Source: Sharecast
Corporate earnings news provided some upside momentum, with Compass Group and Centrica among the top gainers.
The FTSE 100 index edged up 0.12% to close at 9,023.81 points, while the more domestically-focussed FTSE 250 slipped 0.36% to 21,934.26 points.
Sterling climbed 0.25% on the dollar to trade at $1.3527, but fell 0.27% versus the euro, changing hands at €1.1506.
UK government borrowing rises sharply in June
Investor caution followed new data from the Office for National Statistics showing UK government borrowing hit £20.7bn in June, sharply higher than the £16.5bn forecast.
It marked the second-highest June deficit on record, surpassed only during the pandemic in 2020.
Debt interest payments soared to £16.4bn - £8.4bn higher than the same month last year, driven in part by inflation-linked gilts.
“Higher than expected government borrowing pushed up UK gilt yields and pulled down the UK stock market,” said Russ Mould, investment director at AJ Bell.
Ten-year gilt yields briefly rose to 4.645%, with markets speculating on the prospect of further tax rises in the Autumn Budget.
Kathleen Brooks, research director at XTB, warned that “blowing past borrowing expectations is becoming the norm,” adding that while spending pressures partly stem from public sector pay rises, “index-linked gilts could be a problem for some time to come, as the UK’s inflation figures are the strongest in the G13.”
Economic pressure could meanwhile intensify for households, with grocery price inflation rising to 5.2% in July, the highest since January 2024.
According to Worldpanel by Numerator, staples like chocolate, butter and meat drove the increase, potentially adding £275 to the average annual grocery bill.
Despite rising costs, supermarket sales climbed 5.4% in the four weeks to 13 July, aided by strong demand for ice cream and sparkling wine.
Compass surges on profit forecast raise, housebuilders mixed
In equities, Compass Group surged 5.39% after raising its full-year profit forecast and unveiling a €1.5bn acquisition of Dutch catering firm Vermaat Groep.
The food services group said it now expected annual profit growth of around 11%, up from previous high single-digit guidance.
Centrica jumped 4.76% after confirming its investment in the £38bn Sizewell C nuclear project, taking a 15% stake alongside the UK government’s 44.9% holding.
The company said it was a “compelling investment” that would help power six million homes.
Shares in Greencore leapt 12.03% after the convenience food group lifted its annual outlook following a 10% rise in third-quarter revenue.
Acquisition target Bakkavor also rose 8.56% in response.
Utilities benefited from sector upgrades at JPMorgan, which turned “overweight” on Pennon and lifted price targets for United Utilities and Severn Trent.
United Utilities and Severn Trent ended up 2.41% and 2.24% respectively.
Housebuilders ended the day mixed, with Barratt Redrow down 1.25% and Taylor Wimpey flat, as concerns over higher-for-longer interest rates dragged on the sector.
“Housebuilders were knocked by the public sector finance figures as the rise in gilt yields suggests the market believes interest rates could stay higher for longer,” said Mould.
Admiral was also among the FTSE 100’s biggest fallers, following fresh scrutiny from the Financial Conduct Authority over insurance practices, including concerns about monthly premium charges and delays in handling claims.
Drugmaking giant AstraZeneca added 1.17% after confirming a $50bn investment in US medicines manufacturing and R&D through 2030.
However, the news sparked renewed concerns that the company might eventually shift its primary listing to the US.
“The UK government will be kicking itself that AstraZeneca has decided to invest $50bn in the US,” commented Mould.
“It raises the likelihood that investors might push for AstraZeneca to switch its main stock listing.”
Elsewhere, Kier Group dropped 4.86% as investors reacted to news that CEO Andrew Davies would retire at the end of October, with construction chief Stuart Togwell named as successor.
Despite the leadership change, the firm said it remained on track to meet full-year targets.
Travel stocks underperformed, with British Airways owner IAG down 2.42% and easyJet off 2.84%, as recent gains were pared back.
Reporting by Josh White for Sharecast.com.
Market Movers
FTSE 100 (UKX) 9,023.81 0.12%
FTSE 250 (MCX) 21,934.26 -0.36%
techMARK (TASX) 5,158.18 -0.17%
FTSE 100 - Risers
Compass Group (CPG) 2,660.00p 5.39%
Centrica (CNA) 164.10p 4.76%
Glencore (GLEN) 322.55p 3.13%
WPP (WPP) 425.80p 2.90%
Entain (ENT) 986.40p 2.86%
United Utilities Group (UU.) 1,167.00p 2.41%
Rio Tinto (RIO) 4,713.50p 2.25%
Severn Trent (SVT) 2,783.00p 2.24%
Rentokil Initial (RTO) 363.50p 2.22%
SSE (SSE) 1,970.00p 2.13%
FTSE 100 - Fallers
easyJet (EZJ) 492.20p -2.84%
ICG (ICG) 2,112.00p -2.67%
Melrose Industries (MRO) 522.60p -2.50%
International Consolidated Airlines Group SA (CDI) (IAG) 370.60p -2.42%
Games Workshop Group (GAW) 15,840.00p -2.22%
BAE Systems (BA.) 1,859.50p -2.16%
Legal & General Group (LGEN) 254.60p -2.15%
Fresnillo (FRES) 1,466.00p -2.07%
Diploma (DPLM) 5,070.00p -1.93%
Babcock International Group (BAB) 1,050.00p -1.78%
FTSE 250 - Risers
Bakkavor Group (BAKK) 241.00p 8.56%
Oxford Nanopore Technologies (ONT) 184.60p 5.61%
Ocado Group (OCDO) 328.20p 4.06%
Ocean Wilsons Holdings Ltd. (OCN) 1,455.00p 3.93%
Mitie Group (MTO) 142.00p 3.35%
Pennon Group (PNN) 539.00p 2.47%
Diversified Energy Company (DEC) 1,094.00p 2.24%
Burberry Group (BRBY) 1,333.50p 2.11%
Endeavour Mining (EDV) 2,332.00p 2.10%
SDCL Efficiency Income Trust (SEIT) 55.40p 2.03%
FTSE 250 - Fallers
Kier Group (KIE) 199.80p -4.86%
Raspberry PI Holdings (RPI) 458.50p -4.01%
Oxford Instruments (OXIG) 1,916.00p -3.52%
Baltic Classifieds Group (BCG) 362.50p -2.95%
Just Group (JUST) 129.20p -2.86%
Bridgepoint Group (Reg S) (BPT) 316.60p -2.58%
RS Group (RS1) 563.50p -2.42%
Hays (HAS) 63.65p -2.30%
HGCapital Trust (HGT) 509.00p -2.12%
JTC (JTC) 836.00p -2.11%