London blue-chip and mid-cap stocks closed higher on Monday and both indices marked a fresh 14-month high with healthcare equipment, miners, pharma and biotech sectors driving the gains.
Gains by oil prices buttressed the gains, with Brent Crude up 2.55% to $48.17.
The blue-chip FTSE 100 index ended up 0.4% at 6,941. Earlier, it marked an intraday peak of 6,955 – its highest level since late May 2015.
The mid-cap FTSE 250 closed flat at 17,929 but only after chalking a peak of 17.961 – its highest level since May 22, 2015.
But while US stocks marked fresh record highs on Monday, a lot of London’s gains unwound during the session thanks to the pound slipping on foreign exchanges again. Against the euro, sterling fell below 1.15 euros for the first time in three years. What is more, Monday marked the sixth successive session sterling has declined against the euro since February. Even in the immediate aftermath of Britain’s vote to quit the European Union on June 23 there was less downside action over the course of the week.
Sterling also slid against the US dollar to $1.29 for the first time in five weeks.
But in the face of all that, UK equities displayed resilience. Perhaps one reason why broker JP Morgan on Monday said it was keeping its “overweight” recommendation on UK equities, arguing that relatively high dividend yields, sterling weakness and the possibility of further rate cuts from the Bank of England should support the market.
"We reiterate our 'Overweight' call on UK equities that we initiated early this year," JP Morgan equity strategist Mislav Matejka said in a research note.
"UK is a defensive market with the highest dividend yield out of main regions, at 3.9 percent. UK 10-year yields have fallen almost 150 basis points year-to-date, and BoE is likely to cut further," he said, adding that a slump in sterling after June's Brexit vote would also help the FTSE 100's exporters.
That helps explain why mid-caps which benefit less from exports and less from overseas units, underperformed the FTSE 100 index’s gains on Monday.
Among the biggest gainers of the session were Hikma Pharmaceuticals PLC (LON:HIK), up 2.15% to 2324p. Anglo American PLC (LON:AAL) added 1.84% to end at 872.70p and Ashtead Group PLC (LON:AHT), the second largest building equipment rental company in the UK, was up 1.55% to 1245p.
The FTSE AIM 100 Index advanced 0.1% to 3,765 while the FTSE AIM All-Share Index rose by 0.2% to 784.
Gainers totalled 36% of London’s stocks across all indices, while losers were 25% and unchanged 39%.
The top gainer was Hague & London Oil (LON:HNL), up 49% to 10.25p. A week ago the company struck a partnership with ENGIE Global Energy Management to acquire natural gas production reserves.
The top loser on Monday was Glenwick PLC (LON:GWIK) down 13.8% to 0.0625p on no fresh news.
Midsession
London’s leading shares pushed ahead in the lunchtime session pushing the Footsie to a 52-week high.
The FTSE 100 rose to 6,955 before ebbing back to 6,945, up 29 points on the day. The rise was mainly down to the heavily weighted oil giants Royal Dutch Shell PLC (LON:RDSB) and BP PLC (LON:BP.), both of which enjoyed a lift from the recovering oil price.
Small cap energy plays Nostra Terra Oil and Gas Company plc (LON:NTOG) and Independent Resources plc (LON:IRG) received no such lift, both sliding between six and seven per cent as a result of a repayment dispute involving their joint venture (JV), Independent Resources Egypt (IRE).
Transglobe Petroleum claims IRE is in default on loan repayments, whereas the JV partners contest that no money is yet due under the terms of the sale and purchase agreement relating to the East Ghazalat asset sold by Transglobe.
Also on the slide were shares in Pennant International Group PLC (LON:PEN) after the logistics specialist raised around £3.56mln through a placing of shares at 55p, versus Friday night’s closing price of 63p. The shares retreated to 58.5p.
London open
London’s blue chips ambled higher this morning, with small gains on the oil giants marginally offsetting modest losses on the mining titans.
The FTSE 100 was up 11 points at 6,927, with bulls drawing a modicum of comfort from a poor Japanese gross domestic product report for the second quarter, which raised hopes that central banks will be in no mood to take the proverbial punch bowl away any time soon.
There is not much corporate activity among the blue-chips, but in the mid-cap space Bovis Homes Group PLC (LON:BVS) and Petrofac Limited (LON:PFC) dragged down the FTSE 250, as they lost ground following announcements this morning.
The FTSE 250 was down 23 at 17,899, with Bovis topping the losers’ list, as it revealed house purchase reservations had slowed since the EU referendum vote.
Bovis tumbled 3.7% to 805.5p, while Petrofac shed 3% as non-executive director Tim Wller jumped ship to become the new chief executive officer of security solutions provider G4S PLC (LON:GFS), up 1%.
Among the growth companies, Edenville Energy PLC (LON:EDL) led the field with a 50% increase as its shares reacted to news that the Tanzanian government is expected to introduce a ban on coal imports, which would provide a big boost to Edenville’s Rukwa coal project.
Thor Mining (LON:THR) thundered higher as it kicked off a new drilling campaign close to its Molyhil tungsten deposit in the Northern Territory of Australia.
The company said the time was right to resume drilling as interest in the tungsten sector is picking up.
The share rose 18%.
AFC Energy plc’s (LON:AFC) new brand identity got the thumbs-up from investors.
The shares shot 15% higher as it has launched a new brand identity reflecting its ongoing transition from an R&D-focused technology company to a commercial company providing large-scale industrial applications.
Snapshot at 8.15am
The FTSE 100 was down four points to 6,913, falling shy of the 7,000 mark some had anticipated.
The top winner was Persimmon (LON:PSN) was up just under 2% to 1,741p. Brokers upgrade its rating after £210mln housing plan.
The biggest loser was Sage Group (LON:SGE) was down almost 2% to 726.5p, after it was hit by a massive data breach last week. The group said yesterday that it was investigating “unauthorised access to customer information using an internal login”.
Preview at 6.50am
Will this be the week the FTSE 100 breaches 7,000 once again – a level last achieved in May 2015?
Perhaps the feel good factor after Britain’s Olympic super Sunday will push the index of blue-chip shares over the line.
According to the spread betting firms the milestone is unlikely to be achieved in the early hours of London trading. The Footsie expected to make a subdued start, adding just 7 points to open at 6,923.02.
Overnight in Asia the upward momentum was stalled by some pretty dire economic numbers out of Japan, which showed the world’s third-largest economy failed to grow in the second quarter.
At the same time business spending slid 0.4% when it was expected to grow 0.2%, reinforcing the impression that Prime Minister Shinzo Abe’s attempt to resuscitate Japan is failing.
“[This] followed on from last week’s disappointing US and Chinese data and it would appear that the global economy slowed down quite markedly in the second quarter,” pointed out Michael Hewson of CMC Markets.
The Nikkei 225 was down 0.2%, though the other main Asian equity markets staged rebounds with the Shanghai Composite leading the way with a 2.6% gain.
Back in the UK and looking ahead, it is expected to be a reasonably busy week for corporate news.
Builder Bovis and retailer Kingfisher lead the way, followed by updates from drillers Premier Oil and Cairn Energy.
BHP Billiton will give some insight into the state of the mining industry when it delivers prelims on Tuesday, while fellow diggers Antofagasta and Hochschild are also reporting.
On the data front we have jobs and retail sales figures later this week that should provide a fuller picture of how the UK is faring post the Brexit vote.
*Brent crude trading 31 cents higher US$47.28.
*Gold US$8.50 higher at US$1,335.80 an ounce.
*Pound worth US$1.2928.
City Headlines
*The buyout giant behind Toys “R” Us is among a handful of suitors eyeing a bid for the owner of the hit cartoon Peppa Pig, which last week rebuffed a £1bn approach from ITV – Sunday Times.
*Sky is secretly preparing a major expansion of its European empire by launching its online streaming service Now TV in Spain as the first stage of a plan to challenge Netflix and Amazon across the continent – Sunday Telegraph.
*Gold and silver miners are increasingly looking to raise or resume dividend payments, highlighting the renewed confidence in the sector driven by this year’s rise in precious metal prices – FT.
*Supermarket sales have dipped below £100bn for the first time since 2010 as a vicious price war with discounters Aldi and Lidl continues to eat away at the money they make from shoppers’ baskets – Telegraph.