London open: FTSE climbs as oil rebounds and battered pound takes breather

Wed 16 Aug 2017

LONDON (SHARECAST) - (ShareCast News) - London stocks hopped higher in early trade on Wednesday, with only five constituent companies in negative territory as oil prices rallied and a positive lead was taken from Asia as geopolitical tensions faded.
The FTSE 100 was up 50.54 points or 0.68% to 7,434.05 after just over half an hour of trading, following a flattish session on Wall Street and with the battered pound taking a breather on the ropes after many tumbles against the dollar and euro.

Traders were also looking to the release of the UK's August employment report and, later in the day, the minutes of the US central bank's most recent policy meeting.

Both reports are expected to give investors more clues regarding the outlook for monetary policy both here and Stateside in the near-term, although recent events on the Korean peninsula might yet muddy the waters.

In particular, some economists were hoping for a better indication on when the Federal Reserve might be most inclined to begin the process of 'normalising' its balance sheet.

Nonetheless, for now the consensus view appeared to be that infuriatingly low levels of inflation were expected to restrain attempts at policy tightening by the world's central bankers.

On oil, Henry Croft at Accendo Markets noted that crude prices recovered from the prior day's three-week lows as the American Petroleum Institute reported a 9.2m barrel drawdown, almost three times larger than expected.

"This bullish inventory print, complemented by a pause in the US dollar rally, has helped both Brent and US benchmarks to retain $51 and $47.40 handles respectively. Watch this afternoon's EIA inventory data for a confirmation or dispelling of API's report."

On the economic calendar for Wednesday, at 0930 BST the Office for National Statistics is scheduled to release unemployment and average weekly earnings for the three months to June.

"After witnessing July Inflation come in beneath expectations, continuing to fall from its May peak, Bank of England policymakers will likely be further put off from raising interest rates should wage growth remain stagnant at 1.8% as expected," said Croft, advising investors to watch the GBP and the FTSE.

Euro area second quarter GDP data is expected from Eurostat at 1000 BST; the possibility existed that the preliminary reading of quarter-on-quarter growth of 0.6% might be marked down to 0.5%.

This comes a day after Germany reported an acceleration in its annual growth figure to its highest level in four years, the Eurozone equivalent is expected to be confirmed at a 6-year high of 2.1%.

The minutes of the last Federal Reserve meeting are due 1900 BST.

Among individual stocks, miners were leading the rally, with BHP Billiton, Glencore, Rio Tinto and Anglo American to the fore, bouncing back after a subdued few days.

G4S was also rebounding a day after being downgraded by Morgan Stanley.

Construction outfit Balfour Beatty was up as it swung to a first half pre-tax profit of 12m from a loss of 15m last year as its more selective bidding approach started to yield results. However, chief executive Leo Quinn warned that Brexit and the weak pound it has caused were likely to reduce migrant labour at a time when a growing pipeline of major projects is likely to increase demand for skilled workers.

Prudential shares edged up after it offloaded its US independent broker-dealer network for a fee that could rise to $448m as the life insurer looks to trim some of its fat around the global. After the deal was signed off overnight, the transition is expected to be completed by the end of the first quarter of 2018.

Admiral shares tumbled as it reported a 8% jump in net revenues and a 2% rise in statutory profits before tax for the first half of the year, although it reported a higher cost of personal injury claims. The interim dividend was raised by 10% to 56.0p.

Kingfisher was one of the few fallers, a day before the retailer's interim results.

Market Movers

FTSE 100 (UKX) 7,421.27 0.51%
FTSE 250 (MCX) 19,748.06 0.27%
techMARK (TASX) 3,408.65 0.32%

FTSE 100 - Risers

BHP Billiton (BLT) 1,362.50p 1.53%
G4S (GFS) 301.50p 1.41%
Glencore (GLEN) 335.85p 1.39%
Old Mutual (OML) 204.60p 1.29%
Rio Tinto (RIO) 3,418.50p 1.27%
Sage Group (SGE) 691.00p 1.17%
Anglo American (AAL) 1,256.00p 1.17%
3i Group (III) 952.50p 1.11%
easyJet (EZJ) 1,335.00p 0.98%
Convatec Group (CTEC) 292.60p 0.90%

FTSE 100 - Fallers

Admiral Group (ADM) 2,017p -7.40%
BT Group (BT.A) 295.35p -0.44%
United Utilities Group (UU.) 914.50p -0.38%
Severn Trent (SVT) 2,263.00p -0.26%
Kingfisher (KGF) 307.40p -0.26%
Marks & Spencer Group (MKS) 322.60p -0.09%
Bunzl (BNZL) 2,304.00p 0.00%
Carnival (CCL) 5,375.00p 0.00%
Intertek Group (ITRK) 4,810.00p 0.00%
Experian (EXPN) 1,516.00p 0.00%

FTSE 250 - Risers

Balfour Beatty (BBY) 275.90p 5.10%
Vectura Group (VEC) 115.90p 3.02%
Sirius Minerals (SXX) 27.82p 2.43%
Vedanta Resources (VED) 716.00p 2.14%
Savills (SVS) 893.50p 2.06%
Nostrum Oil & Gas (NOG) 397.50p 1.95%
Tullow Oil (TLW) 156.40p 1.82%
Ferrexpo (FXPO) 263.60p 1.74%
Petrofac Ltd. (PFC) 426.50p 1.52%
Melrose Industries (MRO) 234.40p 1.21%

FTSE 250 - Fallers

BGEO Group (BGEO) 3,289.00p -4.39%
TBC Bank Group (TBCG) 1,547.00p -2.34%
Petra Diamonds Ltd.(DI) (PDL) 88.85p -2.31%
Softcat (SCT) 393.00p -1.68%
Computacenter (CCC) 897.00p -0.94%
Galliford Try (GFRD) 1,330.00p -0.75%
Dixons Carphone (DC.) 248.10p -0.72%
Sports Direct International (SPD) 410.50p -0.63%
TR Property Inv Trust (TRY) 365.00p -0.52%
Woodford Patient Capital Trust (WPCT) 100.90p -0.49%
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