London midday: Stocks pop higher as pound slips ahead of May speech

Fri 22 Sep 2017

LONDON (SHARECAST) - (ShareCast News) - London stocks had reversed earlier losses to trade a little higher by midday, helped along by a weaker pound as investors awaited a key speech by Prime Minister Theresa May.
The FTSE 100 was up 0.3% to 7,282.79, while the pound was down 0.2% against the dollar at 1.3555 and 0.5% weaker versus the euro at 1.1317 as the single currency was boosted by encouraging business activity data for the bloc.

Stocks had kicked off the session in the red amid concerns about North Korea, which threatened on Thursday to test a hydrogen bomb over the Pacific.

Speaking at a United Nations meeting in New York, North Korea's foreign minister Ri Yong Ho said the country could consider a nuclear test of "unprecedented scale".

Investors were also looking ahead to a speech by Theresa May in Florence at around 1415 BST, during which she is set to outline her plans for Brexit. May is expected to say she wants a two-year transition deal and is also likely to reference the fact that Britain needs to pay its dues, amid reports of a €20bn divorce payment contingent on access to the single market and some form of customs union.

Neil Wilson, senior market analyst at ETX Capital, said: "The PM is likely to make certain overtures in an attempt to kick-start the next round of talks on September 25th, and this ought to give some direction to the pound. If the market decides this speech means the next round of talks have a chance then the pound could rise. If not, recent rate-hike speculation based gains could erode. The FTSE 100 looks like being a straight sterling-based play given the negative correlation between the pound and the blue chip index."

Market participants were also digesting the latest survey from the Confederation of British Industry, which showed that factory orders in the UK grew at their weakest rate since April in September.

The CBI's factory order book balanced fell to +7 from +13 in August, missing expectations for an unchanged reading, largely due to the food and drink sector.

Meanwhile, the export order book balance came in at +10 in September from +11 the month before and the output balance for the last three months fell to +17 from +30.

Still, the CBI pointed out that all three balances remained above the long-run averages.

On the corporate front, specialty chemicals company Johnson Matthey racked up healthy gains for the second day running after it announced a 200m investment in battery technology on Thursday that will allow it to tap into the growing electric car market.

Pets at Home surged after a capital markets day on Thursday that was more upbeat than expected, according to analysts.

Acacia Mining was also on the front foot after saying it has yielded positive results from a trial to increase the proportion of sellable gold produced by its smallest mine in the country.

Going the other way, Smiths Group was under the cosh after it reported a small decline in full year underlying revenue but 11% growth on a reported basis thanks to the weak pound and said its strategic progress set it up to return to growth next year.

Saga, the specialist provider of products and services for those over 50, reversed course to nudge just a touch lower after it reported a 5.5% jump in its underlying pre-tax profit for the first half to 110.2m.

Shares in oil rig builder Lamprell tanked as it posted a drop in first-half revenue and warned that revenue for 2018 would be 10% lower on the year.

In terms of sectors, heavily-weighted mining stocks were the worst performers, with BHP Billiton, Antofagasta, Anglo American and Glencore all weaker following S&P's downgrade of China's credit rating on Thursday.

Market Movers

FTSE 100 (UKX) 7,282.79 0.26%
FTSE 250 (MCX) 19,432.81 0.07%
techMARK (TASX) 3,431.89 0.51%

FTSE 100 - Risers

Johnson Matthey (JMAT) 3,479.00p 2.63%
Standard Life Aberdeen (SLA) 425.90p 2.26%
AstraZeneca (AZN) 4,850.00p 1.71%
WPP (WPP) 1,407.00p 1.44%
Coca-Cola HBC AG (CDI) (CCH) 2,539.00p 1.44%
Compass Group (CPG) 1,592.00p 1.34%
InterContinental Hotels Group (IHG) 3,780.00p 1.29%
Experian (EXPN) 1,500.00p 1.28%
Sage Group (SGE) 712.50p 1.21%
British American Tobacco (BATS) 4,620.00p 1.20%

FTSE 100 - Fallers

Smiths Group (SMIN) 1,547.00p -4.09%
Glencore (GLEN) 341.80p -1.37%
Standard Chartered (STAN) 727.30p -1.13%
BHP Billiton (BLT) 1,329.50p -1.08%
Anglo American (AAL) 1,317.50p -1.05%
Antofagasta (ANTO) 914.00p -0.87%
United Utilities Group (UU.) 856.50p -0.75%
Babcock International Group (BAB) 838.50p -0.65%
Barclays (BARC) 189.20p -0.63%
Direct Line Insurance Group (DLG) 368.60p -0.51%

FTSE 250 - Risers

Pets at Home Group (PETS) 207.30p 6.53%
Mitchells & Butlers (MAB) 242.00p 2.37%
Spire Healthcare Group (SPI) 235.40p 2.35%
Sophos Group (SOPH) 550.50p 1.94%
Indivior (INDV) 322.00p 1.87%
Greencore Group (GNC) 192.90p 1.79%
Acacia Mining (ACA) 181.80p 1.79%
Safestore Holdings (SAFE) 398.40p 1.63%
John Laing Group (JLG) 292.70p 1.63%
Wetherspoon (J.D.) (JDW) 1,250.00p 1.63%

FTSE 250 - Fallers

FDM Group (Holdings) (FDM) 941.00p -3.64%
Ferrexpo (FXPO) 281.80p -3.29%
Provident Financial (PFG) 745.50p -2.49%
Kaz Minerals (KAZ) 706.00p -2.08%
Galliford Try (GFRD) 1,329.00p -1.99%
Hikma Pharmaceuticals (HIK) 1,113.00p -1.85%
Vedanta Resources (VED) 810.00p -1.64%
Diploma (DPLM) 1,079.00p -1.55%
Metro Bank (MTRO) 3,290.00p -1.53%
Rank Group (RNK) 217.50p -1.18%
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