|CATEGORY: MARKET REPORT - MIDDAY
Tue 10 Jul 2018
LONDON (SHARECAST) - (Sharecast News) - London stocks were in the green by midday on Tuesday following a fairly choppy start as investors mulled over the latest political developments and a slew of UK data releases.
The FTSE 100 was up 0.3% at 7,712.48, having earlier fluctuated between small gains and losses, as Theresa May's reshuffled cabinet met for the first time following the resignation of Boris Johnson and David Davis over her Brexit strategy.
Johnson and Davis have been replaced as Foreign Secretary and Brexit Secretary by Jeremy Hunt and Dominic Raab. Meanwhile, Matt Hancock is the new Health Secretary and Jeremy Wright is the new Culture Secretary, while Geoffrey Cox is Attorney General.
May is also due to meet German Chancellor Angela Merkel later in the day.
In currency markets, sterling was down 0.1% versus the dollar at 1.3249, having fallen sharply on Monday following Johnson's resignation, and 0.2% firmer against the euro at 1.1301.
Spreadex analyst Connor Campbell said the "fretful" pound was "holding off from anything resembling a substantial rebound due to uncertainties surrounding Theresa May's government".
He added that sterling's reticence allowed the FTSE to widen its gains, if only just, and hit a fresh three-and-a-half week peak.
Although politics were the main focus, investors also had a deluge of data to wade through.
Figures from the Office for National Statistics showed that Britain's economy accelerated in May, driven by a surge in construction and services output, after flat-lining in April, leaving the MPC on track to hike Bank Rate come August, according to some economists.
Gross domestic product expanded at a month-on-month pace of 0.3%, which was a tenth of a percentage point higher than in the month before. A 2.9% jump in construction output was the chief driver behind the gains, following a drop of 1.8% in March and a flat reading for April.
The ONS also revealed that industrial production fell 0.6% in the three months to May compared to the preceding three month period. Production in the month of May declined 0.4% compared to April, when it dropped 1.0% compared to the month before, but was up 0.8% compared to May last year, though both figures were worse than expected by economists.
Manufacturing production, having fallen 1.3% in April, bounced back with 0.4% growth on the month and 1.1% on the year in May, though again both not as strong as had been forecast.
Construction output in May was up 2.9% month-on-month on a seasonally adjusted basis, which was up from 0.5% growth the month before and much better than expected.
"The upturn in the new monthly measure of GDP in May is just strong enough to tip the balance in favour of the MPC likely raising Bank Rate at its next meeting on August 2, provided the government doesn't implode before then," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
Trade data was also released, showing a total deficit of £2.8bn in May, smaller than the consensus £3.4bn, while April's deficit was revised down to £3.1bn from £5.3bn.
There was also some encouraging high street data from the British Retail Consortium and KPMG, showing total retail sales in the three months to June were 2.3% higher than last year. Like-for-like sales were up 1.1% in the period.
Finally, figures from Barclaycard showed that consumer spending rose 5.1% year-on-year in June, with non-essential expenditure growing 5.5% and marking its best performance since October 2016.
"Overall the sunshine seems to have prompted consumers to become more optimistic as 65% now feel confident in their household finances - the highest proportion in twelve months," the credit card provider said.
In corporate news, Ocado reversed earlier losses to trade up after saying it swung to a £9m loss before tax for the half-year to 3 June from a £17.7m profit a year ago.
Infrastructure services provider Kier Group rose as it secured three-year extensions on its Highways England contracts for Areas 3 and 9, with a total value of around £250m per annum. Management also said they were confident underlying profit and earnings will be in line with expectations.
Softcat surged after the IT infrastructure products and services provider said it expects 2018 adjusted operating profit to be "materially ahead" of its previous expectations thanks to favourable market conditions.
Sky was higher amid reports that 21st Century Fox is preparing to make a higher bid of around £25bn in order to both satisfy investor pressure and to outbid rival Comcast.
Pubco Ei Group was bubbling up slightly on reports has appointed advisers as it looks to sell its commercial property division.
Tesco was in the red as it announced that its UK and Ireland chief executive Charles Wilson is stepping down as he recovers from throat cancer.
Interdealer broker TP ICAP tumbled 36% following a profit warning and news that its chief executive officer is departing.
Dechra Pharmaceuticals declined despite saying that trading in the year to 30 June was "strong" and in line with management expectations.
In broker note action, Acacia Mining was upgraded to 'overweight' at Barclays, while Chemring was lifted to 'overweight' by the same outfit.
Ascential was boosted to 'add' by Peel Hunt, while Domino's Pizza was rated a new 'buy' at Goodbody Stockbrokers and Ted Baker was started at 'buy' by HSBC.
Computacenter was cut to 'underweight' at Barclays and Rentokil was downgraded to 'hold' at Jefferies, while Convatec was initiated at 'underperform' by Bank of America Merrill Lynch.
FTSE 100 (UKX) 7,712.48 0.32%
FTSE 250 (MCX) 20,851.01 0.14%
techMARK (TASX) 3,563.30 0.54%
FTSE 100 - Risers
Ocado Group (OCDO) 1,047.00p 3.51%
GVC Holdings (GVC) 1,090.00p 2.73%
Micro Focus International (MCRO) 1,316.50p 2.61%
Hargreaves Lansdown (HL.) 2,059.00p 2.29%
Sky (SKY) 1,500.00p 2.15%
Coca-Cola HBC AG (CDI) (CCH) 2,654.00p 1.96%
Smith (DS) (SMDS) 491.40p 1.92%
Experian (EXPN) 1,943.38p 1.91%
Burberry Group (BRBY) 2,110.00p 1.88%
Pearson (PSON) 905.80p 1.50%
FTSE 100 - Fallers
United Utilities Group (UU.) 747.40p -2.48%
Severn Trent (SVT) 1,961.00p -2.10%
BT Group (BT.A) 228.75p -1.55%
British American Tobacco (BATS) 3,908.00p -1.30%
National Grid (NG.) 857.10p -1.23%
Fresnillo (FRES) 1,129.50p -1.22%
Tesco (TSCO) 257.00p -1.12%
Royal Bank of Scotland Group (RBS) 247.70p -1.04%
Randgold Resources Ltd. (RRS) 5,722.00p -0.97%
Marks & Spencer Group (MKS) 309.40p -0.93%
FTSE 250 - Risers
Softcat (SCT) 760.00p 6.89%
Provident Financial (PFG) 629.73p 4.47%
Ted Baker (TED) 2,284.00p 3.72%
Premier Oil (PMO) 134.20p 3.63%
Safestore Holdings (SAFE) 548.00p 3.59%
Kier Group (KIE) 968.00p 3.53%
Drax Group (DRX) 355.20p 3.38%
Stobart Group Ltd. (STOB) 244.25p 3.28%
Daejan Holdings (DJAN) 5,830.00p 3.19%
Coats Group (COA) 78.30p 2.89%
FTSE 250 - Fallers
TP ICAP (TCAP) 268.80p -36.03%
Equiniti Group (EQN) 230.50p -5.14%
Pennon Group (PNN) 765.00p -2.92%
IntegraFin Holding (IHP) 384.00p -2.54%
McCarthy & Stone (MCS) 99.10p -2.17%
Playtech (PTEC) 515.00p -2.02%
Hochschild Mining (HOC) 182.20p -1.91%
Kaz Minerals (KAZ) 836.40p -1.67%
Superdry (SDRY) 1,319.00p -1.57%
RHI Magnesita N.V. (DI) (RHIM) 4,548.00p -1.56%