London midday: Stocks come off highs as wage data, Brexit hopes lift pound
By Michele Maatouk
Date: Tuesday 13 Nov 2018
(Sharecast News) - London stocks were up but off their earlier highs by midday on Tuesday amid signs of improving relations between the US and China, as the pound was lifted by strong wage growth figures and Brexit hopes.
The FTSE 100 was up 0.3% to 7,072.50, paring earlier gains as the pound turned higher, trading up 0.5% against the dollar to 1.2914 and 0.3% versus the euro at 1.1485 on the back of the latest wage growth figures for the UK and after a leading member of the government said a Brexit deal could be secured within a matter of days.
Cabinet Office minister David Lidington, Prime Minister Theresa May's deputy, said he was "cautiously optimistic" that a deal would be struck within the next 24-to-48 hours. "Still possible but not at all definite, I think pretty much sums it up."
In an interview with the BBC, he added: "We are not quite there yet. We are almost within touching distance now. The PM has said it can't be a deal at any price."
Data from the Office for National Statistics also boosted sterling, as it showed UK wages grew at their fastest rate since 2008 in the three months to September, although the unemployment rate unexpectedly rose.
The ONS said 32.41m people were employed in the UK in the three months to 30 September, a rate of 75.5% and a marginal increase of 23,000 on the previous quarter.
The number of people out of work also rose, by 21,000 to 1.38m. The unexpected increase was the first after two quarters of failing unemployment, although the figure remains near a historic low.
Wage inflation was 3.2%, or 3% including bonuses, the highest growth since the three months to December 2008 and slightly ahead on the second quarter of 2018. The improvement means that wage growth now stands above inflation.
Laura Suter, personal finance analyst at AJ Bell, said: "The past few years have seen British workers pummelled by a combination of higher inflation and very sluggish wage growth, meaning they have often faced a real terms wage cut.
"However, the current low unemployment, which stands at 4.1%, appears to have shifted the odds back into workers' favour and we're starting to see wages rise more meaningfully."
Also helping to underpin sentiment were signs that relations between the US and China were thawing following a report that China's top trade negotiator was preparing to visit the US ahead of the G20 summit later this month.
In corporate news, Vodafone rallied as it swung to a large loss at the half-year stage after restructuring its business in India due to competitive pressures, but underlying earnings remained on track and there was reassurance provided on the dividend.
Richard Hunter, head of markets at Interactive Investor said: "Vodafone is not out of the woods, but it has established a positive direction of travel. This should come as some relief to long-suffering investors who have had a torrid time, with the share price having dropped 34% over the last year, as compared to a 5% dip for the wider FTSE100, with a decline of 19% in the last three months alone."
Consumer credit reporting agency Experian gained ground as it posted a jump in half-year revenue amid growth across regions, but a drop in pre-tax profit.
Melrose Industries racked up solid gains after a reassuring trading statement that highlighted strong revenue growth in the aerospace business.
International support services group DCC pushed up as it said interim pre-tax profits rose 17.2% to £85.9m as three of its divisions reported higher earnings and offset a seasonally weaker performance in its LPG unit.
BTG surged 15% as it posted a rise in interim revenue and upgraded sales guidance for its pharmaceuticals arms, while FirstGroup advanced as it appointed a new chief executive officer and posted a widening of its first-half pre-tax loss.
On the downside, housebuilder Taylor Wimpey was in the red as it said it was on track to meet full-year expectations following a "strong" second half, but warned that volumes would be flat next year as customers in the South East grow cautious amid heightened political and economic uncertainty
B&M European Value Retail slumped as it reported a rise interim profit but sounded a cautious note on the outlook.
On the broker note front, Sophos was hit by a downgrade to 'hold' at Shore Capital while Pennon was dented by a downgrade to 'hold' at Deutsche Bank.
Market Movers
FTSE 100 (UKX) 7,072.50 0.28%
FTSE 250 (MCX) 18,937.67 0.67%
techMARK (TASX) 3,392.45 1.76%
FTSE 100 - Risers
Vodafone Group (VOD) 156.60p 8.48%
Experian (EXPN) 1,900.99p 6.02%
Melrose Industries (MRO) 173.90p 5.46%
Micro Focus International (MCRO) 1,292.00p 3.03%
Antofagasta (ANTO) 783.80p 2.11%
Bunzl (BNZL) 2,301.00p 2.04%
DCC (DCC) 6,345.00p 2.01%
BAE Systems (BA.) 540.20p 1.96%
Whitbread (WTB) 4,564.00p 1.65%
Burberry Group (BRBY) 1,765.00p 1.44%
FTSE 100 - Fallers
Wood Group (John) (WG.) 644.20p -3.51%
Smurfit Kappa Group (SKG) 2,262.00p -2.25%
BP (BP.) 517.90p -1.93%
Severn Trent (SVT) 1,938.25p -1.59%
Marks & Spencer Group (MKS) 302.80p -1.46%
Royal Dutch Shell 'A' (RDSA) 2,397.50p -1.40%
Royal Mail (RMG) 341.70p -1.33%
Taylor Wimpey (TW.) 160.95p -1.32%
Informa (INF) 723.40p -1.28%
GVC Holdings (GVC) 778.00p -1.27%
FTSE 250 - Risers
BTG (BTG) 657.35p 10.29%
FirstGroup (FGP) 87.05p 9.29%
Grafton Group Units (GFTU) 764.50p 5.74%
Contour Global (GLO) 158.60p 5.66%
BBA Aviation (BBA) 238.80p 4.28%
Indivior (INDV) 221.00p 4.25%
Just Group (JUST) 89.15p 3.48%
Inchcape (INCH) 567.00p 3.28%
Greencore Group (GNC) 196.25p 3.07%
Stobart Group Ltd. (STOB) 195.51p 2.90%
FTSE 250 - Fallers
B&M European Value Retail S.A. (DI) (BME) 375.50p -7.28%
Pennon Group (PNN) 754.60p -3.38%
Premier Oil (PMO) 97.00p -3.00%
Babcock International Group (BAB) 598.00p -2.95%
Sophos Group (SOPH) 321.80p -2.60%
Games Workshop Group (GAW) 3,115.00p -2.35%
Capital & Counties Properties (CAPC) 255.30p -2.30%
Essentra (ESNT) 376.60p -2.18%
Syncona Limited NPV (SYNC) 275.50p -2.13%
Cairn Energy (CNE) 190.90p -1.95%
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