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FTSE 100 shares close firm with oil while Italy is side-stepped

FTSE 100 shares closed firm on Monday, having brushed off the turmoil in Italy following a “no” vote in the euro zone country’s referendum which led premier Matteo Renzo to tender his resignation, as oil prices continued to extend gains

PM Renzi on the stump
Biggest winners and losers on Monday
  • FTSE 100 ends firm
  • Brushes off Italian vote
  • Miners top and bottom the FTSE 100
  • Oil boosts stockmarket
 
FTSE 100 shares closed firm on Monday, having brushed off the turmoil in Italy following a “no” vote in the euro zone country’s referendum which led premier Matteo Renzo to tender his resignation, as oil prices continued to extend gains.

The FTSE 100 closed up 0.2% at 6746, having bounced back early in the session from negative territory and stayed higher on the day thereafter.

Oil prices were higher, as markets extended last week’s gains on the historic OPEC supply cull declaration. Brent crude futures were up 0.9% at $54.95 while the West Texas Intermediate hit levels last seen in mid July.

Miners were both the biggest risers, and fallers, on Monday after broker Citigroup adjusted its ratings on a number of mining stocks as it upgraded its view on the Western European metals and mining sector to 'bullish' from 'bearish'.

Citi also upgraded Anglo American (LON:AAL) to 'neutral' from 'sell' and lifted the price target to 1,350p from 830p, saying the upgrade was part of the much more positive overall sector view it has adopted. The bank upgraded Glencore (LON:GLEN) to 'buy' from 'neutral' and upped the price target to 330p from 220p as it pointed to the dividend reinstatement, strong cash generation and a solid commodity mix.

Citi upped Rio Tinto (LON:RIO) to 'neutral' from 'sell' and pushed the target price to 3,300p from 2,550p.

But it was Antofagasta Holdings (LON:ANTO) which led with a gain of 4.9% to 727.5p and Glencore was second, up 4.4% at 290.25p.

Anglo American shares closed up 2.8% at 1243p, while Rio was up 1.6% to 3054p.

But fallers were led by Fresnillo (LON:FRES) down 4% to 1150p and Randgold Resources (LON:RRS) down 3.2% to 5640p.

Mid-caps had a better day of it, with the FTSE 250 index closing up 0.2% at 17,461. It was led higher by Vedanta Resources Plc (LON:VED), up 6.3% to 899p after a punchy valuation suggests there is plenty more forward momentum, according to broker Goldman Sachs. The bank said it likes the group’s exposure to the zinc sector, and said balance sheet and corporate governance concerns have now been allayed.

But Topps Tiles (LON:TPT) fell 2.9% to 8525p after the retailer said it had made an "error in the calculation" in its sales figures.

It had originally said that like-for-like sales in the first eight weeks of its new financial year rose 0.8%, but this has now been revised to a fall of 0.3%.

The FTSE AIM 100 Index closed up 0.1% at 3901 and the FTSE AIM All-Share Index up 0.2% at 815.

Loser and risers were evenly matched across the London bourse with 32% rising and 31% falling.

 

14:30 GMT - FTSE 100 loses early gains as nerves return

FTSE100 lost momentum ahead of the US open in spite of spread bet firms predicting another surge of buying on Wall Street.

The London index was six points higher at 6,736 having been over fifty points to the good shortly after the open.

A strong services survey for the UK in November did little to boost as economists suggested it means more stimulus measures from the Bank of England are off the table.

The Markit/CIPS survey showed a figure of 55.2, up from 54.5 on October and confounding predictions Britain’s economy would slump after the Brexit vote. 

FTSE 250 retailer Topps Tiles (LON:TPT) was the butt of many weak puns after it revealed it had mis-calculated like-for-like sales so far this year.

Instead of a 0.8% rise in the eight weeks of the current year so far, sales had dipped by 0.3%.

A comment that this would not affect its results for the year overall cushioned the blow and the shares were down just 3% to 85p.

 

11.00am ...FTSE 100 shrugs off Italian vote

FTSE 100 made decent headway as the resignation of the Italian PM Matteo Renzi was not the seismic event markets had feared.

London’s blue chips rose by 22 points to 6,753 led by the banks as the finance sector in Italy reacted calmly to the no vote to constitutional reform even though the result may give rise to an Italian election.

Commentators expects this to become a proxy vote on Italy’s place in the EU as the populist Five Star movement gains more momentum,.

A rally by Italian banks eased some of the fears and helped those based in the UK.

Barclays PLC (LON:BARC) rose by 2% to 217.2p, while Royal Bank of Scotland PLC (LON:RBS) added 1.5% to 196.2p even though it offered to cough up £800mln in compensation to investors who lost out badly when they backed a rights issue in 2008.

The bank said it has reached a full and final settlement with three of the five groups of investors – representing 77% of the claims by value - who were pursuing lawsuits against it over the ill-fated rights issue in 2008.

Bucking the trend were the precious metals miners as the gold price continued to languish ahead of the next Federal Reserve meeting.

A rise in US interest rates is considered almost a certainty following last week’s strong non-farm payroll jobs data.

Gold miner Randgold Resources PLC (LON:RRS) dropped 4% to 5,595p. Fresnillo PLC dropped a similar amount to 1.154p.

Estate agency Purplebricks PLC (LON:PURP) was the best of the small caps jumping 19% on a bullish update and reassuring comments about future trading. 

 

9.00am ...FTSE 100 rises to dispel Italy fears

Fears for the FTSE 100 in the wake of Italy’s election appeared exaggerated by 9:00 as London’s blue-chip benchmark instead got off on the front-foot.

Up over 50 points, about 0.8%, the FTSE 100 index was changing hands at around 6,785 at the start of the new week.

UK banking shares were notable risers with Barclays (LON:BARC), Royal Bank of Scotland Plc (LON:RBS) and Lloyds Banking Group Plc (LON:LLOY) all rallying 2-3% in the first hour of trade.

Miners Antofagasta Plc (LON:ANTO), BHP Billiton plc (LON:BLT) and Rio Tinto Plc (LON:RIO) were also up well at the start of the session.

Precious metals were the exception, however, with Randgold Resources Ltd (LON:RRL) and Fresnillo Plc (LON:FRES) the two biggest losers in the index.

 

6:55 - FTSE 100 called sharply lower after Italy 'no' vote

The FTSE 100 is expected to open sharply lower after Italy voted to reject a package of reforms and Prime Minister Matteo Renzi offered to quit.

The spread betters are predicting the index of UK blue-chip shares will tumble 47 points to 6,683.72 amid worries over the knock-on impact of the referendum.

Italian banks are seen as vulnerable, while the commentators say the result may be a step towards the country’s exit from the EU.

Renzi's opponent, Beppe Grillo, had urged voters to “go with your gut not your brain” and also had called for Italy to ditch the euro. 

 

Italy headed for EU exit?

“Italy has missed a splendid opportunity to reform its political system and streamline its public administration,” said Holger Schmieding of the German bank Berenberg.

“The ultimate tail risk, namely that Italy could choose to leave the euro eventually, remains small, albeit not fully trivial. This tail risk has now increased slightly, but probably not by a lot.” 

Even if Italy does not quit the EU, Europe is set for weeks of turmoil as the implications of the ‘no’ vote are digested.

Unsurprisingly, the euro lost ground as it fell 1.1% to US$1.054.

Overnight in Asia, the markets were hit across the board with Japan’s Nikkei index and the ASX both off 0.8% and Shanghai down 1.2%.

Back in the UK, the scheduled corporate news this week appears to be slowing a little ahead of the festive season with updates from retailer Sports Direct and support services group Capita the highlights of the week.

  • Brent crude trading 50 cents a barrel lower at US$53.96.
  • Gold up US$2.70 an ounce at US$1,177.70.
  • Pound is worth US$1.2682.

Bids and Rumours

  • Burberry, the luxury goods retailer, rejected multiple takeover overtures from US fashion accessories group Coach – FT.
  • Prudential has begun a review of its £45bn pension liabilities business in a move that could lead to the sale of the division and a potential restructuring of the entire company – Times.
  • High street fashion chains Warehouse, Oasis and Coast are being eyed by a number of private equity groups after their Icelandic owners put the brands up for sale – Daily Mail.

Business Pages

  • Some of the world’s best-known oil majors are expected to compete in a long-awaited auction for deepwater contracts in Mexico on Monday that marks a key opening of the country’s energy sector -  FT.
  • Thousands of London-based US bank workers will get as much as 17% more cash in this year’s bonus rounds thanks to the Brexit-inspired surge in the dollar’s value relative to sterling – FT.
  • Saudi Arabia convened private talks with the world’s largest oil traders in Vienna before OPEC’s crunch meeting on whether to cut oil output, seeking views about the likely market reaction should they fail to clinch a deal, it has emerged – FT.
  • Four Seasons Health Care, the lossmaking care home operator, has closed or sold 51 homes for the elderly over the past 18 months as it seeks to cut costs ahead of a financial restructuring next year – FT.
  • London will experience the greatest slowdown in economic growth of any region in the UK over the next three years as the impact of the Brexit vote, higher inflation and an expected slowdown in the services sector hits the capital hardest – Times.
  • British cyber security business ECSC, which counts 10% of the FTSE 100 as its clients, has announced its intention to float on London’s junior market with a market cap of £15mln – Telegraph.
  • Thousands of restaurant businesses in Britain could go bust because the fall in sterling since the Brexit vote has sharply raised the cost of imported food and wine, an accountancy firm has warned – Guardian.

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