London midday: Stocks extend gains as sterling slides on no-deal jitters
By Michele Maatouk
Date: Friday 21 Sep 2018
(Sharecast News) - London stocks had extended gains by midday on Friday as sterling slid on jitters about a no-deal Brexit, while a strong performance from the mining sector also provided a boost.
The FTSE 100 was up 1.1% to 7,446.09, while the pound - which rallied a day earlier on the back of better-than-expected retail sales data - was down 0.6% against the dollar at 1.3191 and 0.5% lower versus the euro at 1.1209 after European Council president Donald Tusk said Theresa May's Chequers proposal "will not work", reigniting concerns about a no-deal Brexit.
Market analyst David Cheetham at XTB said: "The proposal has been much maligned almost since the day it was unveiled with Brexiteers such as Boris Johnson and David Davis both resigning from the cabinet as they felt it was too soft, and now it appears that the EU won't accept it either.
"This leaves the PM in a particularly testing conundrum and the question now is whether she shelves these plans and adjusts her strategy or whether she sticks to her guns in the face of this widespread criticism."
On the macroeconomic front, figures from the Office for National Statistics showed borrowing rose to £6.75bn in August from £4.35bn in the same month last year, versus expectations of £3.4bn. Still, borrowing for the year to date was down 30.5% at £17.8bn.
Howard Archer, chief economic adviser to the EY Item Club, said: "There will be one, possibly two, more releases before the OBR finalises its forecasts for the Budget. Although borrowing continues to run well below 2017-18 levels, the fact that revenue growth is only running in line with its previous forecast and the likely temporary nature of the undershoot in spending means that major changes to the OBR's projections are looking increasingly unlikely.
"This means the Chancellor may need to use revenue raising measures, or tolerate higher borrowing, in order to fund the extra spending planned for the NHS."
Miners racked up strong gains, with Glencore, Antofagasta, Anglo American, BHP Billiton and Rio Tinto all firmer amid rising metals prices.
Copper was among metals hit hard by the initial trade war concerns, sinking to $5,773 a ton in August, the lowest since June 2017, but noted broker SP Angel, it's since rebounded amid signs of tightness, including a drop in global stockpiles, and spiked to $6,195 on Friday.
Goldman Sachs also put out a note maintaining a year-end target of $6,500, saying that investors have priced in trade-tensions, growth remains strong across top economies and consumers who have delayed purchasing restart. The analysts said: "this week the trade war was escalated and markets shrugged it off with copper rallying. The reason is the market has already factored in an extended standoff between the US and China".
Elsewhere, rare disease specialist Shire ticked up as it announced that the Ministry of Health, Labour and Welfare (MHLW) in Japan has granted manufacturing and marketing authorisation for its treatment for hereditary angioedema attacks in adult patients.
Just Eat bucked the trend, tumbling nearly 6% following reports that Uber is in early-stage talk to buy Deliveroo. Peel Hunt said that while this is isn't a done deal, it would be a shift in the paradigm of the cooked food delivery market in the UK and beyond and could put enormous pressure on "the poster child for takeaway aggregation", Just Eat.
Still, it argued that Just Eat's buying power to get discounts for its restaurants, its invaluable big data assets, and the large swathe of customers that use and continue to use the platform is still a huge barrier to entry for the smaller players.
Smiths Group was sharply lower after saying it returned to growth last year as revenue increased but currency swings and reclassification of costs sent annual profit down 8%. The company also announced the sale of its medical division's water bottling business for an enterprise value of $40m.
SIG fell after it said profits shrank 22% in the first half of the year as the building products supplier continues its transformation and reported that it was "starting to see evidence of delivery".
In broker note action, Burberry was cut to 'neutral' from 'outperform' by Credit Suisse, while Paragon Banking Group was initiated at 'sector perform' by RBC Capital Markets.
Market Movers
FTSE 100 (UKX) 7,446.09 1.07%
FTSE 250 (MCX) 20,600.31 0.24%
techMARK (TASX) 3,506.43 0.56%
FTSE 100 - Risers
Kingfisher (KGF) 253.30p 4.37%
TUI AG Reg Shs (DI) (TUI) 1,414.50p 3.29%
Glencore (GLEN) 332.25p 3.28%
Antofagasta (ANTO) 885.20p 3.17%
Anglo American (AAL) 1,743.40p 2.83%
BHP Billiton (BLT) 1,661.20p 2.67%
Rio Tinto (RIO) 3,914.00p 2.54%
Standard Chartered (STAN) 642.70p 2.02%
Prudential (PRU) 1,799.00p 2.01%
Aviva (AV.) 490.90p 1.97%
FTSE 100 - Fallers
Smiths Group (SMIN) 1,491.00p -6.29%
Just Eat (JE.) 667.20p -5.76%
Next (NXT) 5,220.10p -1.91%
Burberry Group (BRBY) 1,980.00p -1.39%
Persimmon (PSN) 2,419.00p -0.62%
Associated British Foods (ABF) 2,271.00p -0.61%
Rolls-Royce Holdings (RR.) 989.80p -0.58%
Hargreaves Lansdown (HL.) 2,248.00p -0.49%
NMC Health (NMC) 3,316.00p -0.36%
Halma (HLMA) 1,387.00p -0.29%
FTSE 250 - Risers
Kaz Minerals (KAZ) 563.80p 6.18%
Ferrexpo (FXPO) 183.75p 3.64%
Ted Baker (TED) 2,278.00p 3.55%
IG Group Holdings (IGG) 800.00p 2.63%
Fidelity China Special Situations (FCSS) 213.35p 2.57%
Centamin (DI) (CEY) 103.07p 2.35%
UDG Healthcare Public Limited Company (UDG) 679.50p 2.33%
Thomas Cook Group (TCG) 76.65p 2.20%
Investec (INVP) 557.60p 2.16%
Dunelm Group (DNLM) 566.50p 1.98%
FTSE 250 - Fallers
JPMorgan Indian Investment Trust (JII) 641.00p -3.32%
Millennium & Copthorne Hotels (MLC) 525.00p -2.23%
Diploma (DPLM) 1,367.00p -1.94%
Contour Global (GLO) 206.40p -1.71%
Polypipe Group (PLP) 372.40p -1.69%
Sirius Minerals (SXX) 28.69p -1.67%
SIG (SHI) 119.10p -1.65%
Renewi (RWI) 62.50p -1.57%
Serco Group (SRP) 93.95p -1.52%
Galliford Try (GFRD) 1,049.25p -1.48%
Email this article to a friend
or share it with one of these popular networks:
You are here: news
10 Lower Thames St,
London EC3R 6EN