London open: Stocks steady; BAE Systems rallies on acquisitions
By Michele Maatouk
Date: Monday 20 Jan 2020
(Sharecast News) - London stocks were steady in early trade on Monday at the start of what is expected to be a fairly quiet session, with US markets out of action for Martin Luther King Jr day.
At 0835 GMT, the FTSE 100 was flat at 7,674.37, while sterling was down 0.3% against the dollar at 1.2980.
Oil prices surged earlier but had given up some gains by early trade, with West Texas Intermediate up 0.8% at $59.07 a barrel and Brent crude 0.9% higher at $65.47.
Neil Wilson, chief market analyst at Markets.com, said: "Oil took off amid supply disruption in Libya and Iraq. Production of 1.2m barrels per day has been completely crippled after forces loyal to Khalifa Haftar closed a pipeline. About 800k bpd of that figure has been taken out, although it could be higher.
"This is coinciding with disruptions to production in Iraq. We can expect both countries to provide ongoing supply uncertainty but these are relatively mild and likely to be shorter duration outages. I don't think we are seeing a major disruption - certainly any spare capacity can simply be absorbed by other OPEC members gladly pumping a little more to compensate. And the global oil market just isn't as exposed to shocks as it once was."
On home turf, investors were mulling the latest survey from Rightmove, which showed that asking prices for UK houses rose at their fastest pace on record for the month in January, with sentiment boosted by the outcome of the general election.
House prices were up 2.3% on the month, marking the largest price rise recorded at this time of the year since the Rightmove house price survey began in 2002. Prices had fallen 0.9% in December.
This pushed the annual rate of increase to 2.7%, which is the highest level since July 2017. Prices had risen 0.8% the month before.
Rightmove director and housing market analyst Miles Shipside said: "These statistics seem to indicate that many buyers and sellers feel that the election result gives a window of stability. The housing market dislikes uncertainty, and the unsettled political outlook over the last three and a half years since the EU referendum caused some potential home-movers to hesitate.
"There now seems to be a release of this pent-up demand, which suggests we are in store for an active spring market. The early birds are on it, with over 1.3 million buyer enquiries to agents since the election, up 15% on the same period a year ago. Some buyers are even further ahead and have snapped up a property already, with the number of sales agreed up by 7.4% on this time last year."
In equity markets, BAE Systems was the standout gainer after announcing the acquisition of Collins Aerospace's Military Global Positioning System business for $1.925bn (£1.48bn) and Raytheon's Airborne Tactical Radios business for $275m.
Auto Trader was boosted by an upgrade to 'buy' at Goldman Sachs and to 'add' at Peel Hunt.
Anglo American ticked higher after agreeing to buy Sirius Minerals for 5.5p a share in cash, in a deal that values the fertiliser maker at £404.9m.
On the downside, WPP was hit by a downgrade to 'neutral' at Goldman Sachs, while Convatec was weaker after a downgrade to 'underweight' at JPMorgan.
Outsourcer Capita was under the cosh following a Telegraph report that it was planning the £200m sale of a clutch of businesses including translation services and events management.
Outside the FTSE 350, shares of posh tonics maker Fevertree tumbled after it said full-year earnings would fall around 5% from 2018 while revenue would miss the company's expectations after "subdued" Christmas trading.
Market Movers
FTSE 100 (UKX) 7,674.37 0.00%
FTSE 250 (MCX) 21,909.02 0.10%
techMARK (TASX) 4,276.80 0.11%
FTSE 100 - Risers
BAE Systems (BA.) 642.40p 2.85%
Evraz (EVR) 428.70p 2.36%
Auto Trader Group (AUTO) 586.60p 2.30%
Pearson (PSON) 599.00p 1.77%
Kingfisher (KGF) 213.10p 1.33%
Persimmon (PSN) 2,926.00p 1.21%
Barratt Developments (BDEV) 806.20p 0.85%
Berkeley Group Holdings (The) (BKG) 5,078.00p 0.75%
Rightmove (RMV) 668.40p 0.75%
TUI AG Reg Shs (DI) (TUI) 897.20p 0.63%
FTSE 100 - Fallers
NMC Health (NMC) 1,498.50p -3.79%
Burberry Group (BRBY) 2,299.00p -1.29%
International Consolidated Airlines Group SA (CDI) (IAG) 663.00p -1.19%
British American Tobacco (BATS) 3,435.50p -0.89%
easyJet (EZJ) 1,467.00p -0.71%
Lloyds Banking Group (LLOY) 58.05p -0.68%
Prudential (PRU) 1,407.00p -0.67%
Centrica (CNA) 92.26p -0.65%
WPP (WPP) 1,013.00p -0.64%
Associated British Foods (ABF) 2,645.00p -0.56%
FTSE 250 - Risers
Airtel Africa (AAF) 72.45p 3.65%
Watches of Switzerland Group (WOSG) 396.80p 2.37%
Premier Oil (PMO) 119.45p 2.23%
Synthomer (SYNT) 330.60p 2.04%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 332.00p 2.00%
Sirius Minerals (SXX) 5.51p 1.94%
Sanne Group (SNN) 630.00p 1.94%
Ferrexpo (FXPO) 159.05p 1.82%
Tullow Oil (TLW) 54.30p 1.76%
Mitchells & Butlers (MAB) 418.00p 1.70%
FTSE 250 - Fallers
Capita (CPI) 167.65p -2.73%
Hays (HAS) 165.60p -2.24%
Convatec Group (CTEC) 208.50p -2.02%
Sequoia Economic Infrastructure Income Fund Limited (SEQI) 116.40p -1.85%
Cairn Energy (CNE) 190.20p -1.81%
888 Holdings (888) 149.50p -1.64%
Renishaw (RSW) 3,636.00p -1.46%
Telecom Plus (TEP) 1,520.00p -0.91%
Hammerson (HMSO) 262.70p -0.91%
Hunting (HTG) 353.40p -0.90%
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