logo-loader

FTSE 100 and small-cap stocks chalk record highs

Last updated: 17:30 03 Jan 2017 GMT, First published: 07:00 03 Jan 2017 GMT

Wall Street sign
  • FTSE 100, FTSE AIM 100 Index mark record highs

  • US PMI data, oil prices and bullish China data boost market

  • Pound rises 0.2% against euro to €1.1766, slips 0.2% against US dollar to $1.2256

FTSE 100 and small-cap stocks ended at fresh record highs on Tuesday, the first session of 2017, after being buoyed by higher Wall Street on bullish US factory data, 18-month high oil prices and even bumper Chinese data.

After closing at a record peak level of 7,142.83 on the final trading day of 2016, the FTSE 100 opened higher and set an intra-day record of 7,205.21.

But by the finish it was up 0.5% at 7,177.89 – still a record high close.

Fuelling the clutch of buoyant US business and consumer confidence data in late 2016, the Institute for Supply Management’s PMI index rose in December to 54.7, from 53.2 in the previous month. That topped Wall Street expectations of 53.6 and was the highest level since December 2014. Figures above 50.0 indicate expansion.

That added to strong Chinese economic data. The Caixin Purchasing Managers' Index, which tracks manufacturing activity in China, showed the fastest rate of improvement since January 2013.

Meanwhile, crude oil futures hit their highest level in 18 months as traders express confidence that major oil producing nations -- led by cartel OPEC -- will follow through on promises to cut production. The oil benchmark WTI was 2.1% higher at $54.84.

Changes to broker ratings were behind some of the day's biggest moves. Intercontinental Hotels Group (LON:IHG) rose 3.3% to 3758.18p after broker Barclays raised its rating on the company to "overweight".

In fact, the top risers were themselves brokers. Hargreaves Lansdown plc (LON:HL.) ended up 5% at 1274p. The second riser was Barclays (LON:BARC) up 3.8% to 231.9p.

But shares in Halfords and Next were both hit by downgrades from Deutsche Bank. Midcap Halfords fell 5.6% to 345p after Deutsche cut its rating on the company to "sell" from "hold".

Meanwhile, blue-chip Next (LON:NXT) - which is due to release a trading update on Wednesday – was the top faller of 4.3% to 4770p after Deutsche Bank downgraded its rating on the retailer to "hold" from "buy".

The midcap FTSE 250 ended up 0.4% to 18,140 – its highest level since the start of October.

The FTSE AIM 100 Index rose by 0.7% to 4,099.52 – a record high.  Meanwhile, the FTSE AIM All-Share Index advanced by 0.7% to 849 – its highest level since April 2014.

A total of 41% of London stocks gained while only 26% fell on Tuesday.


1530 GMT - FTSE 100 holds off earlier all-time high as US stocks stay shy of new records

  • FTSE 100 index gains 45 points at 7,188

  • Dow Jones up 130 points after first half hour

  • Banks play catch-up, helped by Basel rules delay   

  • Retailers weak on footfall worries, broker comment

3.30pm ... Commodity boost ...

Energy stocks were also strong in London as oil prices hit 18-month highs today, with Brent crude back above $58 a barrel, buoyed by hopes that a deal between Opec and other big oil exporters to cut production - which kicked in on Sunday - will improve a global supply glut.

Among the majors, BP was up 1.8% to 518.8p and Royal Dutch Shell Group PLC (LON:RDSA) saw its A shares add 1.2% at 2,270p, while mid-cap explorer Tullow Oil (LON:TLW) jumped over 6% to 332.3p.

Meanwhile, mining stocks also held firm, benefitting from firmer base metal prices following bullish factory data from top consumer China, with commodities trader and miner Glencore PLC (LON:GLEN) standing out, up over 3% at 286.75p.

Gold prices, however, eased back slightly today to US$1,148 an ounce as the US dollar firmed once again after more upbeat US factory data. 

On currency markets, the pound was down 0.6% versus the greenback at US$1.2202 in late afternoon trade, although sterling held good gains versus the euro at €1.1777 hit following upbeat UK manufacturing data this morning.

3pm … Dow up, but no records …

The FTSE 100 extended its lunchtime gains but still held off earlier all-time highs in late afternoon trading as US stock indexes started 2017 with strong gains but failed to hit new records themselves.

By 3pm, the UK benchmark was ahead 45 points at 7,188, having broached the 7,200 in opening deals on the first session of the new year.

Meanwhile, in New York, the Dow Jones Industrial Average rose by over 130 points in the first half-hour having put in a negative performance in the final trading week of 2016.

The US blue chip index posted strong gains for both the fourth quarter and for 2016 overall, but has been unable to break above the key psychological milestone of 20,000 that some analysts see as a resistance level for the market.

Global markets got a lift on the first session – for most - of 2017 after a batch of upbeat manufacturing surveys, with the latest US factory reports showing an increase this afternoon after those from China and the UK both beat expectations earlier today.

Banks racked up healthy gains in London, playing catch-up with their European peers, which rallied on Monday while UK markets were closed.

The sector was also higher on news that the Basel Committee on Banking Supervision has delayed the sign-off of new rules on bank capitalisation.

Barclays PLC (LON:BARC) was the best performer, up 4% to 232.8p, while Lloyds Banking Group PLC (LON:LLOY) gained over 3% at 64.65p, and Royal Bank of Scotland PLC (LON:RBS) added 3% as well at 231.8p.

But retailers were lower, hit by uninspiring New Year footfall figures from research firm Springboard Insights and some cautious broker comment.

Next PLC (LON:NXT), which is due to report its fourth quarter trading update tomorrow, lost nearly 4% at 4,798p also hit by a downgrade in rating from Deutsche Bank to 'hold' from ' buy',

The bank’s analysts also cut their stance for both cars to bicycle parts retailer Halfords Group PLC (LON:HFD) and department stores firm Debenhams PLC (LON:DEB) to ‘sell’ from ‘hold’. Halfords shares shed over 5% at 346.3p, and Debenhams was down almost 3% at 55.65p.

12.50pm … Dow boost sought …

The FTSE 100 index ticked higher around midday, but stayed off the morning’s new all-time peak, with traders looking to the 2017 start in New York to provide a fresh boost for the market.

At lunchtime, the UK blue chip index was up 37 points at 7,180.

US blue chip futures pointed to an opening 110 point jump by the Dow Jones, putting Wall Street on track to start the New Year on the same upbeat note it left the last one.

Remo Fritschi, Institutional Sales Manager at ADS Securities, said: “Futures markets are currently indicating that Wall Street indices will be jumping higher once again as the new trading year gets underway, with the DOW once again moving back to within striking distance of the 20,000 mark.

“Whether we actually get there remains a point that’s open to much debate and at these levels, equity valuations certainly look rather toppy, but the bull rally that started in the wake of Donald Trump winning the Presidential election remains intact, at least for now.”

Global stock markets got an early 2017 lift after Asian markets pushed higher following encouraging Chinese manufacturing data, while other European stocks built on their gains from Monday – when London and New York markets were closed.

Airlines were a focus at lunchtime, with Irish discount carrier Ryanair PLC (LON:RYA) flying 1.5% lower to €14.32 after Bank of America Merrill Lynch downgraded its rating to 'underperform' from 'neutral', saying the group is likely to lag behind its peers in coming months.

But British Airways-owner International Consolidated Airlines Group PLC (LON:IAG) rose over 1% to 445.8p after the same broker reiterated a 'buy' rating on the FTSE 100-listed stock and pushed its price target up to 555p from 500p.

On the second line, soft drinks firm Britvic PLC (LON:BVIC) also had some fizz, adding 1% at 572.5p after the Robinson’s juices and J2O producer expanded its presence in Brazil with a deal to buy Bela Ischia Alimentos Ltda.

Numis Securities reiterated a 'buy' rating and target price of 697p on Britvic this morning.

10.45am ... Drifts from early peak ...

The Footsie held firm mid morning, but drifted off its earlier record highs as weakness in the retail sector ahead of Christmas trading updates countered strength in the heavyweight mining sector.

Around 10.45am,  the FTSE 100 was ahead 24 points at 7,166, having hit a fresh all-time peak of 7,205.21 in opening deals on the first session of 2017.

Meanwhile on currency markets, sterling hit a two-week high against the euro after a survey suggested British manufacturing growth climbed to a two-and-a-half-year high last month, continuing the run of upbeat post-Brexit surveys.

Markit’s purchasing managers index (PMI) for the manufacturing sector rose to 56.1 in December, the strongest reading since June 2014 and exceeding all forecasts.

David Cheetham, market analyst at XTB.COM, said: “Predictions for a recession in the second half of last year were widespread following the Brexit vote, but this latest data suggests that these were wide of the mark, with the economy now expected to not only have managed to avoid a contraction but actually posted strong growth in the subsequent months.”

It was Chinese data, however, which gave the boost to the FTSE 100 miners, after a PMI for that country’s manufacturing index also beat expectations.

Among the stronger commodity sector - which is heavily dependent on demand from China - Glencore PLC (LON:GLEN) and Antofagasta PLC (LON:ANTO) stood out, both up over 2%. A firmer oil price also gave the sector a lift. 

In corporate news, Vodafone PLC (LON:VOD) edged higher 0.5%, or 1p higher to 200.85p after saying it will receive a £0.6mln cash payment after it completed its VodafoneZiggo joint venture in the Netherlands with Virgin Media owner Liberty Global.

But London Stock Exchange PLC (LON:LSE) shares shed 0.5%, 15p at 2,899p after Euronext NV made a £510mln cash offer to buy the French operations of its clearing house business, LCH Group.

The LSE is hoping that the deal will help smooth European Commission approval for its planned merger with Germany’s Deutsche Boerse AG.

08.30am ... Record highs continue ...

The FTSE 100 kicked off the week in fine fettle, up 49 points at 7,195.35, and at least on leading technical analyst expects to the trend to continue.

See below Chris Weston’s candlestick chart, which assesses the movement from early December into 2017.

“This is obviously bullish,” Weston concludes.

“Although if we look at price action and the daily candles we can see a lack of real conviction to push prices higher, with small bodies in the candles.

“There is a measured calm from both the buyers and sellers, and while the index is printing higher highs and lows, there are no real signs of euphoria.

“Price action could be best described as a cautious optimism.”

The early risers were a mixed bunch, led by InterContinental Hotel Group (LON:IHG). It rose 3%, recovering from the markdown it received between Christmas and New Year thanks to an upgrade in rating to overweight from equal-weight by analysts at Barclays.

Next (LON:NXT), which updates on Wednesday, fell 1.8% with investors betting the festive season may not have been particularly kind to the clothes retailer.

In fact a report in one of the broadsheets this morning suggests the hedge funds are staking large sums on the sector being one of the winter’s big losers.

6.45am ... Strong start predicted ...

The FTSE 100 looks set to make a strong start to the new trading year, taking its cue from Asia overnight.

The index of blue-chip will rise 46 points to 7,188.83, according to the spread betting firms, after hitting record territory just before the Christmas break.

Chart experts are predicting the recent run will continue, although nobody is getting carried away, according to Chris Weston, analyst at financial markets group IG.

“There is a measured calm from both the buyers and sellers, and while the index is printing higher highs and lows, there are no real signs of euphoria,” he added.

“Price action could be best described as a cautious optimism.”

In Asia overnight, sentiment was buoyed by better than expected manufacturing data from China, which showed output at a six-year high.

Shanghai rose 1%, while the best performing regional index was the mining-heavy ASX, which advanced 1.2%.

Back here in Britain it is expected to be a slow week for corporate news, although Next will provide some early insight into festive trading on the High Street when it updates on progress on Wednesday.

Markets ...

Brent crude up 34 cents a barrel at US$57.16 a barrel.

Gold up US$5.80 an ounce US$1,157.50.

Pound worth US$1.2302.

Business Headlines ..

Telecoms giant O2 is poised to return to the London stock market in a deal that would value the company at £10.3bn – Daily Mail.

BP has opted out of the first wave of agreements to develop oil and gas reserves in Iran after the lifting of international sanctions — setting it apart from its two biggest European rivals Royal Dutch Shell and Total – FT.

Venezuela has issued US$5bn in new bonds to state-run Banco de Venezuela in a private placement, as it seeks cash for imports of food and medicine as the country struggles with critical shortages of basic goods – FT.

 Property prices in Britain and other wealthy countries may be set to tumble, the Organisation for Economic Co-operation and Development has warned – Times.

The changeovers of four of the largest rail franchises have been delayed by up to a year as transport officials admit that they are having to alter terms and conditions to enable train operators to make big enough profits – Times.

Hedge funds are holding significant short positions across the retail sector as they look to profit from a slowdown in trading this year, despite early signs of a surprisingly resilient Christmas on the high street – Times.

London lost market share in the global currency trading arena last year, as rising rivals in the emerging markets nibbled away at Britain’s historic position as the world’s dominant foreign exchange centre – Telegraph.

Caledonia Mining tackles 2023 challenges with optimism for 2024 as it...

Caledonia Mining Corporation PLC (AIM:CMCL, NYSE-A:CMCL) chief executive Mark Learmonth tells Proactive's Stephen Gunnion the company faced a challenging 2023, primarily due to poor production in the first half of the year at its core asset, the Blanket Mine in Zimbabwe, and an underperformance...

1 hour, 17 minutes ago