London midday: FTSE stays down amid doubts over US-Iran peace talks

(Sharecast News) - London stocks were still weaker by midday on Wednesday amid doubts over peace talks between the US and Iran, as investors mulled the latest reading on the UK manufacturing sector.

The FTSE 100 was down 0.4% at 10,459.05, while Brent crude was 1.2% lower at $72.07 a barrel and West Texas Intermediate was off 1.3% at $68.63.

US envoys Jared Kushner and Steve Witkoff arrived in Doha on Tuesday for what the White House described as "high level" talks. However, Iran and host Qatar said they would meet with mediators, rather than Iranians officials.

Russ Mould, investment director at AJ Bell, said: "A new twist with the US/Iran peace talks caused ripples across the market as investors grow tired of non-stop setbacks.

"Iran said it would not meet with visiting US envoys, causing equities to pull back and investors to switch to a risk-off mood.

"Commodity producers weighed down the FTSE 100, although support from pharma and defence stocks helped stop the blue-chip index from falling."

On home shores, a survey showed that activity across the manufacturing sector grew less than initially predicted in June as growth slowed from a four-year high the previous month.

The S&P Global UK manufacturing purchasing managers' index (PMI) came in at 52.5, down from the preliminary estimate of 53.1 released a week ago.

This marked the lowest rate of growth - indicated by any figure above the neutral 50-point level - in three months and a slowdown from the 53.9 print registered in May, which was its highest since May 2022.

According to S&P Global, the manufacturing upturn experienced since the end of last year "showed signs of losing momentum".

"Although output growth accelerated as companies continued to benefit from clients' strategic stockpiling, a softer uplift in incoming new orders suggested the impetus provided by this was already starting to fade," the survey said.

Four of the five sub-components of the PMI were at levels consistent with improved operating conditions, though stocks of purchases fell following a solid rise the previous month.

On the prices front, input cost inflation remained elevated due to raw material shortages and higher vendor charges, though the recent drop in energy prices helped to ease the overall rate of inflation, softening the increase in factory selling prices.

Elsewhere, industry data showed that house prices were flat in June on the back of cautious consumer sentiment.

According to the latest Nationwide house price index, prices rose 2.2% on an annual basis but were broadly unchanged month-on-month, following a 0.6% decline a month earlier. Economists had expected a slightly higher annual increase, of 2.4%.

The average house price now stands at �277,484.

However, Nationwide chief economist Robert Gardner said it was not surprising that the market had softened given the uncertainty caused by developments in the Middle East and the subsequent rise in energy prices.

"Indeed, consumer confidence and measures of housing sentiment have weakened, and mortgage approvals fell noticeably in May," he said.

Gardner said: "In recent weeks a shift in market expectations for the future path of Bank Rate has helped to bring down the market interest rates which underpin fixed-rate mortgage pricing.

"If maintained, these trends will help to restore household confidence and ease affordability constraints, paving the way for a recovery in housing market activity in the coming quarters - provided that domestic political uncertainty does not adversely impact sentiment."

In equity markets, Associated British Foods slumped as it said that Primark's third-quarter like-for-like sales fell 2.2% as the Iran war and unseasonal UK spring weather hit consumer sentiment. The diversified group held annual guidance despite an expected �25m-60m loss at its sugar business.

Greggs fell as it said chief financial officer Richard Hutton plans to retire at the end of the year after 28 years with the company. The bakery chain has appointed Ben Waldron as CFO and executive director.

JD Sports was also in the red as Nike fell after its latest earnings.

On the upside, Babcock gained again after the British government announced a �15bn hike in defence spending on Tuesday. BAE Systems, Melrose and Rolls-Royce also rose.

CMC Markets surged to the top of the FTSE 250 as it lifted its full-year guidance for net operating income as it hailed continued strong momentum, driven by "exponential and exceptional" growth in its B2B business.

RS Group was boosted by an upgrade to 'buy' from 'hold' at Deutsche Bank, which said the recovery case was strengthening.

Market Movers

FTSE 100 (UKX) 10,459.05 -0.36%

FTSE 250 (MCX) 23,081.39 0.30%

techMARK (TASX) 5,908.68 0.66%

FTSE 100 - Risers

Babcock International Group (BAB) 1,000.50p 5.12%

Sainsbury (J) (SBRY) 329.40p 3.41%

Abrdn (ABDN) 243.60p 2.27%

BAE Systems (BA.) 1,882.00p 2.25%

Melrose Industries (MRO) 482.70p 1.77%

Rolls-Royce Holdings (RR.) 1,470.60p 1.76%

Flutter Entertainment (DI) (FLTR) 7,688.00p 1.61%

Coca-Cola Europacific Partners (DI) (CCEP) 7,675.00p 1.39%

Scottish Mortgage Inv Trust (SMT) 1,489.50p 1.36%

Prudential (PRU) 1,015.50p 1.35%

FTSE 100 - Fallers

Entain (ENT) 539.60p -4.27%

Relx plc (REL) 2,275.00p -3.76%

Compass Group 11 (CPG) 31.27p -2.91%

Associated British Foods (ABF) 1,926.00p -2.77%

Experian (EXPN) 2,481.00p -2.67%

Diageo (DGE) 1,487.00p -2.53%

British American Tobacco (BATS) 4,565.00p -2.31%

Pershing Square Holdings Ltd NPV (PSH) 3,644.00p -2.31%

JD Sports Fashion (JD.) 82.90p -2.15%

Investec (INVP) 588.50p -2.08%

FTSE 250 - Risers

CMC Markets (CMCX) 596.00p 29.91%

Raspberry PI Holdings (RPI) 889.00p 8.93%

Ceres Power Holdings (CWR) 540.00p 7.55%

Shawbrook Group (SHAW) 340.50p 5.45%

SDCL Efficiency Income Trust (SEIT) 37.05p 4.37%

QinetiQ Group (QQ.) 434.20p 3.43%

THG (THG) 31.10p 3.39%

Oxford Biomedica (OXB) 645.00p 3.37%

Ashmore Group (ASHM) 207.80p 3.18%

The Schiehallion Fund Limited NPV (MNTN) 2.01p 3.08%

FTSE 250 - Fallers

BlackRock Smaller Companies Trust (BRSC) 261.05p -96.04%

Greggs (GRG) 1,520.00p -4.81%

Telecom Plus (TEP) 723.00p -3.08%

Pan African Resources (PAF) 93.10p -2.51%

RTW Biotech Opportunities Ltd (RTW) 2.36p -2.48%

Rank Group (RNK) 95.50p -2.25%

B&M European Value Retail (BME) 190.70p -2.15%

Berkeley Group Holdings (The) (BKG) 3,438.00p -2.05%

WPP (WPP) 231.90p -1.98%

Foresight Group Holdings Limited NPV (FSG) 430.50p -1.71%