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London stocks remained positive by midday on Thursday, with JD Sports (LSE:JD) leading the gains following a favorable update. Investors are also anticipating a speech from Federal Reserve Chair Jerome Powell.
The FTSE 100 index was up 0.2% at 8,302.17.
Powell is scheduled to speak in Jackson Hole, Wyoming, on Friday during the Federal Reserve’s annual conference for central bankers. Philip Marey, senior US strategist at Rabobank, suggested that Powell might indicate a 25 basis points rate cut for September. Marey noted that, given the upcoming data between Jackson Hole and the September Federal Open Market Committee meeting, it would be premature for Powell to specify the exact size of a rate cut. Powell might instead signal whether a 25 or 50 basis points reduction is more likely, aiming to reassure the market about stability.
On the domestic front, a recent survey revealed that private sector activity reached a four-month high in August. The S&P Global flash PMI composite output index increased to 53.4 from 52.8 in July, surpassing expectations and indicating expansion. The services PMI also rose to 53.3 from 52.5, marking a four-month high.
Chris Williamson, chief business economist at S&P Global Market Intelligence, commented that August has seen a positive mix of stronger economic growth, improved job creation, and reduced inflation. Both manufacturing and service sectors are showing solid output growth and increased job gains. Although GDP growth might slow in the third quarter compared to the first half of the year, the PMI data suggest a steady quarterly expansion rate of around 0.3%. Inflationary pressures have also moderated, particularly in the service sector, which had been a concern for the Bank of England. This data could ease the path for potential interest rate cuts, though policymakers may proceed cautiously due to persistent inflation in services.
In equity markets, JD Sports Fashion saw a significant rise, driven by a return to like-for-like sales growth in its second quarter. The company's expansion in North America and Europe contributed positively, while the UK market remains less robust. The company maintained its profit guidance for the year but remains cautious about the future.
Frasers Group, owner of Sports Direct, also saw gains. Serco increased following a $320 million contract award from the US Army Corps of Engineers for modernizing a backup electrical plant at the US Space Force’s Pituffik Space Base in Greenland. United Utilities benefited from an upgrade to ‘buy’ from ‘neutral’ at UBS.
Hays saw its earlier losses reversed, despite reporting a decline in full-year profit and acknowledging a slowdown in challenging markets. For the year ending in June, pre-tax profit fell significantly, and net fees decreased.
Several companies, including Legal & General, Mondi (LSE:MNDI), Schroders (LSE:SDR), Land Securities, Imperial Brands (LSE:IMB), Convatec, OSB Group, Just Group (LSE:JUST), Hammerson, and Investec (LSE:INVP), experienced declines as they traded without entitlement to dividends. Ithaca Energy also faced a drop in value following a reported decrease in first-half profit.
