors mulled the latest reading on the UK services sector and a downgrade of China's economic growth target for this year.
The FTSE 100 was up 0.2% at 7,150.02, while the pound was down 0.1% against the dollar at 1.3174 and flat versus the euro at 1.1620.
Overnight, China's Caixin/Markit services purchasing managers' index for February came in at 51.1, down from January's reading of 53.6 and marking the lowest level since October. It was also well below economists' expectations for a reading of 53.5.
In addition, Beijing said it now expects the economy to grow between 6% and 6.5% this year, down from growth of about 6.5% in 2018. However, it also unveiled $298bn in tax cuts as it looks to boost growth.
IG market analyst Chris Beauchamp said: "China’s shift to a less ambitious GDP target is not as worrying a development as it might at first appear, since a more modest growth target should calm fears about mis-directed investment and a rush for growth at all costs."
On home shores, the latest survey from IHS/Markit signalled that the UK economy is on track for its worst quarter of growth since the end of 2012 even though services activity improved slightly last month.
The IHS Markit/CIPS UK purchasing managers' index rose to 51.3 in Feburary from the two-and-a-half year low of 50.1 in the prior month. The market had expected a decline to 49.8.
Chris Williamson, chief business economist at IHS Markit, said: "The latest PMI surveys indicate that the UK economy remained close to stagnation in February, despite a flurry of activity in many sectors ahead of the UK’s scheduled departure from the EU."
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The modest rise in the services PMI in February comes as a relief, following the sharp deterioration in similar surveys from Lloyds and EC, which usually are good bellwethers. Admittedly, the average level of the services PMI so far in Q1 is lower than in any other quarter since Q4 2012. And falls in the manufacturing and construction PMIs mean that the weighted average of the three still points to quarter-on-quarter GDP growth slowing to zero in Q1, from 0.2% in Q4."
But he added that the PMIs are "rarely spot on", tending to overstate the impact of political uncertainty on the economy.
Earlier, the latest figures from the British Retail Consortium and KPMG showed that the value of retail sales edged up 0.5% in February compared with the year before, and fell 0.1% on a same-store basis.
Pantheon Macroeconomics said uncertainty about Brexit appears to be preventing the current pick-up in households’ income growth, primarily driven by stronger wage growth, from feeding through to spending.
In corporate news, GVC Holdings was the standout gainer as the sports betting and gaming group reported underlying profits at the top end of its full-year guidance and got off to a strong start to 2019 as its extracted benefits from its acquisition of Ladbrokes Coral.
Vodafone followed close behind after confirming that it is aiming to raise roughly €4bn from convertible securities to fund the acquisition of Liberty Global's assets in Germany, Czech Republic, Hungary and Romania.
Brick manufacturer Ibstock was higher as it sounded an upbeat note on the outlook and reported a 19% increase in full-year pre-tax profit, while animal genetics specialist Genus was boosted by an upgrade to 'buy' at Liberum.
On the downside, Intertek suffered the heaviest losses even as the product testing and inspection group reported an increase in 2018 profit as revenue rose amid growing demand.
Equipment rental firm Ashtead was in the red as it said profit and revenue rose in the third quarter, but that capital expenditure will be towards the upper end of its previous guidance.
BBA Aviation was also on the back foot despite its full-year revenues coming in slightly ahead of consensus expectations.
Ted Baker retreated as Stifel cut its stance on the stock to 'sell' from 'hold' a day after the retailer said chief executive Ray Kelvin had resigned following last year's "forced hugging" scandal.
Market Movers
FTSE 100 (UKX) 7,150.02 0.22%
FTSE 250 (MCX) 19,378.37 -0.17%
techMARK (TASX) 3,486.72 0.41%
FTSE 100 - Risers
Vodafone Group (VOD) 135.08p 2.83%
GVC Holdings (GVC) 663.50p 1.92%
NMC Health (NMC) 2,896.00p 1.40%
Standard Chartered (STAN) 632.70p 1.38%
BT Group (BT.A) 216.30p 1.10%
Antofagasta (ANTO) 950.00p 0.89%
British American Tobacco (BATS) 2,897.00p 0.89%
Aviva (AV.) 438.35p 0.89%
Evraz (EVR) 586.60p 0.83%
3i Group (III) 963.20p 0.82%
FTSE 100 - Fallers
Intertek Group (ITRK) 4,999.00p -3.64%
Royal Bank of Scotland Group (RBS) 258.60p -2.89%
Marks & Spencer Group (MKS) 276.40p -2.37%
Ocado Group (OCDO) 1,024.00p -2.15%
ITV (ITV) 134.70p -2.04%
Hargreaves Lansdown (HL.) 1,780.00p -1.98%
Ashtead Group (AHT) 2,029.00p -1.79%
Centrica (CNA) 121.95p -1.26%
easyJet (EZJ) 1,220.56p -1.13%
Mondi (MNDI) 1,792.50p -1.10%
FTSE 250 - Risers
Stobart Group Ltd. (STOB) 159.80p 5.13%
Synthomer (SYNT) 378.40p 3.67%
Vivo Energy (VVO) 133.98p 3.67%
Genus (GNS) 2,258.00p 3.29%
Ibstock (IBST) 259.20p 3.10%
John Laing Group (JLG) 387.60p 2.49%
Spirent Communications (SPT) 157.80p 2.47%
Coats Group (COA) 87.51p 2.23%
JPMorgan Indian Investment Trust (JII) 659.00p 2.17%
Fidelity China Special Situations (FCSS) 234.50p 1.96%
FTSE 250 - Fallers
Amigo Holdings (AMGO) 212.48p -6.39%
BBA Aviation (BBA) 239.53p -5.70%
Aston Martin Lagonda Global Holdings (AML) 1,005.80p -3.73%
Indivior (INDV) 106.70p -3.70%
Ted Baker (TED) 1,911.00p -3.58%
Just Group (JUST) 104.40p -3.33%
William Hill (WMH) 173.70p -3.07%
Royal Mail (RMG) 270.20p -2.91%
Syncona Limited NPV (SYNC) 285.78p -2.79%
Fisher (James) & Sons (FSJ) 2,085.40p -2.55%