Stocks in London were higher at midday Tuesday, as the UK manufacturing sector continued to outperform its peers in France and Germany.
The FTSE 100 index was up 26.97 points, or 0.3%, at 8,264.19. The FTSE 250 was up 18.02 points, or 0.1%, at 21,071.21, and the AIM All-Share was down 0.48 points, or 0.1%, at 739.95.
The Cboe UK 100 was up 0.4% at 827.69, the Cboe UK 250 was up 0.2% at 18,539.63, and the Cboe Small Companies was up fractionally at 16,867.90.
According to S&P Global, the seasonally adjusted S&P Global UK manufacturing purchasing managers’ index posted 51.5 points in September, unchanged from the earlier flash estimate. This was down from its 26-month high of 52.5 in August, but was nevertheless above the neutral 50 mark for the fifth month running.
As S&P Global Market Intelligence Director Rob Dobson put it: ‘The UK manufacturing sector is still expanding at a solid, albeit slightly slower, pace.’
Manufacturing production rose for the fifth consecutive month, S&P said, mainly driven by stronger rises in output and new business in the consumer and intermediate goods sectors.
‘The final September manufacturing PMI shows the sector continues to grow strongly, but uncertainty about potential tax hikes in the late October Budget cut business optimism,’ said Elliott Jordan-Doak, senior UK economist at Pantheon Macroeconomics.
‘For now Budget worries seem to be hitting sentiment rather than actual output, with the PMI still reporting solid growth in activity and new orders. We expect the forward-looking indicators to improve in November once Budget uncertainty has passed. For instance, the general election earlier this year led to firms pausing work and the PMI falling before rebounding strongly once the new Government was elected. We expect the same pattern to hold this autumn. That said, global growth poses a downside risk to the relatively strong UK manufacturing PMI.’
In European equities on Tuesday, the CAC 40 in Paris was down 0.2%, while the DAX 40 in Frankfurt was up 0.3%.
According to Eurostat, harmonised consumer prices in the eurozone rose 1.8% in September year-on-year, which came in lower than FXStreet-cited market consensus of 1.9%. Prices had risen 2.2% on-year in August.
Prices eased by 0.1% in September from August, having risen 0.1% in August from July.
Core inflation - stripping out energy, food, alcohol and tobacco - was 2.7% annually in September, compared to market expectations that it would be unchanged from August’s 2.8%.
The data followed remarks from European Central Bank President Christine Lagarde, who expressed confidence in Brussels that inflation could soon return to the bank’s target level.
‘Looking ahead, inflation might temporarily increase in the fourth quarter of this year as previous sharp falls in energy prices drop out of the annual rates, but the latest developments strengthen our confidence that inflation will return to target in a timely manner,’ Lagarde told a European Parliament’s economic and monetary affairs committee.
‘The ECB staff projections from September foresee inflation to average 2.5% in 2024, 2.2% in 2025 and 1.9% in 2026,’ she said.
Separate data on Tuesday showed that eurozone manufacturing production fell at its steepest pace this year, and ‘took a turn for the worse’ in France and Germany.
Compiled by S&P Global, the seasonally adjusted HCOB France manufacturing purchasing managers’ index rose to 44.6 in September from 43.9 in August, its highest reading since June.
Germany’s manufacturing PMI reached a 12-month low of 40.6 in September, down from 42.4 in August. S&P remarked that the sector’s health ‘ took a further turn for the worse...with output, new orders, employment and stocks all falling at faster rates’.
Finally, the eurozone ‘slid deeper in contraction’ in September, the manufacturing PMI edging down to a nine-month low in September of 45.0 from 45.8 in August.
The HCOB eurozone manufacturing PMI output index also slid to a nine-month low of 44.9 in September, from 45.8 the prior month.
The pound was quoted at $1.3319 at midday on Tuesday in London, lower compared to $1.3397 at the equities close on Monday. The euro stood at $1.1086, lower against $1.1142. Against the yen, the dollar was trading at JP¥143.72, higher compared to JP¥143.31.
In London, Mulberry Group lost 3.9%, after rejecting a possible takeover offer from Frasers Group, at 130p per share. It said it had ‘carefully’ considered the offer, seeking feedback from Challice, its 56% shareholder.
The firm said that the recent appointment of Andrea Baldo as chief executive officer, alongside a capital raising, gives Mulberry ‘a solid platform to execute a turnaround and, ultimately, to deliver best value for all Mulberry shareholders.’
Frasers, which back in 2020 bought a large chunk of shares in Mulberry at 150p each, currently has a 36.8% stake. Its shares lost 0.4% in London following the announcement.
Haleon fell 0.8%.
The firm has agreed to make an off-market purchase of 60.5 million ordinary shares from Pfizer, pursuant to the terms of a share purchase deed entered into by both parties, which was previously approved by Haleon’s shareholders.
The off-market purchase is being made in conjunction with, and subject to the completion of an offering by Pfizer to institutional investors. The purchase price payable by Haleon to Pfizer for the off-market purchase is £3.80 per ordinary share and the total consideration payable will be approximately £230 million.
On completion of the off-market purchase and Pfizer’s offering to institutional investors, Pfizer’s interest in Haleon’s issued ordinary shares with voting rights is expected to reduce from 22.6% to 15.0%. This follows Monday’s news that Pfizer would sell £2.7 billion Haleon shares.
Elsewhere, James Halstead gained 3.7%.
The flooring supplier reported pretax profit for the year ended June 30 of £56.2 million, up 7.9% from £52.1 million a year prior. Revenue, however, fell 9.4% to £274.9 million from £303.6 million.
The firm declared a 6.0 pence final dividend, up 4.3% from 5.75p, making its full-year dividend 8.5p, up 6.3% from 8.0p; and marking James Halstead’s 49th year of dividend increases.
Separately, James Halstead said that Anthony Wild will step down as chair at the December 6 AGM, with CEO Mark Halstead to step up to executive chair. Finance Director Gordon Oliver will step up to CEO, while David Drillingcourt will become finance director.
On AIM, Tavistock gained 58%.
The Ascot, Berkshire-based financial advice and investment management firm has entered an agreement for the sale of two subsidiary businesses, Tavistock Partners Ltd, and Tavistock Estate Planning Services Ltd.
The businesses will be sold to Saltus Partnership Holdings LLP for a cash consideration of up to £37.8 million.
Stocks in New York were called predominantly lower on Tuesday. The Dow Jones Industrial Average was called down 0.3%, the S&P 500 index down slightly, and the Nasdaq Composite up 0.2%.
The US is set to see inflation cool further towards policymakers’ target, Federal Reserve Chair Jerome Powell said, with interest rates likely to come down over time too.
‘Disinflation has been broad based, and recent data indicate further progress toward a sustained return to two percent,’ Powell said, according to prepared remarks of a speech he is set to deliver at the National Association for Business Economics annual meeting in Tennessee.
In particular, Powell noted that prices of goods – excluding volatile food and energy categories – have fallen while supply bottlenecks have eased. With the growth rate in rents charged to new tenants remaining low, he added, housing services inflation will likely continue to decline.
He also signalled that further rate cuts are in the pipes, if there are no major surprises. ‘Looking forward, if the economy evolves broadly as expected, policy will move over time toward a more neutral stance,’ Powell said.
Oil prices remained steady at midday, despite Israel launching a ground offensive against Hezbollah in Lebanon, said AJ Bell’s Russ Mould. Brent oil was quoted at $71.25 a barrel at midday in London on Tuesday, down from $72.30 late Monday.
Meanwhile, ‘gold prices ticked higher, within sight of record highs amid the Middle East turmoil, helping to lift precious metals miners on the UK stock market’, Mould added. Gold was quoted at $2,649.20 an ounce, up against $2,633.76.
Still to come on Tuesday’s economic calendar, there is the Redbook index, more manufacturing PMIs, and the Dallas Fed service index from the US.
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