London close: Stocks jump on US optimism, weaker pound

Tue 22 Aug 2017

LONDON (SHARECAST) - (ShareCast News) - Shares finished the session higher, after a report stoked optimism that the White House might be making headway in its tax reform efforts and helped along by well-received results from the likes of Persimmon and BHP Billiton, although subprime lender Provident Financial nosedived after another profit warning.
At the closing bell, the FTSE 100 was ahead by 0.86% or 62.86 points at 7,381.74, while the pound was down 0.51% against the dollar at 1.2833 despite a surprise surplus in UK public borrowing in July.

In parallel, the second-tier index was gaining 0.53% or 104.30 points to 19,751.20.

"One day down, one day up, and so on. This is the theme of August, with markets unable so far to establish a direction and stick with it. After losses yesterday the buyers have come back in, with fresh hope of moves on US tax reform apparently providing the catalyst for gains. Warm words from Senate leader McConnell on the debt ceiling are also helping to boost confidence," said IG's chief market analyst, Chris Beauchamp.

According to Politico, which cited five sources familiar with the talks between top members of the Trump administration and several key Republican Congressmen, a broad consensus had been reached on the best way to go about cutting both the individual and corporate tax rates.

Back in the UK, public sector borrowing produced a first July surplus in 15 years thanks to a one-off jump in self-assessment tax receipts.

Public sector net borrowing excluding government stakes in banking groups moved to a 0.18bn surplus compared to a deficit of 0.31bn in July last year and a consensus forecast for a 1.0bn deficit. This follows a deficit the previous month that was revised to 6.2bn deficit from a previously reported 6.9bn.

Elsewhere, the Confederation of British Industry's monthly industrial order book balance rose to +13 in August from +10 the month before, beating expectations for a reading of +8.

In corporate news, shares in FTSE 100 subprime lender Provident Financial tumbled 66% as it issued its second profit warning in two months and announced the resignation of its chief executive and the withdrawal of its dividend as the rate of progress in the turnaround of the home credit business has been "too weak".

UK supermarkets were also in focus as the latest data from Kantar Worldpanel revealed the big four enjoying their strongest run in four years and that discounter Lidl stepped up to become the seventh largest grocer in the country. Tesco was the standout gainer on the FTSE as it came out way ahead in terms of market share at 27.8%, although this was down a touch from 28.1% a year ago.

Meanwhile, Morrisons was higher as it grew sales by 2.6% but saw its share drop to 10.4% from 10.5 and Sainsbury's slipped as it saw a 2% sales boost but its share shrank to 13.1% from 15.7%.

Wood Group pushed lower following weaker-than-expected first-half earnings.

Nevertheless, there were a number of bright spots on the corporate front helping to propel the blue chip benchmark higher.

Housebuilder Persimmon gained ground after it reported a 30% improvement in its profit before tax in the six months to 30 June on Tuesday, to 457.4m.

BHP Billiton rallied as it said it swung back to a profit for the full year and upped its final dividend, while Antofagasta advanced after posting a jump in earnings for the first half as revenues rose amid higher copper prices.

Cairn Energy edged higher after giving an updated estimate on its oil resources, while Petrofac reversed earlier losses to trade up after announcing the sale of its 50% stake in the Panuco oil field in Mexico to Schlumberger.

Market Movers

FTSE 100 (UKX) 7,381.74 0.86%
FTSE 250 (MCX) 19,751.20 0.53%
techMARK (TASX) 3,385.91 0.89%

FTSE 100 - Risers

Tesco (TSCO) 184.20p 4.10%
Shire Plc (SHP) 3,725.00p 3.10%
Rio Tinto (RIO) 3,539.50p 2.43%
Micro Focus International (MCRO) 2,291.00p 2.14%
Glencore (GLEN) 348.60p 2.14%
WPP (WPP) 1,594.00p 2.11%
BHP Billiton (BLT) 1,394.50p 2.09%
Smiths Group (SMIN) 1,577.00p 2.07%
Antofagasta (ANTO) 973.50p 1.99%
Smith & Nephew (SN.) 1,386.00p 1.91%

FTSE 100 - Fallers

Provident Financial (PFG) 589.50p -66.22%
Admiral Group (ADM) 1,970.00p -1.10%
ITV (ITV) 165.70p -0.72%
G4S (GFS) 294.50p -0.47%
Royal Bank of Scotland Group (RBS) 254.00p -0.47%
International Consolidated Airlines Group SA (CDI) (IAG) 614.50p -0.32%
InterContinental Hotels Group (IHG) 3,903.00p -0.23%
Hammerson (HMSO) 565.00p -0.18%
British American Tobacco (BATS) 4,773.00p -0.08%
Direct Line Insurance Group (DLG) 385.10p -0.08%

FTSE 250 - Risers

Kaz Minerals (KAZ) 784.00p 7.18%
Marshalls (MSLH) 423.20p 4.70%
Evraz (EVR) 271.00p 3.91%
Balfour Beatty (BBY) 279.00p 3.68%
Cairn Energy (CNE) 180.20p 3.62%
Indivior (INDV) 419.50p 3.05%
Booker Group (BOK) 201.40p 3.02%
Ferrexpo (FXPO) 286.70p 2.87%
Polar Capital Technology Trust (PCT) 1,057.00p 2.82%
Sophos Group (SOPH) 498.90p 2.59%

FTSE 250 - Fallers

AA (AA.) 174.10p -6.15%
Carillion (CLLN) 47.56p -4.02%
IP Group (IPO) 128.00p -3.91%
Virgin Money Holdings (UK) (VM.) 258.20p -3.66%
Rank Group (RNK) 227.00p -2.87%
TBC Bank Group (TBCG) 1,558.00p -2.63%
Syncona Limited NPV (SYNC) 158.70p -2.46%
Sports Direct International (SPD) 397.00p -2.39%
Stagecoach Group (SGC) 174.60p -2.29%
OneSavings Bank (OSB) 386.00p -2.28%
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