London Midday: Stocks Steady Amid UK Data Slew, Trade Deal Hopes
Warren TakundaSummary:
London stocks traded flat by midday as investors digested strong UK economic data and revived US-Canada trade talks, while corporate news drove individual stock movements.
London stocks had pared earlier small gains to trade flat by midday on Monday, as investors mulled a raft of UK data releases and amid hopes of a US-Canada trade deal.
The FTSE 100 was steady at 8,796.43.
Dan Coatsworth, investment analyst at AJ Bell, said: "There is a lot going on to influence markets before the summer lull and investors’ animal spirits continue to fuel the equities space.
"Investors seem confident trade deals will be struck, geopolitical tensions ease, and a major economic slump is avoided. The big unknown is whether investors are correct or are simply being too complacent.
"Following yet another bust-up between the US and Canada, the latter has now scrapped its digital services tax aimed at US tech firms and resumed trade talks. This has brought a sense of calm to markets, also helped by an extended deadline for negotiations whereby Canada has an extra week and a bit to agree a trade deal. It also provides some hope that other countries will get extra time to deal with the Trump administration beyond the 9 July cut-off."
On home shores, investors mulled the latest monthly Money and Credit report from the Bank of England, which showed mortgage approvals nudged higher in May, beating expectations.
Net mortgage approvals were 63,032 last month. That was a 2,376 increase on April, and higher than forecasts for 59,750.
Net borrowing of mortgage debt was also higher. It rose £2.8bn to £2.1bn, following April’s £13.8bn slump. The slide had been prompted by buyers rushing to complete in March ahead of changes to stamp duty thresholds.
The effective interest rate - the actual interest paid - on newly drawn mortgages decreased marginally in May to 4.47% from 4.49%.
Earlier, figures from the Office for National Statistics showed the economy grew 0.7% in the first three months of the year, confirming a preliminary estimate released in May.
Growth was driven by a 0.7% increase in the services sector, while production also grew, by 1.3%, and the construction sector saw 0.3% growth.
ONS director of economic statistics Liz McKeown said: "While overall quarterly growth was unrevised, our updated set of figures show the economy still grew strongly in February, with growth now coming in a little higher in March too.
"There was broad based growth across services, while manufacturing also had a strong quarter.
"The saving ratio fell for the first time in two years this quarter, as rising costs for items such as fuel, rent and restaurant meals contributed to higher spending, although it remains relatively strong."
Investors were also digesting the latest growth indicator from the Confederation of British Industry, which showed that UK companies remain deeply uncertain about their near-term growth prospects as they continue to battle higher costs and global headwinds.
In equity markets, defence firms Rolls-Royce and Babcock were among the risers.
Babcock in particular got a boost as Citi hiked its price target on the shares to 1,338p from 730p and reiterated its ‘buy’ rating as it said growth is likely to accelerate over the next 10 years.
Chemring advanced after announcing the acquisition of Hampshire-based software-defined radio systems manufacturer Landguard Nexus in a deal worth as much as £20m.
Water company Pennon rallied after an upgrade to ‘buy’ at Deutsche Bank.
On the downside, British Gas owner Centrica was knocked lower by a downgrade to ‘neutral’ from ‘overweight' at JPMorgan, which cited limited valuation upside.
WH Smith tumbled after it sold its high street business for £12m less than expected following a period of "softer trading".
Source: Sharecast
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