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24 Mar 2021 | 11:02

London midday: Stocks a touch weaker amid third wave worries

(Sharecast News) - London stocks were still a touch weaker by midday on Wednesday amid ongoing worries about a third wave of coronavirus, as investors digested the latest UK inflation and business activity data. The FTSE 100 was down 0.2% at 6,689.39.

IG market analyst Joshua Mahony said we are seeing "a continued focus on the potential impact a third wave could have upon market sentiment, with the reflation trade coming into question as a result".

"Declines in Treasury yields over the course of this week signal a shift in tactics, with confidence of a straight-forward recovery certainly on the wane. Instead, we have seen traders head for the havens on the prospect of fresh lockdowns and prolonged restrictions, driving assets such as the dollar, yen, gold, and bonds higher.

"Nevertheless, while markets are becoming increasingly hesitant, the ongoing vaccination push and economic recovery do still mean we could see buyers come in when markets provide discounts."

On home shores, investors mulled over the latest figures from the Office for National Statistics, which showed inflation unexpectedly fell in February as the price of clothes and second-hand cars declined. Consumer price inflation fell to 0.4% from 0.7% in January, coming in below expectations of 0.8%.

Clothing, second-hand cars, and games, toys and hobbies were the largest downward contributors. Clothing and footwear prices fell 5.6% in the year to February 2021 - the biggest fall since November 2009.

Meanwhile, the core rate of inflation - which excludes more volatile energy and food prices - declined to 0.9% in February from 1.4% the month before, versus expectations of no change.

Market participants were also digesting a survey showing that UK business activity returned to growth in March, powered by stronger consumer confidence and rebounding sales ahead of a planned lifting of the Covid-19 lockdown.

The initial reading for the IHS Markit/CIPS UK composite purchasing managers' index jumped to 56.6 from 49.6 a month earlier. The increase was the fastest since August, supported by the first rise in new orders since September. The total figure was well ahead of the 50 mark that indicates no growth.

Services drove the improvement with a forecast-beating reading of 56.8, up from 49.5 in February as the UK's dominant sector returned to expansion. Analysts had on average expected a score of 51. Manufacturing also outstripped expectations with a score of 57.9, up from 55.1.

In equity markets, housebuilder Bellway was in the red as it reinstated its dividend and reported a strong forward order book, but said interim profits had fallen slightly. Peers followed suit, with Taylor Wimpey, Barratt Developments and Crest Nicholson also lower.

Elsewhere, WH Smith was hit by a downgrade to 'neutral' at JPMorgan.

On the upside, British Airways owner IAG, Premier Inn owner Whitbread and caterer Compass Group were all higher, recovering from heavy losses earlier in the week.

Safety and protection company Halma rallied after it said annual profit would beat expectations as revenue continued to improve and rose in all its major regions.

Softcat surged after the IT infrastructure and services provider said full-year results were set to be "significantly" ahead of its previous expectations.



Market Movers

FTSE 100 (UKX) 6,689.39 -0.15% FTSE 250 (MCX) 21,342.82 0.05% techMARK (TASX) 4,177.70 -0.44%

FTSE 100 - Risers

International Consolidated Airlines Group SA (CDI) (IAG) 192.50p 2.75% Halma (HLMA) 2,348.00p 1.87% Whitbread (WTB) 3,300.00p 1.63% Smith (DS) (SMDS) 404.80p 1.58% Anglo American (AAL) 2,760.50p 1.45% Kingfisher (KGF) 319.40p 1.40% Glencore (GLEN) 275.30p 1.21% Barclays (BARC) 183.24p 1.19% Compass Group (CPG) 1,471.00p 1.10% CRH (CDI) (CRH) 3,252.00p 1.09%

FTSE 100 - Fallers

Taylor Wimpey (TW.) 178.95p -2.67% Just Eat Takeaway.Com N.V. (CDI) (JET) 6,724.00p -2.01% Avast (AVST) 471.60p -1.54% Ocado Group (OCDO) 2,072.00p -1.52% Barratt Developments (BDEV) 767.20p -1.39% Auto Trader Group (AUTO) 574.20p -1.34% BT Group (BT.A) 147.00p -1.31% Polymetal International (POLY) 1,447.50p -1.30% Fresnillo (FRES) 916.60p -1.25% London Stock Exchange Group (LSEG) 7,174.00p -1.18%

FTSE 250 - Risers

Softcat (SCT) 1,813.00p 16.29% TUI AG Reg Shs (DI) (TUI) 374.60p 5.55% Centamin (DI) (CEY) 106.40p 4.26% Hammerson (HMSO) 32.27p 4.06% Tullow Oil (TLW) 50.90p 3.98% SSP Group (SSPG) 336.00p 3.90% National Express Group (NEX) 309.00p 3.00% Drax Group (DRX) 423.20p 2.67% easyJet (EZJ) 932.00p 2.37% Unite Group (UTG) 1,054.00p 2.33%

FTSE 250 - Fallers

AO World (AO.) 294.50p -3.60% HICL Infrastructure (HICL) 164.60p -2.95% Dr. Martens (DOCS) 482.20p -2.59% Sanne Group (SNN) 605.00p -2.42% Frasers Group (FRAS) 475.20p -2.34% Provident Financial (PFG) 210.40p -2.32% Bellway (BWY) 3,412.00p -2.29% Crest Nicholson Holdings (CRST) 390.20p -2.25% Oxford Biomedica (OXB) 937.00p -2.19% Just Eat Takeaway.Com N.V. (CDI) (JET) 6,724.00p -2.01%
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