London midday: Stocks steady as investors mull raft of data

Sharecast - The FTSE 100 was flat at 7,906.01.

Sophie Lund-Yates, lead equity analyst at Hargreaves Lansdown, said: "The FTSE 100 is expected to end the week on a subdued note, with minimal losses possible. The lack of lift-off in any meaningful way is likely to reflect ongoing concerns around economic and business activity following the miss on retail sales."

"At the same time, the US also saw its main indices slip in yesterday’s trading session, with futures now flat. The market is trying to digest a tough set of results from Tesla in particular, where margins are being sacrificed in the name of encouraging people to spend. This has wide ramifications for other growth companies in the region and could be a source of sensitivity for some time."

"The market will also be struggling to find a place to land in expectation of big-tech earnings next week, which should signal the health of the consumer industry, and either prop up or challenge some valuations, given the significant rallies seen since the start of the year. An important report by the Federal Reserve has shown that the US economy has stalled in recent weeks which could act as a drag on equities."

A survey out earlier showed that output in the UK’s private sector grew in April at the fastest pace in a year.

The S&P Global/CIPS flash composite purchasing managers’ index - which measures activity in the manufacturing and services sectors - rose to 53.9 from 52.2 in March. This marked the strongest growth in a year and was ahead of expectations for a reading of 52.5.

Meanwhile, the services PMI came in at 54.9 in April, up from 52.9 a month earlier, making it the highest level in a year.

It was a different picture for the manufacturing sector, with the flash manufacturing output index falling to 48.5 in April from 49.0 in March and remaining in contraction territory.

Chris Williamson, chief business economist at S&P Global Market Intelligence, said growth is "lopsided", with surging demand for services contrasting with an ongoing downturn in demand for goods.

"Even within the service sector, growth is dependent on consumers switching spending from goods to services and a revival of financial services activity, both of which are areas susceptible to the impact of higher interest rates and the ongoing cost of living squeeze. Business services and manufacturing are clearly struggling," he said.

"However, for now the key takeaway is that the economy as a whole is not only showing encouraging resilience but has gained growth momentum heading into the second quarter, the latest PMI reading broadly indicative of GDP rising at a robust quarterly rate of 0.4%."

Meanwhile, figures from the Office for National Statistics showed that retail sales fell by more than expected in March after the wet weather kept shoppers at home.

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Retail sales volumes fell by 0.9% in March, following a downwardly-revised increase of 1.1% in February. Most analysts had been looking for a 0.5% decline.

Within that, food store sales volumes eased 0.7%, reversing February’s 0.6% increase, while non-food stores sales were down 1.3%, compared to a 2.4% rise a month previously.

Retailers reported that poor weather conditions throughout much of the month - the sixth wettest March on record since 1836 - affected sales. Department stores and clothing shops were especially affected, with sales volumes off 3.2% and 1.7% respectively over the month.

Year-on-year, retail sales volumes were down 3.1% on March 2022 and 0.7% below February 2020, pre-pandemic.

In the three months to March, sales volumes rose by 0.6% compared to the previous quarter, the first rise in this series since August 2021.

Finally, a survey out earlier from GfK showed that consumer confidence strengthened in April despite soaring food prices and inflation.

In equity markets, miners were the worst performers, with Rio Tinto (LON:RIO), Anglo American (LON:AAL), Antofagasta (LON:ANTO) and Glencore (LON:GLEN) all lower as copper prices fell.

Glencore was in focus after saying it remained on track to exceed earnings forecasts, despite a dip in first-quarter production, thanks to strong trading profits.

Payments firm Network International (LON:NETW) surged after confirming it had received a "highly preliminary" rival 400p a share cash offer from Canada's Brookfield Asset Management. The latest bid trumps a non-binding takeover proposal from a consortium of CVC and Francisco Partners about a cash offer of 387p a share which Network said it was minded to accept if a firm bid was made.

Outside the FTSE 350, Sureserve (LON:SURS) rocketed after the social housing energy services provider agreed to be bought by French private equity firm Cap10 in a £214.1m deal.

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