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LONDON MARKET MIDDAY: Stocks flat as focus shifts to US inflation data

London stocks were mixed at midday on Monday, ahead of Wednesday’s US consumer price reading, though analysts believe potential London floats by Shein and Raspberry Pi could be a game-changer for UK-listed equities.

The FTSE 100 index was up 7.05 points, 0.1%, at 8,440.61. The FTSE 250 was down 33.65 points, 0.2%, at 20,611.59, and the AIM All-Share was down 0.45 points, 0.1%, at 789.42.

The Cboe UK 100 was down 0.1% at 843.51, the Cboe UK 250 was down 0.2% at 17,896.72, and the Cboe Small Companies was up 0.1% at 16,124.94.

In European equities on Monday, the CAC 40 in Paris and the DAX 40 in Frankfurt were down 0.2%.

Reuters reported Shein will press ahead with a London float, dodging regulatory hurdles that stemmed from a possible New York listing.

The fast fashion retailer plans to tell China’s securities watchdog of its intention to change its initial public offering venue to the London Stock Exchange, Reuters reported, citing a person with knowledge of the matter. It can file with the LSE as soon as this month.

Reports have suggested Shein could be valued at as much as $66 billion, around £53 billion.

It would be a welcome tonic for the London market which has seen the IPO market stall and witnessed a number of high profile departures.

Meanwhile, the Times reported UK computer company Raspberry Pi is also finalising a plan to list in London.

The float may take place in the next ten days, though could be delayed if market conditions weaken. It could value Raspberry Pi at about £500 million.

Dan Coatsworth, investment analyst at AJ Bell said: ‘Shein is such a big name in the world of retail that its mere presence on the London market could encourage others to look hard at the UK as a listing venue.’

‘It is now a household name in many parts of the world and that‘s what many investors love to see when picking stocks.’

Coatsworth noted while Raspberry Pi would be a ‘much smaller float’ it would still be ‘significant’ as it brings a well-known name in the technology sector to the UK market.

‘The UK is woefully under-represented in technology companies despite the country brimming with tech talent. We need a few more tech firms to list in the UK and give investors more domestic choice rather than them simply having to fish around the US market for tech opportunities.’

The main focal point for investors this week will be Wednesday’s US inflation figures, which will likely inform market expectations of potential US interest rate cuts.

According to FXStreet-cited consensus, consumer prices are expected to have risen 3.4% annually in April, cooling slightly from 3.5% in March.

US producer prices data on Tuesday and retail sales numbers on Wednesday add to an important week of economic releases across the pond.

Stocks in New York were called modestly higher. The Dow Jones Industrial Average was called up 0.1%, the S&P 500 index up 0.1%, and the Nasdaq Composite up 0.2%.

Sterling was quoted at $1.2523 at midday on Monday, higher than $1.2513 at the London equities close on Friday.

The euro traded at $1.0781 at midday on Monday, up from $1.0769 late Friday. Against the yen, the dollar was quoted at JP¥155.85 down slightly from JP¥155.87.

In the FTSE 100, Diploma was the best performing stock, rising 4.4%.

The London-based supplier of specialised technical products impressed analysts with better-than-expected half-year results, which prompted an increase to annual guidance.

Diploma now expects constant-currency revenue growth of 16% for all of financial 2024, which ends on September 30, up 0.5% from the company’s previous guidance.

Diploma also anticipates an improved operating margin of 20.5%, an increase of 0.8 percentage points from its previous forecast, as well as EPS growth of 15%.

The improved outlook came as Diploma reported pretax profit of £77.8 million for the six months that ended March 31, down 1.1% from £78.7 million a year before.

Revenue was £638.3 million, up 9.5% from £582.8 million.

Stifel said the results were ‘good,’ with revenue and adjusted operating profit around 1% ahead of consensus.

The broker noted all divisions delivered organic growth, with Controls ‘the standout’.

‘We are buyers at the current valuation and see upside from further compound growth and strong delivery against financial targets. The group’s clear strategy and trading resilience provide confidence in the growth trajectory,’ Stifel said.

British Airways owner International Consolidated Airlines Group rose 2.1%, extending Friday’s gains which followed well received first quarter results.

But BAE Systems fell 2.7%, after Bank of America downgraded the stock to ’neutral’ from ’buy’. It is, however, up 21% in the year-to-date.

Phoenix Group fell 2.5% after announcing Chief Financial Officer, Rakesh Thakrar will step down during 2024.

Phoenix said former Non-Executive Director Stephanie Bruce will return in June as interim chief financial officer, while it begins the formal process to find Thakrar’s permanent successor.

In the FTSE 250, John Wood rose 3.7%.

Last week, the Aberdeen, Scotland-based consulting and engineering company, rejected a 205 pence per share offer from Sidara.

Sidara is the trading name of Dar Al-Handasah Consultants Shair and Partners Holdings, a planning, design, engineering and project management firm, founded in Beirut, with more than 300 offices in 60 countries.

On AIM in London, MediaZest soared 67% after reporting trading for the six months ended March 31 has been encouraging, with momentum continuing into the second half of the financial year.

The Surrey, England-based audiovisual solutions provider also said it had won a series of new orders in recent weeks from a wide range of customers worth in excess of £350,000.

Mission Group rose 5.2% after confirming receipt of an unsolicited conditional takeover proposal from digital advertising and technology company Brave Bison Group.

Mission said Brave Bison’s potential offer was for an all-share offer at an exchange ratio of 11.5 Brave Bison shares for each share in Mission. Mission said its board unanimously rejected the possible offer last week, terming it ‘opportunistic’ and as significantly undervaluing the company.

Brave Bison, which fell 1.1%, said it believes an enlarged company would ‘present a more attractive investment opportunity to institutional shareholders than either standalone company.’

Gold was quoted at $2,342.47 an ounce at midday on Monday, lower than $2,362.94 on Friday.

Brent oil was trading at $82.99 a barrel at midday on Monday, lower than $83.66 late Friday.

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