London midday: FTSE down after services PMI, ahead of French no-confidence vote

London stocks were still in the red by midday on Wednesday ahead of a no-confidence vote in France and as investors mulled the latest developments in South Korea and uninspiring UK services data.
The 100 was down 0.3% at 8,330.86.

Susannah Streeter, head of money and markets at Hargreaves Lansdown, said: "Political risk has been put back on the agenda after South Korea was plunged into chaos by the declaration, then subsequent lifting of martial law.

"Deep uncertainty looms for France too. The looming vote of no-confidence in the minority government of Michel Barnier threatens fresh political upheaval in a key EU member state.

"Friday's key monthly jobs report is being eyed amid hopes it may show a US labour market which is buoyant but not hot enough to derail a gradual easing of interest rates in the world's largest economy."

A survey out earlier showed that activity in the UK services sector was close to stalling last month, with growth easing to its slowest in more than a year.

The S&P Global services PMI business activity index fell to 50.8 from 52.0 in October and. This was the slowest rate of growth since the current phase of expansion began in November 2023.

A reading above 50.0 indicates expansion, while a reading below signals contraction.

Many service sector firms pointed to heightened economic uncertainty and concerns about tax raising measures announced in the Autumn Budget.

The survey also showed that business optimism dropped to its lowest level since December 2022.

Tim Moore, economics director at S&P Global Market Intelligence, said: "Weaker sales pipelines, cutbacks to new projects and more caution among clients were all cited as having an adverse impact on service sector output.

"Softer new business expansion and forthcoming rises in employers' National Insurance contributions weighed heavily on staff recruitment, according to survey respondents. Total workforce numbers dipped for the second month running, with many firms noting that pressure on margins from higher payroll costs had led to the non-replacement of departing staff."

Still to come, the US ADP report is at 1315 GMT and the ISM services PMI at 1500 GMT.

In equity markets, Legal & General gained as it maintained profit guidance for the full year and hinted at more returns for shareholders than previously announced. The company said it expects to return to shareholders a proportion of the capital not deployed on strain this year which "would be incremental to the capital return intentions indicated at the capital markets event in June".

BA and Iberia owner IAG flew higher as JPMorgan Cazenove said it was the "most compelling" overweight in the airline sector and added the stock to its Analyst Focus List and put it on "positive catalyst watch".

JPM said this was driven by solid pricing, strong free cash flow leading to shareholder cash returns and a re-rating potential.

Victrex surged after an upgrade to 'buy' at Jefferies.

On the downside, Rio Tinto was a little weaker as it forecast higher consolidated mined copper production for the 2025 financial year driven by higher output from its Oyu Tolgoi operation in Mongolia and also faced calls from hedge fund Palliser to scrap its dual listing structure.

Rio also said it was selling a 30% stake in its Winu copper-gold project in Australia to Japan's Sumitomo Metal Mining Co. for $399m.

Zigup slumped as it posted a drop in interim profit and revenue, while Me Group dropped even as it reported continued growth in the second half and said it expects FY 2024 to be another year of record profitability.

Bunzl was knocked lower by a downgrade to 'hold' at HSBC.

Market Movers

FTSE 100 (UKX) 8,330.86 -0.34%
FTSE 250 (MCX) 20,959.47 0.32%
techMARK (TASX) 4,715.34 -0.18%

FTSE 100 - Risers

Legal & General Group (LGEN) 231.10p 3.68%
Vistry Group (VTY) 648.50p 3.26%
International Consolidated Airlines Group SA (CDI) (IAG) 272.90p 3.21%
Entain (ENT) 819.60p 1.81%
Spirax Group (SPX) 7,465.00p 1.15%
Beazley (BEZ) 797.00p 1.14%
Next (NXT) 10,270.00p 1.08%
Standard Chartered (STAN) 976.20p 1.08%
Intermediate Capital Group (ICG) 2,182.00p 1.02%
Rolls-Royce Holdings (RR.) 597.40p 1.01%

FTSE 100 - Fallers

Anglo American (AAL) 2,500.00p -2.76%
AstraZeneca (AZN) 10,512.00p -2.58%
Smiths Group (SMIN) 1,745.00p -2.35%
Severn Trent (SVT) 2,672.00p -2.02%
National Grid (NG.) 974.60p -1.56%
SSE (SSE) 1,721.00p -1.54%
Unilever (ULVR) 4,632.00p -1.32%
GSK (GSK) 1,351.00p -1.24%
Admiral Group (ADM) 2,588.00p -1.22%
Smith & Nephew (SN.) 984.60p -1.07%

FTSE 250 - Risers

Wood Group (John) (WG.) 63.15p 8.04%
Victrex plc (VCT) 1,070.00p 6.57%
W.A.G Payment Solutions (WPS) 83.80p 3.97%
Kainos Group (KNOS) 793.00p 3.93%
Close Brothers Group (CBG) 215.60p 3.55%
Foresight Group Holdings Limited NPV (FSG) 409.00p 3.28%
Moonpig Group (MOON) 262.50p 2.54%
SDCL Energy Efficiency Income Trust (SEIT) 53.20p 2.50%
SSP Group (SSPG) 182.10p 2.48%
PZ Cussons (PZC) 84.00p 2.44%

FTSE 250 - Fallers

Zigup (ZIG) 350.50p -8.49%
Auction Technology Group (ATG) 551.00p -2.13%
Harworth Group (HWG) 174.00p -1.42%
Bloomsbury Publishing (BMY) 666.00p -1.19%
Me Group International (MEGP) 223.00p -1.11%
St James's Place (STJ) 887.50p -1.06%
Energean (ENOG) 1,028.00p -1.06%
4Imprint Group (FOUR) 5,000.00p -0.99%
Mitchells & Butlers (MAB) 251.00p -0.99%
Endeavour Mining (EDV) 1,541.00p -0.96%