London midday: FTSE flat as investors mull potential US govt shutdown

(Sharecast News) - London stocks had flattened out by midday on Tuesday as investors considered the implications of a potential US government shutdown and digested the latest UK GDP data.

The FTSE 100 was steady at 9,302.82.

Russ Mould, investment director at AJ Bell, said investors were starting "to fret about the prospect of a government shutdown in Washington".

"Relations between the Democrats and Republicans are frostier than an Alaska morning, so markets are not confident on the prospects of agreeing a deal before midnight tonight," he said.

"One of the biggest short-term concerns for markets is the impact this would have on the release of government data - particularly the jobs number due on Friday - without which the Federal Reserve might not feel as confident about cutting interest rates."

On home shores, figures from the Office for National Statistics showed that economic growth ticked higher in the second quarter, in line with expectations.

GDP was estimated to have grown by 0.3% in the three months to June, following an unrevised 0.7% uplift in the first quarter.

Within that, the dominant services sector rose by 0.4% and construction by 1%, helping to offset ongoing weakness in the manufacturing sector.

Production softened 0.8%.

Year-on-year, GDP rose by 1.4%, marginally ahead of forecasts for a 1.2% increase.

Liz McKeown, director of economic statistics at the ONS, said: "In the latest quarter, we saw an increase in the household saving ratio, very little growth in consumer spending and a slight fall in output for consumer-facing services, despite growth in services overall."

McKeown also addressed recent changes to the methodologies used by the ONS.

She said: "Today's figures include a suit of improvements to our measurement of the economy, including better information on research and development and the activities of complex multinational companies, alongside the usual inclusion of updated and improved data sources.

"Growth for 2024 as a whole was unrevised, though these new figures show the economy grew a little less strongly at the start of the year than our initial estimates suggested, but performed better in the later quarters."

The ONS has come under sustained criticism in recent months after issues in its data gathering emerged, weighing on the veracity of a number of its statistical bulletins.

Elsewhere, the British Retail Consortium warned of more pain ahead for shoppers as price pressures for UK consumers picked up this as month food prices continued to climb and non-food price deflation eased.

The BRC-NIQ Shop Price Monitor released earlier showed that the annual rate of shop price inflation increased to 1.4% in September from 0.9% in August.

In equity markets, Close Brothers slumped after saying it fell into the red in the year to 31 July, with operating income 2% lower at �681.2m after a decreasing loan book weighed on income in its core banking division.

Adjusted operating profits from continuing operations fell 14% to �144.3m. That was ahead of consensus, as lower impairment charges helped partially offset the decline in income and higher costs.

However, operating losses swelled to �122.4m, compared to pre-tax profits of �132.7m a year previously, hit by a �165m provision charge relating to motor finance commissions as well as weak trading its rentals business.

The merchant bank also said it had decided to exit its vehicle hire business, which has been loss making "in a challenging market environment".

Legal & General slipped it said its chief financial officer of eight years has handed in his resignation. Jeff Davies, the former EY partner who has been CFO of L&G since 2017, will be leaving the company in December to "pursue a new opportunity", with the head of its Institutional Retirement division, Andrew Kail, named as his replacement.

On the upside, building materials provider CRH shot higher as it reaffirmed its full-year guidance and set out financial targets over the next five years.

PayPoint rallied as it said that Royal Mail owner International Distribution Services has taken a 49% stake in Collect+ for �43.9m and announced a special dividend as a result of the deal.

Real estate investment trust Assura gained after saying it had delivered a "strong" trading performance over the first six months of the year, despite it being a period of uncertainty for the firm.

Outside the FTSE 350, online fashion retailer Asos slid as it warned that full-year adjusted EBITDA was set to be towards the lower end of the �130m to �150m guided range.

Market Movers

FTSE 100 (UKX) 9,302.82 0.03%

FTSE 250 (MCX) 21,926.39 0.27%

techMARK (TASX) 5,432.76 -0.03%

FTSE 100 - Risers

CRH (CDI) (CRH) 9,004.00p 7.52%

Airtel Africa (AAF) 237.80p 2.68%

Rentokil Initial (RTO) 375.90p 2.54%

Reckitt Benckiser Group (RKT) 5,642.00p 2.47%

3i Group (III) 4,084.00p 1.47%

JD Sports Fashion (JD.) 94.28p 1.35%

Babcock International Group (BAB) 1,318.00p 1.23%

Beazley (BEZ) 897.00p 1.07%

Weir Group (WEIR) 2,708.00p 1.04%

Hikma Pharmaceuticals (HIK) 1,676.00p 1.02%

FTSE 100 - Fallers

BT Group (BT.A) 187.70p -2.92%

Metlen Energy & Metals (MTLN) 47.08p -1.93%

Ashtead Group (AHT) 4,931.00p -1.58%

Smurfit Westrock (DI) (SWR) 3,110.00p -1.05%

Croda International (CRDA) 2,672.00p -1.04%

Mondi (MNDI) 1,016.50p -1.02%

BP (BP.) 430.60p -0.92%

WPP (WPP) 360.70p -0.91%

Diageo (DGE) 1,752.00p -0.90%

AstraZeneca (AZN) 11,002.00p -0.78%

FTSE 250 - Risers

PayPoint (PAY) 738.00p 9.50%

Kainos Group (KNOS) 927.00p 3.69%

Baltic Classifieds Group (BCG) 307.50p 2.67%

Keller Group (KLR) 1,500.00p 2.32%

TBC Bank Group (TBCG) 4,565.00p 2.24%

Dr. Martens (DOCS) 97.60p 2.15%

Genuit Group (GEN) 364.00p 2.10%

Renishaw (RSW) 3,585.00p 1.99%

Carnival (CCL) 2,000.00p 1.94%

Aston Martin Lagonda Global Holdings (AML) 84.60p 1.93%

FTSE 250 - Fallers

Close Brothers Group (CBG) 482.60p -2.70%

Wizz Air Holdings (WIZZ) 1,138.00p -2.32%

Pantheon Infrastructure (PINT) 110.50p -2.21%

Investec (INVP) 556.50p -2.20%

Endeavour Mining (EDV) 3,040.00p -1.81%

THG (THG) 36.72p -1.40%

Hochschild Mining (HOC) 356.20p -1.22%

Barr (A.G.) (BAG) 670.00p -1.18%

Greggs (GRG) 1,582.00p -1.13%

Anglo-Eastern Plantations (AEP) 1,385.00p -1.07%