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LONDON MARKET MIDDAY: FTSE outperforms peers; housebuilders rise

29th Aug 2023 11:51

(Alliance News) - The FTSE 100 was outperforming its European peers at midday on Tuesday, amid news that UK consumer price inflation is decelerating and the government is scrapping some rules to boost housebuilding.

Stocks in London were also catching up after a strong bank holiday session across the globe. Markets were lifted on Monday after Chinese regulators announced measures to boost the country's stock markets.

The FTSE 100 index was up 116.55 points, 1.6%, at 7,455.13. The FTSE 250 was up 243.34 points, 1.3%, at 18,374.36, and the AIM All-Share was up 5.48 points, 0.8%, at 739.15.

The Cboe UK 100 was up 1.5% at 742.67, the Cboe UK 250 was up 1.4% at 16,071.56, and the Cboe Small Companies was flat at 13,417.21.

UK shop price inflation decelerated further in August, data showed on Tuesday, presenting some "better news for consumers".

According to the latest British Retail Consortium-NielsenIQ tracker, the annual shop price inflation rate cooled to 6.9% in August from 8.4% in July.

This was below the three-month average of 8.0% and the lowest rate since October 2022.

In other news, UK holidaymakers were hit by travel disruption on Monday, which could last for days. Flights were cancelled leaving thousands of passengers stranded following an air traffic control technical fault.

Airlines, however, shrugged off the chaos on Tuesday. International Consolidated Airlines rose 2.0%, Wizz Air jumped 3.8% and easyJet rose 1.3%.

Hargreaves Lansdown's Susannah Streeter explained that "hopes that signs inflation is easing may help provide further support for discretionary spend on holidays."

In the FTSE 100, just B&M and Haleon were in the red at midday, down 0.4% and 0.1%, respectively.

Bunzl was up 3.0%, as investors cheered moderately higher annual guidance and two new acquisitions from the firm.

"Sometimes boring can be beautiful as far as investors are concerned," said Russ Mould, investment director at AJ Bell.

The London-based distribution services company reported that revenue increased 4.5% to GBP5.91 billion in the first half of 2023, from GBP5.65 billion the year prior. Pretax profit grew 6.9% to GBP317.1 million, from GBP296.6 million a year ago.

Given the positive performance in the year-to-date, Bunzl upgraded its 2023 adjusted operating profit guidance.

"We now expect adjusted operating profit to be moderately higher than in 2022 at constant exchange rates, with operating margin remaining strong and moderately higher than that achieved in the prior year. At constant exchange rates we expect group revenue in 2023 to be slightly higher than in 2022, driven by announced acquisitions, partially offset by a slight organic decline, following strong organic growth in recent years, and a small impact from the UK healthcare disposal," the company said.

Housebuilders were also on the rise at midday. Persimmon was up 4.0%, Barratt Developments up 3.3% and Taylor Wimpey up 2.9%.

The stocks were boosted following news that the UK government is scrapping some rules on waterway pollution in bid to boost home building.

Scrapping EU-era environmental protections on nutrient neutrality will allow for an additional 100,000 homes to be built in England by 2030, the government said.

In the FTSE 250, Crest Nicholson rose 6.1%.

Berenberg on Tuesday said it retains its 'buy' rating on Crest Nicholson as despite the "disappointment" of a large profit warning from the housebuilder, it still thinks the group's "asset-backed valuation" is the "most compelling" in the sector.

Last Monday, Crest Nicholson lowered its profit guidance as it warned that conditions in the housing market worsened over the course of the summer. The Surrey-based firm said it does not expect conditions to improve before its financial year-end on October 31.

On AIM, Pelatro plummeted 80%.

The marketing software provider has decided to cancel shares from AIM market in London, citing costs, management time required, and regulatory burden of maintaining a listing.

It will announce schedule for the cancellation, including date of general meeting for shareholders to vote on the plan, "in due course".

Further, Pelatro said it will put in place a matched bargain facility to help shareholders buy and sell shares after the delisting.

In European equities on Tuesday, the CAC 40 in Paris was up 0.4%, while the DAX 40 in Frankfurt was up 0.5%.

German consumer sentiment is expected to worsen in September, according to new figures from GfK on Tuesday.

Pollster GfK said its forward-looking survey fell to minus 25.5 points in September from a revised minus 24.6 points in August. FXStreet-cited market consensus had expected the figure to come in at a slightly better minus 24.3 points.

"The chances that consumer sentiment can sustainably recover before the end of this year are dwindling more and more. Persistently high inflation rates, especially for food and energy supplies, ensure that the consumer sentiment is currently not making any progress," said Rolf Burkl, GfK consumer expert.

Stocks in New York were called slightly higher. The S&P 500 index was called up 0.1%. The Dow Jones Industrial Average and the Nasdaq Composite were both called marginally higher.

It will be a data-heavy week in the US, with a gross domestic product reading on Wednesday, the Fed's preferred inflationary gauge on Thursday and the latest jobs report on Friday.

Still to come on Tuesday, there is the latest US job opening and labour turnover survey and a US consumer confidence reading at 1500 BST.

The pound was quoted at USD1.2603 at midday on Tuesday in London, higher compared to USD1.2571 at the equities close on Friday. The euro stood at USD1.0811, up against USD1.0783. Against the yen, the dollar was trading at JPY146.63, higher compared to JPY146.27.

Brent oil was quoted at USD84.45 a barrel at midday in London on Tuesday, up from USD83.57 late Friday. Gold was quoted at USD1,921.55 an ounce, higher against USD1,906.88.

By Sophie Rose, Alliance News reporter

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