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Stocks inch higher as Hargreaves rejects offer, Rolls and Scot Mort rise

Published 23/05/2024, 11:34
© Reuters FTSE 100 live: stocks inch higher as Hargreaves rejects offer, Rolls and Scot Mort rise
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Proactive Investors -

  • FTSE 100 rises 1 point to 8371
  • Rolls-Royce (LON:RR) and Aviva (LON:AV) maintain full-year outlook
  • Scottish Mortgage gets double boost

PMI data doesn't change much

There was not much of a reaction to the UK PMI data earlier, says market analyst Kathleen Brooks at XTB, though the FTSE 100 and 250 are both in positive territory now.

She notes that GBP/USD fell to $1.27 on the news, but is now recovering. "Stocks are moving in unison after Nvidia (NASDAQ:NVDA) results boosted overall market sentiment. Global sovereign bonds are mostly rallying, the UK is seeing bond yields fall back slightly after Wednesday’s big surge higher after the stronger than expected CPI print for April."

As the PMIs are often volatile from month-to-month, economist Peter Arnold of the EY ITEM Club said the strength of last month's balance "did look like an outlier compared with other indicators", so he "does not see May's softer outturn as being problematic".

"Indeed, it is consistent with GDP continuing to grow at a solid pace in Q2, and the recovery becoming more firmly entrenched."

One interesting point, Arnold says, is on inflation, with input cost inflation the weakest in seven months and output prices at their slowest growth in over three years.

"Following on the back of yesterday's large upside surprise for services inflation, these results offer some cause to hope that the official data will cool in the months ahead," he says.

"But the chances of a June rate cut look very low after yesterday's data, and softer survey data is unlikely to do much to change that."

Rio Tinto should drop UK listing

An activist investor has called for Rio Tinto (LON:RIO) PLC to give up its primary London quote and therefore also its FTSE 100 listing, like rival BHP did three years ago.

London-based Palliser Capital, which has built up less than a 1% stake, has argued Rio’s dual Anglo-Aussie corporate structure made it difficult to pull off big acquisitions, the Financial Times reported.

It reckons Rio is trading at a $27 billion discount, or so it told a Sohn Hong Kong investment conference on Thursday.

Palliser’s chief investment officer James Smith, who is reported to have been in contact with management about its dual listing, said he believed there was upside of “nearly 40 per cent” in Rio’s shares.

PMI services weaker

The UK's services sector has seen some cooling this month, according to the preliminary 'flash' PMI survey from S&P Global, though manufacturing is rebounding.

The composite purchasing managers’ index fell to 52.8 midway through May from 54.1 in April, taking the balance back to the level seen in March.

This was caused by a fall in the services PMI to 52.9 from 55.0 as growth in new orders cools.

On the flip side, the manufacturing PMI rebounded back into positive territory at 51.3 from 49.1 in April.

Another interesting development in May's flash survey was the weakness in the costs and prices balances, with input cost inflation the weakest in seven months, while output prices rose at their slowest pace since February 2021, with the service sector being the source of weakness in both sectors.

Read more on Proactive Investors UK

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