London blue-chips edged into positive territory as the falling pound eclipsed lower oil and commodity prices.
The FTSE 100 Index rose 9.58 points to 6719.71 as the pound descended 0.41% against the dollar to US$1.3086, making UK exports cheaper.
But the UK-centric FTSE 250 tumbled 47.73 points to 17043.25 as imports became more expensive for domestic companies.
The price of a barrel of Brent crude fell 0.449% to US$44.52 while West Texas Intermediate (WTI) dropped 0.6% to US$42.88 a barrel.
Copper cheapened to one-week lows as WTI traded at $43 in Asia.
London Capital Group said oil slipped below its 100-day moving average on the downside for the first time since April and short positions were gaining further momentum for a fresh attempt towards the US$40 level.
LCG analyst Ipek Ozkardeskaya said: "Investors see increasing value in the pound’s depreciation, as UK companies become gradually more cost efficient and could be interesting M&A targets for foreign investors."
In small-caps, Sunrise Resources Plc (LON:SRES) brightened 19% to 0.22p as it found significant bedrock copper-gold mineralisation in trenching at its Garfield Project in Nevada in the US.
Baron Oil PLC (LON:BOIL) spurted 18.75% to 0.48p on news that Peru had signed a Supreme Decree to assign a 30% interest in Block Z-34 from Baron's subsidiary Gold Oil Peru SAC to Union Oil and Gas Group under the terms of the Farm-in Agreement of April 29, 2013.
Baron's chairman Bill Colvin said: "The eventual assignment will unblock the path to new activity on Z-34, as well as providing a cash injection to Baron."
Public sector e-commerce system provider Cloudbuy PLC (LON:CBUY) was also up 15% to 7.9p after rising 47% on Monday, although a lack of news from the company left investors none the wiser.
Meanwhile, Harvest Minerals Limited (LON:HMI) backtracked 11.6% to 4.75p as investors were seemingly unimpressed by a resource estimate from its Arapuá fertiliser project in Minas Gerais State, Brazil.
Investors appeared similarly underwhelmed by China New Energy Ltd's (LON:CNEL) signing of an investment promotional and protection agreement between Sunbird Bioenergy Africa Limited and the Zambian government.
Shares fell 10.1% to 1.55p as the bioenergy engineering group said there were a number of other project milestones to be concluded before it could do a deal with Sunbird to begin building the Zambian project.
The top winner was BT Group Plc (LON:BT.A) after it unveiled plans to meet regulatory demands for a shake-up of its Openreach network division. Shares rose 4.5% to 405.1p.
BP Plc (LON:BP.) was the biggest loser, down 3.1% to 426.7p, as it psted a US$2.2bn loss in the second quarter of 2016, thanks largely to a US$5.2bn charge for the 2010 Gulf of Mexico oil spill.
Preview at 6.30am
All company announcements on Tuesday are likely to overshadowed by the second quarter update from BP PLC.
Investors will be hoping BP will update on efforts to cut costs and streamline its organisation to deal with lower oil prices.
It paved the way for that by drawing a line under legal claims for the 2010 Gulf of Mexico disaster, estimating the total bill at about US$61bn.
“The Brexit fall-out has worked to the benefit of the share price but also because of the stabilisation of oil price around the $50 mark,” observed Graham Spooner at retail investor-focused share dealing services provider The Share Centre.
“We expect the good numbers from Q1 to follow through into the latest quarter, lower costs throughout the group should help on the underlying profits along with better performances in the downstream refining and chemicals businesses when oil prices are low. The trading division also did well so the market should wait and see if the rights calls were made again in the second quarter,” Spooner said.
Living by numbers
One of those companies set to be in BP’s shadow is accountancy software firm Sage PLC, which is likely to face questions about M&A following the £24.3bn SoftBank buyout of chip-maker ARM Holdings PLC (LON:ARM).
Numis Securities expects the focus in the third quarter update will be on revenue rather than profits, with, perhaps, a bit of reassurance that the looked-for growth in margins in the second half of the financial year is being delivered.
Numis is predicting the margin will rise from 6.2% in the first half to around 6.5% in the second.
“We do not expect any detail on potential Brexit impacts, although clearly currency is materially more positive for Sage than was the case a month ago,” Numis’s David Toms said.
George O’Connor at Panmure Gordon said some comfort for Sage shareholders could be drawn from Microsoft’s results last week, which were ahead of expectations.
He expects Sage’s chief financial officer Stephen Hare to suggest that trading is in line.
“If there is upside, given the fragile economic backdrop and as Sage’s entrepreneurial and SME clients will naturally be cautious, especially so in Europe – a key swing geography, we think that Sage will hold back any enthusiasm given Q4 uncertainties.” O’Connor said.
The interim management statement coincides with the user-fest “Sage Summit” being held in Chicago.
“For those lucky enough to attend the event, CEO Stephen Kelly will again champion the cause of the entrepreneur and abstract the debate from the bits and bytes of software products and take it to a more aspirational level as he champions the cause of the entrepreneur. Despite the current valuation, positive news seeping out of Chicago should ensure that the share price continues to creep upwards.” O’ Connor suggested.
Acal expected to benefit from contract wins
The annual general meeting of Acal Plc (LON:ACL), the supplier of customised electronics, should contain an update on how the new financial year has started.
House broker Peel Hunt said acquisitions are all bedding in well and that cross-selling initiatives are bearing fruit, but the outlook statement is likely to be relatively cautious, given that many markets are still challenging and that the Brexit vote has shaken things up a it.
“However, contract wins in H1 [the first half] point to improvement in H2 and we don't see these being affected,” the broker said.
Significant announcements expected
Finals: PZ Cussons PLC (LON:PZC); Victoria PLC (LON:VCP)
Interims: BP PLC (LON:BP.); Capital & Counties Properties PLC (LON:CAPC); Croda International PLC (LON:CRDA); Drax Group PLC (LON:DRX); GKN PLC (LON:GKN); Huntsworth PLC (LON:HNT); Jardine Lloyd Thompson PLC (LON:JLT); Man Group PLC (LON:EMG); Provident Financial PLC (LON:PFG); SEGRO PLC (LON:SGRO); Tyman; UNITE Group PLC (LON:UTG); Virgin Money Holdings (UK) PLC (LON:VM..
Trading Statements: Acal Plc (LON:ACL), Greencore Group PLC (LON:GNC); Sage Group PLC (LON:SGE); Victrex PLC (LON:VCT).