London open: Miners and energy stocks fire up FTSE as pound slumps
By Michele Maatouk
Date: Monday 12 Nov 2018
(Sharecast News) - London stocks rallied in early trade on Monday, boosted by a weaker pound as miners and oil companies advanced.
At 0830 GMT, the FTSE 100 was up 1.1% to 7,182.74 as sterling slumped 1% against the dollar to 1.2844 and 0.2% versus the euro to 1.1428 amid reports of growing opposition to Theresa May's Brexit deal. A weaker pound tends to boost the top-flight index as around 70% of its constituents derive most of their earnings from abroad.
Ahead of a key cabinet meeting on Tuesday, with British and EU negotiators also reported to be close to agreeing a draft withdrawal agreement for the same day, May's plans were "under siege from across the Tory party", according to the Guardian newspaper, while the Times eyed potential further cabinet resignations as there remains two major issues on which the party cannot agree: fishing rights and a review mechanism for leaving the Irish backstop arrangement.
Spreadex analyst Connor Campbell said: "With her most ardent anti-EU MPs opposed to her custom arrangement plans, and a potential Remain rebellion brewing following the resignation of Jo Johnson, Theresa May appears to have been forced to abandon the emergency Cabinet meeting that was pencilled in after a supposed breakthrough last week.
"Seemingly dashing the hopes of a withdrawal deal being within reached any time soon, the pound took a plunge against the dollar, a drop that was exacerbated by the greenback's renewed confidence following the Fed's hawkish-ish November statement."
Miners and energy shares were the standout gainers as copper and oil prices rose, with Rio, Antofagasta, BHP Billiton, Anglo, BP and Shell all in the top 10 FTSE 100 risers. On the 250, Premier, Tullow and Cairn Energy also gained as Brent crude increased 2.3% to $71.82 a barrel and West Texas Intermediate was 1.8% higher at $61.24 after Saudi Arabia said it would cut production by 500,000 barrels a day next month.
Neil Wilson, chief market analyst at Markets.com, said: "In the short term this is a positive for oil, but we must question the impact longer term unless it's the sign of more to come from OPEC. Saudi Arabia cannot act alone though - realistically it needs to pull together OPEC allies and, critically, Russia to curb production if it wants prices to hold. The language from Russia suggests it is not ready to follow the Saudis yet."
Elsewhere, Rio Tinto pushed up as it successfully completed an AUD$2.87bn off-market buyback and Shire advanced as Japan's Takeda Pharmaceutical said it will seek investor backing for its acquisition next month and aims to close the deal on 8 January.
Diageo ticked up after announcing the sale of 19 brands, including Seagrams, to US firm Sazerac for $550m (£427m). The net proceeds of around £340m, after tax and transaction costs, will be returned to shareholders through a share repurchase
Defence contractor Babcock International rose as it responded to an attack from a mystery research firm, insisting that its relationship with the Ministry of Defence was "as strong as ever". There were calls for a boardroom shake-up in the Sunday Telegraph, which cited a report from research firm Boatman Capital that said the FTSE 250 company had "systematically misled investors by burying bad news about its performance".
AstraZeneca was in the green after saying that its diabetes drug Farxiga had "significantly" reduced the risk of hospitalisation for heart failure in a clinical trial.
Wood Group was firmer after being awarded three new call-off contracts totalling $53m by the Abu Dhabi National Oil Company.
On the downside, Imperial Brands was under the cosh following reports that the US Food and Drug Administration is looking to ban menthol cigarettes.
In broker note action, JD Sports was boosted by an initiation at 'buy' by Berenberg while Sports Direct was hit by an initiation at 'sell' from the same outfit.
Market Movers
FTSE 100 (UKX) 7,182.74 1.09%
FTSE 250 (MCX) 19,181.21 0.39%
techMARK (TASX) 3,370.74 0.89%
FTSE 100 - Risers
Rio Tinto (RIO) 3,996.00p 3.81%
Antofagasta (ANTO) 804.00p 3.32%
Wood Group (John) (WG.) 686.60p 3.25%
BHP Billiton (BLT) 1,637.00p 3.24%
Shire Plc (SHP) 4,754.00p 3.07%
Anglo American (AAL) 1,728.80p 2.43%
Evraz (EVR) 574.00p 2.32%
BP (BP.) 535.60p 2.23%
Royal Dutch Shell 'A' (RDSA) 2,470.00p 2.15%
Royal Dutch Shell 'B' (RDSB) 2,514.50p 2.11%
FTSE 100 - Fallers
Imperial Brands (IMB) 2,690.00p -2.18%
British Land Company (BLND) 615.40p -1.50%
Taylor Wimpey (TW.) 166.35p -0.98%
Persimmon (PSN) 2,365.23p -0.87%
United Utilities Group (UU.) 765.60p -0.83%
Marks & Spencer Group (MKS) 310.80p -0.61%
Barratt Developments (BDEV) 541.60p -0.44%
Centrica (CNA) 153.65p -0.42%
National Grid (NG.) 852.10p -0.42%
Berkeley Group Holdings (The) (BKG) 3,625.00p -0.41%
FTSE 250 - Risers
Premier Oil (PMO) 104.38p 5.38%
Ferrexpo (FXPO) 221.00p 4.44%
Kaz Minerals (KAZ) 533.60p 3.73%
Hunting (HTG) 659.50p 3.37%
Playtech (PTEC) 475.20p 3.10%
Tullow Oil (TLW) 209.80p 2.99%
Cairn Energy (CNE) 199.10p 2.95%
TI Fluid Systems (TIFS) 203.80p 2.67%
Syncona Limited NPV (SYNC) 292.50p 2.63%
Babcock International Group (BAB) 616.00p 2.60%
FTSE 250 - Fallers
Amigo Holdings (AMGO) 240.00p -4.00%
Daejan Holdings (DJAN) 5,870.00p -2.00%
AA (AA.) 98.28p -1.97%
TBC Bank Group (TBCG) 1,618.00p -1.70%
Contour Global (GLO) 164.50p -1.56%
FDM Group (Holdings) (FDM) 892.00p -1.44%
Clarkson (CKN) 2,370.00p -1.25%
IP Group (IPO) 111.60p -1.24%
Great Portland Estates (GPOR) 736.20p -1.18%
Tate & Lyle (TATE) 694.60p -1.14%
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