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FTSE 100 closes higher as Chinese data bolsters miners

The blue-chip index has traded sideways since about 8.30 this morning
Trading screens
The Footsie has traded in a narrow range for most of the day
  • FTSE 100 closes up 25 at 7,404

  • FTSE 250 up 112 at 19,520

  • Investor confidence takes a dive in July

 

FTSE 100  closed up over 25 points, bolstered by the miners as the pound weakened

Sterling was down 0.37% against the Euro and off 0.39% against the US dollar, at the time of writing.

As Brexit negotiations began in earnest in Brussels, the more UK company FTSE 250, added112 points to finish at 19,520, while its bigger brother closed up 25.74 at 7,404.

David Madden, at CMC Markets, summed it up thus: "European equity markets are mixed today, but London’s large exposure to commodity related companies has given it the edge over its eurozone counterparts.

"The better-than-expected growth numbers from China boosted the share price of Rio Tinto, Glencore, Anglo American and BHP Billiton. The second-largest economy in the world is easily on target to achieve its 2017 growth target of 6.5%, as it grew by 6.9% in the first quarter and second quarter."

In France, the CAC 40 shed 0.10% to 5,230, while the German DAX is down 0.35%, or 44 points, at 12,587.

3.30pm - Investor confidence down

Investor confidence has fallen sharply this month, according to private investor-focused stockbroker and fund supermarket Hargreaves Lansdown.

The Hargreaves Lansdown Investor Confidence Index fell 20% from 86 points last month to 69 points in the latest reading.

The index has fallen below its long-term average level of 99, though well above its lowest level of 59, which was recorded in November 2016.

At the same time - and possibly the two might be connected – expectations of an interest rate rise have risen sharply.

Hargreaves Lansdown (HL) reports that 44% of those surveyed now expect an interest rate rise in the next six months, compared to just 16% in June.

“Investor confidence is scraping along pretty close to the bottom of the barrel right now, in stark contrast to the stock market, which is riding high,” said Laith Khalaf, a senior analyst at HL.

“The UK currently finds itself in economic limbo, with the election of a limp government and the start of the long and winding Brexit journey both creating a sense of suspense, which appears to have taken its toll on investor sentiment,” said Khalaf, while clearly in lyrical mode.

He’s not wrong about the stock market riding high, however, with the FTSE entering the final hour of trading back above 7,400 at 7,406, up 28.

The FTSE 250 index was up 103 at 19,511.

“The broadly inauspicious start to the week continued this Monday afternoon, the US markets failing to do much after the bell,” said Connor Campbell at Spreadex.

“Following a far worse than forecast Empire State manufacturing index reading, falling from 19.8 to 9.8 month-on-month, there wasn’t much reason for the Dow Jones to build on its recent highs this Monday. Instead the Dow sat flat at 21630, around 50 points away from last Friday’s intraday peak. In general the week is a bit light on Grade A data from the US, meaning the Dow’s movements may end up being dictated by its reporting companies rather than any rate hike chatter,” Campbell said.

3.00pm ... US indices open little changed

The FTSE 100 dipped below the 7,400 level, after US indices opened little changed.

The FTSE 100 was up 25 at 7,403, while over the pond the Dow Jones was a couple of points lower at 21,635 and the S&P 500 was less than a point higher at 2,460.

As Brexit negotiations start in earnest in Brussels, the pound has given ground against the US dollar, which has provided a bit of a lift to UK-listed dollar earners – and there are a lot of them in the FTSE 100.

The pound was buying US$1.3071 in mid-afternoon, down 0.24% on the day.

Among the small caps, Ascent Resources PLC (LON:AST) was on offer after conversion of loan notes led to 88.2mln new shares being issued, lifting the total number of Ascent shares in issue to 2,026mln.

The newly issued shares represent 4.4% of the shares in issue.

A trading statement from Parity Group PLC (LON:PTY) pushed the share price of the technology-focused consultancy and staffing business up 12%.

The company has been shifting its focus to the more profitable consultancy services arm, and this division has generated significant growth in its revenues compared to last year.

1.30pm ... The Footsie gives up gains

The FTSE 100 gave up gains over the lunchtime session, despite expectations of a firmer start on Wall Street.

Having risen as high as 7,426, the Footsie was just about keeping its chin above 7,400 at 7,404, up 26.

READ BlackRock, Netflix, Goldman Sachs, Brexit, AT&T - PRE-MARKET

The mid-cap FTSE 250 was proving better at keeping up the pace; it was up 86 at 19,495, some 30 points off its intra-day high.

Among the small caps, KEFI Minerals PLC (LON:KEFI) and Image Scan Holdings PLC (LON:IGE) slugged it out throughout the morning and lunchtime session to be the biggest riser.

KEFI was up 30% after securing a finance package for its Tulu Kapi gold project in Ethiopia, while Image Scan was also up 30% after lifting profit guidance in a pre-close trading statement.

Infrastructure and construction group Carillion clawed back 10.25p of recent losses at 66.4p, as it appointed EY to help with its strategic review and revealed it had won two contracts for the first phase of the HS2 high-speed rail line.

It’s a week since the company shocked (some in) the market with a profits warning, before which the stock traded at around 192p. 

11.30am ... FTSE 100 up 46 as it picks up the pace

After a mid-morning lull, Footsie picked up the pace in the final hour of the morning.

The top-shares index was up 46 at 7,424, close to its intra-day high and back above 7,400.

FTSE 100 constituent Sports Direct International PLC (LON:SPD) was not participating in the advance.

According to IHS Markit, the stock is one of the “most shorted” on the London Stock Exchange. Shorting is the practice whereby traders will borrow stock from a shareholder, and sell it in the hope of being able to buy it back at a lower price before it has to return the shares whence they came.

IHS Markit reckons short sellers increased their positions by 25% in the last month.

“While it may be easy to assume this increased shorting activity is due to the firm’s ongoing legal battle with a former executive – which brought accusations of drunken backroom “banter” into the open – short sellers are most likely targeting the company for its exposure to UK consumer spending,” the forecasting units suggested.

In the mid-cap space, the FTSE 250 matched the Footsie’s 0.4% rise, climbing 81 to 19,489.

Mitie Group PLC (LON:MTO), the outsourcing group, rose 4.8% on the back of an upgrade from Investec, which went straight from “sell” to “buy” without bothering to visit “hold” along the way.

Investec whacked the price target up from 212p to 330p.

11.00am ... Miners keep Footsie in the blue

FTSE 100 remained in credit, but only just.

Mining stocks were largely responsible for the Footsie being 14 points higher at 7,392 after encouraging Chinese gross domestic product numbers overnight.

Year-on-year real GDP growth was unchanged in the second quarter at 6.9%, which was slightly better than the 6.8% growth expected.

“The West would be ecstatic if its economies were to suddenly start growing by nearly 7% a year but the second-quarter increase of 6.9% generated by China is the norm for the Middle Kingdom and this figure should help to reassure those who are worried that Beijing’s gathering debt mountain mean it could one day suffer a hard landing,” suggested Russ Mould, the investment director at AJ Bell.

“However, this does not mean that everyone can let down their guard, for several reasons. After all, China is a massive country yet it publishes one estimate for GDP and does it faster than the UK or US for example – both of which then revise their initial figure at least twice – so cynics may be tempted to greet Beijing’s published figures with some scepticism, especially as the recent growth rates have sat comfortably within the authorities’ target range,” he added.

Equipment hire firm Ashtead Group PLC (LON:AHT) was doing its bit to prop up the Footsie, up 2% on the back of some broker comment from UBS.

On Friday, two of Ashtead’s US rivals agreed to merge, and UBS expects more consolidation in the sector Stateside is on the way.

READ Neff to be subsumed into rival H&E Equipment Services

“We expect the rental industry to continue to consolidate, but Ashtead remain more focused on organic growth (6yr organic revenue CAGR of 14% vs. inorganic 2.8%; however, they have historically benefited from consolidation via share gains during disruption and pricing, in our view,” UBS said.

The FTSE 250 was, like its bigger brother, was also off the top, up 60 at 19,468.

Carillion’s advance had extended to 23% by 11.00am.

9.30am ... Footsie consolidates after fast start

The FTSE 100 got off to a fast start before moving into consolidation mode.

The top-shares index was up 26 at 7,405, helped by the strength of miners.

Publishing giant Pearson PLC (LON:PSON) was a drag on the index, however, after Berenberg chopped its target price from 680p to 490p.

Centrica PLC (LON:CNA) advanced 0.19% - about half the rise seen by the Footsie – on news of a joint venture with Stadtwerke München that will see Centrica’s European oil & gas exploration & production business scrunched into a joint venture with Bayerngas Norge.

The mid-cap FTSE 250 was up 85 (0.4%) at 19,493, with troubled infrastructure group Carillion PLC (LON:CLLN) leading the way.

READ Carillion rallies on contract wins for HS2 rail line and appointment of EY to help with strategic review

Carillion’s share price had been in freefall since last Monday’s profit warning and defenestration of the chief executive officer, but it rallied 11% this morning as it won contracts to build the UK’s HS2 rail line and announced the appointment of accounting firm EY to support its efforts to avoid collapse.

Has it turned the corner? Does it even know where the corner is?

Carillion is currently being steered by former Weir boss Keith Cochrane, and this morning his former employer, Weir Group PLC (LON:WEIR) cheered the market with an upbeat trading update.

READ Weir Group raises full-year guidance thanks to accelerated recovery in Northern American oil and gas markets

Weir’s shares were up 9.4%.

08.30am ... Back after a short break ... FTSE 100 rises 29

The Footsie got off to a bright start to the week, as two of its constituents played musical chairs.

ITV PLC (LON:ITV) has poached the chief executive of easyJet PLC (LON:EZJ) to replace Adam Crozier, who stepped down as boss of the broadcaster at the end of June.

The shares put a small dent in the easyJet share price – down 0.7% - and gave a lift to ITV – up 1.8%.

McCall will become the first female boss of ITV, though the appointment might be overshadowed by another female first in the broadcast world.

The broadcaster was among the best performing Footsie constituents, rubbing shoulders at the top of the index’s leader-board with a number of miners.

The FTSE 100 was up 29 at 7,407.

Preview

London’s blue chips are for a strong start to the week after good gains overnight in Tokyo and Hong Kong.

Spread bet firms see FTSE 100 adding almost 25 points from Friday's close of 7,378 when trading gets underway with more record highs in the US on Friday also helping the mood.

The Dow Jones closed at 21,638, up 85 points, while the Nasdaq rose 38 to 6,312. The market benchmark, the S&P 500, advanced 11 to 2,459.

At the same time, the CBOE Volatility Index - known as the VIX, or more colloquially, the “fear tracker”, closed at the third lowest level since its inception in 1993.

UK company news this week comes from Royal Mail Group PLC (LON:RMG), which is expected to reflect the tough market in both letters and parcels as giants such as Amazon muscle into the market.

Vodafone and Unilever also report this week.

 

City headlines

Financial Times

  • BP intends to use “big data” to ride out the oil price down cycle
  • Energy companies raise concerns about the roll-out of smart meters
  • US shopping malls under threat from online shops, warns Blackstone

The Times

  • Sportswear brands give Pentland a boost
  • EY Item Club predicts a pro-business Brexit deal
  • Brakes off for Morgan Motors’ electric future
  • New port helps Qatar to weather the blockade storm
  • UK fishing fleet nets big profits in best performance for a decade
  • Retailers set for £250 million boost from business rates switchover

The Independent

  • Next boss attacks Government’s muddled thinking on Brexit
  • Government welfare cuts blamed for 50% surge in mental health issues among unemployed

The Daily Telegraph

  • Trade deal ‘essential’ to protect UK car industry
  • Westerman in the frame to be next chief executive at HSBC
  • Airbus’s boss in UK departs as aerospace giant shakes up British management

The Guardian

  • UK business confidence at lowest point for six years, say forecasters
  • UK housing market shrugs off concerns of Brexit slowdown
  • Low-paid should receive inflation-only rises, say business leaders
  • Jane Austen to star in Bank of England literary links exhibition
  • Poundland delays launch of Twin Peaks chocolate bar amid legal row
  • Trump’s tax proposal would push US below Greece on inequality index
  • Lloyd’s says cyber-attack could cost $120 billion, same as Hurricane Katrina

Commodities/currencies

Oil (WTI) : US$46.66 +12c
Gold: US$1,230 up US$3
£/$: 1.3090 £ lower

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