London midday: Stocks flat amid fragile Israel-Iran ceasefire; Babcock surges

(Sharecast News) - London stocks had pared earlier gains to trade flat by midday on Wednesday as investors exercised some caution amid the fragile ceasefire between Israel and Iran.

The FTSE 100 was steady at 8,760.34.

Neil Wilson, UK investor strategist at Saxo Markets, said investors "are pausing to see what happens next".

"Israel and Iran seemed to be complying with a US-brokered ceasefire agreement after Trump's firm response to reports of initial breaches by both parties," he said.

"Crude has wiped out its geopolitical premium and looks like it will trade at best sideways now after plenty of technical damage. The defence theme looks like it's going to run and run and Babcock is testament to that as Europe signs up to spend LOTS more.

"Certainly, optimism was never really all that diminished throughout the 12-day conflict so the snapback is inherently more muted. The worst of the negative impact from fears about tariffs, US immigration and the Middle East seem to be behind us, and we are seeing earnings expectations rising, whilst the Federal Reserve seems to be erring more closely towards a cut."

In equity markets, defence engineering company Babcock surged to the top of the FTSE 100 after saying it expects to hit its underlying operating margin of 8% a year early and increasing its medium-term target in a 'new era' of weapons spending amid global political instability.

Babcock also posted a sharp jump in annual operating profit to �364m from �241.6m a year earlier and announced a �200m share buyback.

Russ Mould, investment director at AJ Bell, said: "Shares in defence and engineering contractor Babcock have more than doubled year to date so a positive set of results was needed for investors to sustain their enthusiasm.

"Largely that's what they got - the numbers themselves were strong but so too was the accompanying rhetoric as the company talked about a 'new era for defence'. A meaningful increase in medium-term guidance won't have hurt either."

He added: "Some eyebrows may be raised at the decision to launch the company's debut share buyback when its share price is at its highest level in more than a decade and not a million miles off its all-time high from 2014. Although, in fairness, this is merely following the recent trend for UK companies to return an increasing proportion of the capital they dole out to shareholders this way."

Online retailer THG rallied as it said that second-quarter trading has been "much improved" across both its beauty and nutrition units, with the overall group returning to constant currency revenue growth.

Warehouse REIT advanced as it agreed to be taken over by bigger peer Tritax Big Box REIT for �485m. Tritax, which outbid an earlier proposal by Blackstone, was in the red.

Burberry racked up strong gains as Morgan Stanley and HSBC lifted their price targets on shares of the luxury fashion brand.

Advertising firm WPP was hit by a downgrade to 'underweight' at Barclays, while Moonpig fell ahead of full-year results on Thursday.

Market Movers

FTSE 100 (UKX) 8,760.34 0.02%

FTSE 250 (MCX) 21,341.67 0.07%

techMARK (TASX) 5,047.59 0.29%

FTSE 100 - Risers

Babcock International Group (BAB) 1,169.00p 13.17%

Rolls-Royce Holdings (RR.) 926.40p 1.89%

Fresnillo (FRES) 1,436.00p 1.84%

Experian (EXPN) 3,877.00p 1.57%

JD Sports Fashion (JD.) 77.74p 1.38%

Halma (HLMA) 3,198.00p 1.14%

Ashtead Group (AHT) 4,468.00p 1.11%

Entain (ENT) 858.00p 1.04%

Bunzl (BNZL) 2,352.00p 1.03%

Glencore (GLEN) 277.35p 0.82%

FTSE 100 - Fallers

WPP (WPP) 508.80p -2.53%

easyJet (EZJ) 530.60p -1.56%

Pearson (PSON) 1,043.00p -1.46%

NATWEST GROUP (NWG) 502.80p -1.37%

3i Group (III) 3,976.00p -1.34%

Mondi (MNDI) 1,171.00p -1.22%

Intermediate Capital Group (ICG) 1,963.00p -1.21%

Schroders (SDR) 362.60p -1.20%

LondonMetric Property (LMP) 201.60p -1.18%

Unite Group (UTG) 843.00p -1.17%

FTSE 250 - Risers

Burberry Group (BRBY) 1,073.50p 5.87%

Oxford Nanopore Technologies (ONT) 128.80p 3.87%

Pagegroup (PAGE) 255.20p 2.90%

Alpha Group International (ALPH) 3,160.00p 2.60%

B&M European Value Retail S.A. (DI) (BME) 283.00p 2.35%

Chemring Group (CHG) 552.00p 2.22%

Aston Martin Lagonda Global Holdings (AML) 81.80p 2.19%

Raspberry PI Holdings (RPI) 443.10p 2.10%

Renishaw (RSW) 2,800.00p 1.82%

Auction Technology Group (ATG) 449.50p 1.81%

FTSE 250 - Fallers

Moonpig Group (MOON) 240.50p -5.31%

Tritax Big Box Reit (BBOX) 146.70p -2.59%

Wizz Air Holdings (WIZZ) 1,060.00p -2.39%

Just Group (JUST) 139.40p -2.24%

Bloomsbury Publishing (BMY) 504.00p -2.14%

Tate & Lyle (TATE) 521.50p -2.07%

Telecom Plus (TEP) 1,938.00p -1.92%

Workspace Group (WKP) 413.50p -1.90%

Quilter (QLT) 153.40p -1.79%

Keller Group (KLR) 1,454.00p -1.62%