London close: Stocks little changed following May speech
London stocks finished a touch lower on Wednesday, giving up modest gains from earlier in the session as the pound rallied following a better-than-expected reading on the UK services sector, but moves were muted after a speech by Prime Minister Theresa May.
The FTSE 100 was down 0.01% to 7,467.58, while the pound was up 0.21% against the dollar at 1.3270.
A survey released earlier showed activity in the UK services sector unexpectedly improved in September but new business growth fell to a 13-month low.
The Markit/CIPS services purchasing managers' business activity index rose to 53.6 from an 11-month low of 53.2 in August, beating expectations for it to remain unchanged.
A reading above 50 indicates expansion, while a reading below signals contraction.
Survey respondents highlighted healthy labour market conditions and resilient consumer spending, but there were also reports that worries about the business outlook had acted as a growth headwind. In addition, service providers noted subdued business-to-business sales and delayed decision-making on large projects due to Brexit-related uncertainty, while operating expenses jumped.
New business volumes expanded at the slowest pace since August 2016 and optimism about year-ahead growth prospects remained close to its weakest level since
the end of 2011.
Chris Williamson, chief business economist at IHS Markit, said the manufacturing, construction and services surveys released this week portray an economy struggling with sluggish growth and rising prices.
Market participants were digesting speeches by Theresa May, ahead of others from European Central Bank chief Mario Draghi and Federal Reserve Chair Janet Yellen later in the day.
Speaking to the Conservative party conference, the Prime Minister promised more council homes and a cap on energy prices.
On Draghi and Yellen, analyst Craig Erlam at Oanda said: "It will be interesting to get the views of the two central bank heads today and traders will likely be paying very close attention to what they have to say regarding meetings later this year.
"With the Fed currently indicating that one more rate hike is likely and the ECB giving the impression that a further asset purchase reduction will happen, traders are naturally curious about whether these views are changing in light of recent data. As it is, traders have only recently become convinced that we’ll see another Fed rate hike this year and the possibility of more next year is only just being priced in."
In corporate news, Tesco reversed earlier gains - which saw the stock push up to near six-month highs - as it reinstated its dividend after a three-year hiatus with a 1p half-year payout as sales rose more than City forecasts and profits soared.
The results were positive but do nothing to hide what are "worryingly pedestrian" UK growth numbers in the second quarter of just 0.4% for transactions and 0.3% for volumes, with slowing like-for-like sales, said analyst Mike van Dulken at Accendo Markets."Lots of positives, granted, but work still to do."
Royal Mail fell after its staff voted in favour of strike action in a row over pensions and pay, while Balfour Beatty was lower after being awarded a $260m contract to build the River Landing Shops and Residences project in Miami for real-estate investment trust H&R REIT and Urbanx Company, in association with real estate developer Matthews Southwest.
Ultra Electronics declined as it announced the award of a $16.2m modification to a previously-awarded cost-plus-fixed-fee contract by the US Department of the Navy, extending its services providing solutions to cyber-secure Navy critical infrastructure.
Centrica and SSE were under the as Theresa May used her speech to announce new details on government energy policy.
Shares in 888 Holdings fell after Sinitus sold its entire stake in the online gambling group via an accelerated bookbuild, while OneSavings Bank was under the cosh after funds managed by private investment firm JC Flowers sold 20m shares in the challenger bank, or an 8% stake.
Tile specialist Topps Tiles tanked after it warned that full-year profit will be at the lower end of the current range of market expectations as market conditions "remain challenging" despite a moderate improvement in the group's final quarter.
In broker note action, Greene King and Marston's were hit by downgrade to 'sell' and 'hold', respectively, at Berenberg, but Wetherspoon was lifted by an upgrade to 'hold' from the same outfit. Meanwhile, Shaftesbury was weaker as HSBC cut its stance on the stock to 'reduce' and Tullow gushed lower as Jefferies cut the stock to 'underperform'.
Bodycote was boosted by an initiation at 'overweight' by Barclays.
Market Movers
FTSE 100 (UKX) 7,467.58 -0.01%
FTSE 250 (MCX) 20,029.42 -0.03%
techMARK (TASX) 3,521.62 0.06%
FTSE 100 - Risers
WPP (WPP) 1,403.00p 2.86%
Anglo American (AAL) 1,430.00p 2.36%
Mondi (MNDI) 2,119.00p 2.07%
Ferguson (FERG) 5,150.00p 1.78%
Glencore (GLEN) 359.40p 1.64%
Coca-Cola HBC AG (CDI) (CCH) 2,558.00p 1.47%
Kingfisher (KGF) 306.10p 1.46%
GKN (GKN) 354.00p 1.37%
TUI AG Reg Shs (DI) (TUI) 1,298.00p 1.25%
Paddy Power Betfair (PPB) 7,540.00p 1.21%
FTSE 100 - Fallers
Centrica (CNA) 179.30p -6.08%
Tesco (TSCO) 183.95p -3.21%
SSE (SSE) 1,367.00p -3.19%
Sainsbury (J) (SBRY) 241.60p -2.38%
Standard Life Aberdeen (SLA) 425.10p -2.03%
Morrison (Wm) Supermarkets (MRW) 231.90p -1.99%
easyJet (EZJ) 1,278.00p -1.46%
Next (NXT) 5,245.00p -1.41%
Aviva (AV.) 498.90p -1.31%
International Consolidated Airlines Group SA (CDI) (IAG) 615.50p -1.12%
FTSE 250 - Risers
Kaz Minerals (KAZ) 821.00p 4.59%
Bodycote (BOY) 962.50p 4.51%
Coats Group (COA) 83.20p 3.94%
Daejan Holdings (DJAN) 6,055.00p 3.50%
Wetherspoon (J.D.) (JDW) 1,276.00p 3.49%
UDG Healthcare Public Limited Company (UDG) 892.50p 2.65%
FDM Group (Holdings) (FDM) 1,010.00p 2.43%
Hochschild Mining (HOC) 232.90p 2.42%
Senior (SNR) 284.50p 1.93%
Vectura Group (VEC) 107.90p 1.79%
FTSE 250 - Fallers
Provident Financial (PFG) 849.50p -6.03%
888 Holdings (888) 243.80p -5.87%
OneSavings Bank (OSB) 374.70p -5.76%
Pets at Home Group (PETS) 212.60p -3.14%
Drax Group (DRX) 301.30p -2.78%
Royal Mail (RMG) 374.20p -2.60%
McCarthy & Stone (MCS) 150.00p -2.53%
Shaftesbury (SHB) 984.50p -2.52%
Auto Trader Group (AUTO) 379.60p -2.52%
Acacia Mining (ACA) 190.20p -2.46%