London midday: Stocks push up as investors mull UK manufacturing, EZ inflation

(Sharecast News) - London stocks had extended gains by midday on Tuesday as investors mulled the latest UK manufacturing data and eurozone inflation figures, and considered the consequences of Israel's invasion of Southern Lebanon. The FTSE 100 was up 0.4% at 8,265.62.

Kathleeen Brooks, research director at XTB, said the market has not reacted to the latest escalation in tensions between Israel and Hezbollah. "This was a well signalled next step, and it has not come as a shock to investors," she said.

"The oil price is down a touch on Tuesday and Brent crude is trading around $71.30. The gold price is higher on this news and is higher by more than $10 per ounce this morning.

"We continue to think that fears about tensions in the Middle East will mostly play out in the gold market, with a limited impact elsewhere.

"So far, Iran has not retaliated and, as yet this conflict has not become a wider issue across the Middle East. This is why markets have remained mostly immune to the situation. Added to this, oil supply from outside of the US, along with expectations that oil demand will decline in the coming years, is also keeping a lid on oil prices. However, if Iran does retaliate or suggest that it will directly strike back at Israel, we expect the oil price to surge and this could rattle global markets."

On home turf, a survey showed that growth in the manufacturing sector slowed in September, while business confidence deteriorated amid concerns about the upcoming Budget and geopolitical tensions.

The S&P Global purchasing managers' index printed at 51.5, down from August's 26-month high of 52.5 and in line with the flash estimate. The PMI has remained above the 50.0 mark that separates contraction from expansion for five successive months.

The survey also showed that business confidence declined to a nine-month low, with manufacturers adopting a wait-and-see approach when it came to decision making.

Rob Dobson, director at S&P Global Market Intelligence, said the manufacturing sector was underpinned by a resilient domestic market.

"However, manufacturers have become more nervous about the outlook, suggesting that the current spell of impressive growth is fading, with business optimism about the year-ahead slumping to a nine-month low," he said.

"The extent of the drop in confidence was striking, beaten only by that seen in March 2020 prior to Covid lockdowns. Uncertainty about the direction of government policy ahead of the coming Autumn Budget was a clear cause of the loss of confidence, especially given recent gloomy messaging, though firms are also worried about wider global geopolitical issues and economic growth risks.

"Price pressures are also becoming a more prominent feature of the survey and a reminder that the inflation genie is not yet back in the bottle. Input cost inflation accelerated to a 20-month high, leading manufacturers to further push up their selling prices. Freight cost rises are a big factor underlying the resurgence in the price measures, as supply chains continue to feel the strain of the Red Sea crisis and global conflicts."

Elsewhere, the latest figures from Eurostat showed that inflation in the eurozone fell below the European Central Bank's 2% target for the first time since 2021, boosting hopes of further interest rate cuts in the single currency bloc.

A flash estimate revealed that annual inflation across the euro area was 1.8% in September 2024, down from 2.2% in August and its lowest since April 2021.

In equity markets, WPP was the top gainer on the FTSE 100 after consumer goods giant Unilever concluded its global media review and reappointed the ad agency's media services business, Mindshare, in key markets.

According to reports, WPP lost five Southeast Asian markets to Publicis Media. However, Mindshare was reappointed to deal with Unilever's media accounts in the UK, US and China, and the company secured the Sub-Saharan Africa region, including South Africa, from Omnicom Media Group.

Luxury handbag maker Mulberry fell as it rejected an £83m takeover offer from Mike Ashley's Frasers Group, saying it failed to recognise the company's "substantial future potential value".

Greggs slumped as the bakery chain backed its full-year outlook but reported a slowdown in third-quarter sales growth.

Market Movers

FTSE 100 (UKX) 8,265.62 0.35% FTSE 250 (MCX) 21,077.07 0.11% techMARK (TASX) 4,841.42 0.14%

FTSE 100 - Risers

WPP (WPP) 782.40p 2.52% Rightmove (RMV) 629.80p 2.01% Severn Trent (SVT) 2,691.00p 1.85% Melrose Industries (MRO) 463.50p 1.71% LondonMetric Property (LMP) 208.20p 1.66% Flutter Entertainment (DI) (FLTR) 17,865.00p 1.65% Entain (ENT) 775.60p 1.62% Diageo (DGE) 2,645.00p 1.61% United Utilities Group (UU.) 1,062.00p 1.58% Ashtead Group (AHT) 5,870.00p 1.45%

FTSE 100 - Fallers

3i Group (III) 3,225.00p -2.42% Hiscox Limited (DI) (HSX) 1,136.00p -0.87% Beazley (BEZ) 754.50p -0.85% JD Sports Fashion (JD.) 152.80p -0.81% BT Group (BT.A) 146.75p -0.78% Imperial Brands (IMB) 2,157.00p -0.74% Haleon (HLN) 390.20p -0.69% Sage Group (SGE) 1,018.00p -0.63% Reckitt Benckiser Group (RKT) 4,548.00p -0.63% Frasers Group (FRAS) 829.00p -0.54%

FTSE 250 - Risers

Ocado Group (OCDO) 401.10p 4.37% Carnival (CCL) 1,256.00p 3.12% Man Group (EMG) 216.40p 2.17% Assura (AGR) 43.24p 1.74% Pennon Group (PNN) 602.00p 1.69% Discoverie Group (DSCV) 617.00p 1.48% Johnson Matthey (JMAT) 1,543.00p 1.45% Grainger (GRI) 249.00p 1.43% Great Portland Estates (GPE) 361.00p 1.40% Cranswick (CWK) 5,090.00p 1.39%

FTSE 250 - Fallers

Greggs (GRG) 3,002.00p -3.91% Aston Martin Lagonda Global Holdings (AML) 116.70p -3.07% Lancashire Holdings Limited (LRE) 667.00p -2.91% Raspberry PI Holdings (RPI) 377.20p -2.43% Watches of Switzerland Group (WOSG) 466.40p -2.22% NB Private Equity Partners Ltd. (NBPE) 1,576.00p -2.11% Burberry Group (BRBY) 687.40p -1.94% Ithaca Energy (ITH) 106.70p -1.93% PZ Cussons (PZC) 94.70p -1.76% Renewi (RWI) 628.00p -1.57%