|CATEGORY: MARKET REPORT - MIDDAY
Fri 06 Dec 2019
LONDON (SHARECAST) - (Sharecast News) - London stocks had extended gains by midday on Friday, underpinned by signs of progress in Sino-US trade relations and some encouraging house price data, as investors awaited the release of the latest US non-farm payrolls report.
The FTSE 100 was up 0.8% at 7,192.09, while the pound was down 0.2% against the dollar at 1.3131 and 0.1% lower versus the euro at 1.1839.
Sentiment got a boost after China said it will waive import tariffs for some soybean and pork shipments from the US. The country's finance ministry made the announcement earlier on Friday but did not specify quantities.
Joshua Mahony, senior market analyst at IG, said: "From an optimistic standpoint, the Chinese decision to drop 25% tariffs previously imposed on pork and soybeans highlights a firm shift towards closing the gap needed to drag a phase one deal across the line.
"However, this is also likely to be a move of necessity, with the swine fever epidemic meaning that China has a pronounced undersupply of pork and proteins that need addressing."
Later in the session, all eyes will be on the US November payrolls report, which is due at 1330 GMT, along with the unemployment rate and average earnings.
Spreadex analyst Connor Campbell said: "The headline figure is set to jump from 128k to 181k month-on-month, with wage growth up 0.3% from 0.2%, and the unemployment rate steady at 3.6%."
On home shores, the latest survey from mortgage lender Halifax showed that UK house prices saw their biggest monthly rise in November since February.
House prices were up 1% on the month following a 0.1% decline in October and beating expectations of a 0.7% fall.
On the year, house prices rose 2.1% in November following a 0.9% increase the month before. In the quarter to November, meanwhile, prices were up 0.2%, unchanged from the previous month.
Halifax managing director Russell Galley said: "Prices are now up by £3,904 since the start of the year. While a degree of uncertainty remains evident, it's also clear that buyers and sellers are responding to factors such as improved mortgage affordability and the limited supply of available properties.
"It is these issues which we believe will continue to underpin the resilience evident in the market for most of 2019. Over the medium term we expect the emerging trend of modest gains to continue into next year."
Hansen Lu, economist at Capital Economics, said the rise in annual house price growth appears to be "an outlier".
"After all, the Nationwide recorded house prices rising at just 0.8% year-on-year for the same period, while Rightmove's measure of asking prices showed a 0.3% y/y gain. Of course, there could be some truth in November's strong month-on-month figure. After all, the Nationwide recorded an also punchy 0.5% month-on-month rise in November - which was the fastest reading in 16 months. Then again, house price indices can be volatile, so we'd avoid putting too much weight on just one reading.
"Indeed, looking ahead, we expect only a limited pick-up in house price growth over the next few years. Previous bouts of rapid house price growth reflected a structural fall in interest rates. But with interest rates now at or close to their floor, that force has been expended. As a result, while an easing in economic and political uncertainty might allow a slight pick-up in house price growth, we expect the magnitude of any rise to be limited."
In equity markets, paper and packaging groups DS Smith and Smurfit Kappa were the biggest risers, bouncing back from losses in the previous session following half-year results from DS Smith.
Miners racked p strong gains amid trade optimism, with Antofagasta, Anglo American and BHP all higher.
Associated British Foods advanced after the Primark owner said it still expects earnings per share growth for FY2020. In a statement ahead of its annual meeting, the company said its sugar division would benefit "materially" from the rise seen last year in EU sugar prices, while the grocery division was expected to see "another year of strong profit and margin growth".
Housebuilder Berkeley Group reversed earlier losses to trade slightly higher even as it said profits in the first half fell by nearly a third.
British Airways and Iberia parent IAG was lifted by an initiation at 'buy' at Peel Hunt and an upgrade to 'outperform' at MainFirst, while Marks & Spencer was higher after an upgrade to 'neutral' at JPMorgan.
On the downside, Glencore was under the cosh again, having suffered heavy losses on Thursday after the Serious Fraud Office said it was launching an investigation into suspected bribery at the miner.
Elsewhere, Petrofac was hit by a downgrade to 'hold' at Jefferies.
FTSE 100 (UKX) 7,192.09 0.76%
FTSE 250 (MCX) 20,819.75 0.54%
techMARK (TASX) 4,017.38 0.46%
FTSE 100 - Risers
Smith (DS) (SMDS) 363.20p 3.24%
Smurfit Kappa Group (SKG) 2,676.00p 2.69%
Kingfisher (KGF) 212.00p 2.37%
WPP (WPP) 972.20p 2.34%
Rightmove (RMV) 634.20p 2.22%
Antofagasta (ANTO) 885.00p 1.96%
Anglo American (AAL) 2,057.00p 1.88%
Evraz (EVR) 347.20p 1.70%
Next (NXT) 6,862.00p 1.66%
JD Sports Fashion (JD.) 795.00p 1.61%
FTSE 100 - Fallers
NMC Health (NMC) 2,534.00p -2.35%
Glencore (GLEN) 214.65p -1.04%
Fresnillo (FRES) 559.20p -0.71%
Phoenix Group Holdings (PHNX) 734.40p -0.62%
BT Group (BT.A) 190.16p -0.30%
United Utilities Group (UU.) 860.20p -0.23%
Hiscox Limited (DI) (HSX) 1,352.00p -0.22%
Croda International (CRDA) 4,892.00p -0.16%
Ferguson (FERG) 6,602.00p -0.15%
Coca-Cola HBC AG (CDI) (CCH) 2,490.00p -0.12%
FTSE 250 - Risers
Aston Martin Lagonda Global Holdings (AML) 629.80p 5.92%
Virgin Money UK (VMUK) 173.30p 4.21%
Marks & Spencer Group (MKS) 199.30p 3.16%
IP Group (IPO) 61.80p 3.00%
Sports Direct International (SPD) 353.60p 2.91%
Network International Holdings (NETW) 589.00p 2.79%
Riverstone Energy Limited (RSE) 414.50p 2.73%
Kaz Minerals (KAZ) 487.00p 2.57%
Hilton Food Group (HFG) 1,018.00p 2.31%
Countryside Properties (CSP) 433.60p 2.26%
FTSE 250 - Fallers
Cairn Energy (CNE) 175.90p -2.39%
Hill & Smith Holdings (HILS) 1,329.00p -1.63%
Go-Ahead Group (GOG) 2,030.00p -1.55%
UK Commercial Property Reit Limited (UKCM) 83.80p -1.53%
Petrofac Ltd. (PFC) 384.10p -1.44%
Wood Group (John) (WG.) 318.00p -1.33%
Serco Group (SRP) 146.10p -1.28%
Centamin (DI) (CEY) 118.05p -1.09%
Polypipe Group (PLP) 509.00p -1.07%
Quilter (QLT) 149.05p -1.06%