London midday: FTSE flat ahead of US inflation print; UK PMI, retail sales in focus

(Sharecast News) - London stocks were flat by midday on Friday following a record close in the previous session, as investors eyed a key US inflation reading and mulled retail sales and the latest PMI reading in the UK.

The FTSE 100 was steady at 9,574.31.

A survey out earlier showed the economy expanded in October, boosted by an above-forecast rebound in manufacturing and easing cost inflation.

The S&P Global flash UK PMI composite output index came in at 51.1, up from 50.1 a month previously and the sixth consecutive month it has been above the neutral 50.0 mark. A print below 50.0 suggests contraction but one above it indicates growth.

It was also comfortably above forecasts for 50.6.

Driving the growth was a rebound in the under-pressure manufacturing sector.

The UK manufacturing PMI rose to 49.6 from 46.2 - a 12-month high and ahead of forecasts for 46.6 - while the output index moved into positive territory for the first time in over a year, rising to 51.2 from 45.7.

The services PMI business activity index also ticked higher, to 51.1 from 50.8.

Manufacturing respondents attributed the higher levels of output to restocking and a "tentative" turnaround in domestic demand, despite the impact of cyberattack on Jaguar Land Rover.

Firms in the automotive supply chain flagged ongoing challenging conditions following the attack, which led the car manufacturer - the UK's biggest - to shutter production throughout September and into October.

Price pressures across the private sector economy, meanwhile, moderated to the lowest point since November 2024.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said the survey "brings hope that September was a low point for the economy, from which business conditions are starting to improve".

He continued: "Output has picked up, with a particularly welcome return to growth for manufacturing for the first time in over year, accompanied by an upturn in demand for services, notably among consumers.

"However, the overall pace of growth signalled by the PMI remains consistent with only suggest GDP growth of around 0.1%. And while easing, jobs continue to be cut amid a backdrop of business confidence that remains subdued by historical standards."

Earlier, data from the Office for National Statistics showed that retail sales jumped in the last quarter, boosted by strong demand for summer clothing and gold jewellery.

The quantity of goods bought was estimated to have risen 0.9% in the three months to September, the highest level since summer 2022.

The ONS attributed much of the growth to strong demand for summer clothing, thanks to fine weather in July and August.

However, September was also stronger-than-expected.

Sales volumes rose by 0.5% - well ahead of forecasts for a 0.2% dip - following an upwardly-revised 0.6% increase in August.

Sales volumes of computer and telecommunications goods were notably higher during the month, while online jewellers reported strong demand for gold.

Year-on-year, sales rallied 1.5% in September, easily beating expectations for a 0.4% improvement.

Hannah Finselbach, senior statistician at the ONS, said of the wider quarter: "Although food stores saw very little growth, good weather in July and August boosted sales of clothing, while online retailing also did well."

Year-on-year, quarterly volumes rose 1%.

Looking ahead to the rest of the day, all eyes will be on the US CPI data for September, due at 1330 BST.

Joshua Mahony, chief market analyst at Scope Markets, said: "Today brings a rare dose of economic data out of the US, with CPI inflation figures belatedly due for September. Coming ahead of next week's FOMC meeting, the ability of today's release to change the perception of the markets is questionable, with the CME currently pricing a whopping 99% chance of a 25bp cut next week.

"That figure may weaken somewhat with a high inflation print today, but in all likeliness the more questionable meeting comes in January given that markets attach a 55% chance of additional easing."

In equity markets, LSEG was the standout gainer on the FTSE 100, having surged on Thursday on the back of strong quarterly results and news it will sell a 20% stake in its clearing unit, Post Trade Solutions, to a group of banks, in a deal that values the business at �850m.

NatWest shares jumped after the banking group raised its income and returns guidance for 2025 following a strong performance in the third quarter, helped by "healthy levels of customer activity".

The lender said it now expects income excluding notable items to be around �16.3bn this year, up from earlier projections of at least �16.0bn, and to achieve a return on tangible equity of greater than 18.0%, up from 16.5%.

Elsewhere, B&Q and Castorama owner Kingfisher rallied after RBC Capital Markets upgraded the stock to 'outperform' from 'sector perform' and lifted the price target to 350p from 320p.

"Our store potential analysis suggests further space growth opportunities for KGF in the UK and Poland, with likely further strong trade and ecom growth," it said. "We are positive on its gross margin outlook, while Poland recovery should offset a tough French market. 12x CY26e price-to-earnings looks undemanding given KGF's strong EPS growth and cash returns."

Market Movers

FTSE 100 (UKX) 9,574.31 -0.04%

FTSE 250 (MCX) 22,343.47 -0.08%

techMARK (TASX) 5,558.57 -0.38%

FTSE 100 - Risers

London Stock Exchange Group (LSEG) 9,726.00p 4.07%

NATWEST GROUP (NWG) 563.00p 3.19%

Burberry Group (BRBY) 1,309.50p 2.67%

Relx plc (REL) 3,504.00p 1.62%

Compass Group (CPG) 2,632.00p 1.62%

Tesco (TSCO) 452.60p 1.57%

Kingfisher (KGF) 315.60p 1.45%

Next (NXT) 13,345.00p 1.44%

Diploma (DPLM) 5,625.00p 1.26%

Scottish Mortgage Inv Trust (SMT) 1,135.00p 1.25%

FTSE 100 - Fallers

Metlen Energy & Metals (MTLN) 43.05p -2.71%

Fresnillo (FRES) 2,134.00p -2.56%

LondonMetric Property (LMP) 195.20p -1.66%

SSE (SSE) 1,881.00p -1.44%

BAE Systems (BA.) 1,845.50p -1.39%

Airtel Africa (AAF) 227.20p -1.39%

GSK (GSK) 1,625.00p -1.31%

Rolls-Royce Holdings (RR.) 1,096.00p -1.13%

Barclays (BARC) 382.35p -1.12%

Coca-Cola Europacific Partners (DI) (CCEP) 6,840.00p -1.01%

FTSE 250 - Risers

WH Smith (SMWH) 701.00p 3.85%

Trustpilot Group (TRST) 214.20p 3.48%

Harbour Energy (HBR) 220.80p 2.70%

B&M European Value Retail S.A. (DI) (BME) 184.20p 2.22%

International Workplace Group (IWG) 242.00p 2.02%

Dr. Martens (DOCS) 96.55p 1.95%

Energean (ENOG) 945.50p 1.78%

AO World (AO.) 105.20p 1.74%

Marshalls (MSLH) 178.80p 1.48%

Morgan Advanced Materials (MGAM) 207.00p 1.47%

FTSE 250 - Fallers

SDCL Efficiency Income Trust (SEIT) 60.00p -3.07%

Genus (GNS) 2,485.00p -2.93%

Hochschild Mining (HOC) 344.60p -2.60%

Telecom Plus (TEP) 1,826.00p -1.83%

Grainger (GRI) 193.60p -1.73%

Close Brothers Group (CBG) 427.00p -1.70%

C&C Group (CDI) (CCR) 138.60p -1.70%

Oxford Nanopore Technologies (ONT) 142.00p -1.59%

Mitchells & Butlers (MAB) 251.00p -1.57%

Domino's Pizza Group (DOM) 197.30p -1.45%