London midday: World Cup feelgood factor helps boost consumer stocks
London stocks climbed to their highest level in almost a fortnight on Monday in spite of a resurgent pound as Brexit Secretary David Davis resigned from the government and consumer stocks rode a wave of public good feeling after England's World Cup victory over the weekend.
The FTSE 100 index was up 29 points or 0.4% to 7,646.49, while sterling gained 0.4% on the dollar at 1.3339 and gained 0.2% versus the euro to 1.1327 as investors continued to digest the softer Brexit stance pushed through by Theresa May at Friday's crunch cabinet meeting at Chequers.
The resignation of Davis and one of his under-secretaries was in protest against the new Brexit proposals. He was replaced by Dominc Raab, a prominent 'Leave' campaigner for the 2016 referendum, to take over the negotiations with the European Union’s Michel Barnier for the UK’s divorce from the union.
"It’s unwelcome timing for the PM ahead of the UK’s white paper on Brexit, and before crucial talks with Brussels, but markets welcome the removal of a major impediment to a pro-business 'soft-Brexit'," said analyst Mike van Dulken at Accendo Markets.
Bookmakers cut the odds of a UK general election in 2018 to 5/2 from 11/2.
In macro data, China’s foreign exchange reserves were shown to have risen by an unexpected $1.51bn in June to $1.31trn, compared to a $10bn drop widely expected.
"It was mostly on the back of a pause in the downtrend of Treasury prices last month," said Ken Odeluga at City Index. "Still, the surprise resilience of China’s dollar holdings to a barrage of trade rhetoric and the symbolism of global shares shrugging off tariffs that came into effect was sufficient encouragement for Asian investors, particularly on the basis that pricing of trade concerns could have overshot."
Odeluga wondered how long the good sentiment would hold. "Should Washington go ahead with a threatened $450bn in counter-retaliatory new duties, markets are likely to be less sanguine. Treasury, gilt and bund yields showed signs of having found a floor. Of late, that has been a fair precursor of the next phase in the dollar’s upward grind. Should the greenback’s upticks against the yen broaden, we expect risk appetite to be pared back in the short term."
There was no UK data on Monday but a busy Tuesday lies ahead for the UK's Office for National Statistics, including monthly and rolling three-monthly estimates of GDP for the UK, while the agency also will release the index of services, construction output, the index of production and monthly trade data. China data will also be in the spotlight over the week.
In company news, high street retailers Next and Marks & Spencer and takeaway food group Just Eat were among the top risers, with some analysts suggesting a connection for consumer-focused stocks with the feel-good factor created by England reaching its first World Cup semi-final in nearly 30 years.
Though for M&S, it was revealed that analysts had been told last week that there would be no first-quarter update alongside the group's annual general meeting. "If the feeble excuse had been that the new FD Humphrey Singer only starts his new job today and wants time to get his feet under the desk the City might have swallowed this," mused independent retail analyst Nick Bubb, "but, in response to protests from disbelieving analysts, M&S merely said that management are focused on 'the long-term transformation plan' and that most investors are not interested in 'short-term noise'."
The FTSE's phalanx of heavyweight miners was also helping lead the charge, with Antofagasta, BHP Billiton, Anglo American and Rio Tinto all rising, as although the dollar weakness may hamper the earnings potential of some of the FTSE’s global stocks, it is a boon to the dollar-priced resources sector, analysts said. Oil and copper prices are also both up.
Shell was surging but BP was down after problems with its card machines over the weekend prevented customers from paying unless they had cash. There were also reports from Reuters that BP was in the lead to buy BHP's US onshore oil assets.
Stobart Group took off after it was confirmed over the weekend that chairman Iain Ferguson received enough votes at Friday's annual shareholder meeting to remain in his position. Ex-director Andrew Tinkler, who had been leading a campaign to replace Ferguson, was voted back onto the board, but the board quickly decided to vote him back off.
Cairn Energy climbed as it said ongoing arbitration with the Government of India would face final arbitration hearings scheduled from 20 August in The Hague.
Inmarsat was rising despite US suitor Echostar having abandoned its efforts to acquire the satellite company just after the close on Friday.
Shares in TalkTalk were higher, with reports over the weekend that billionaire chairman Sir Charles Dunstone is facing an attempt by investors to kick him off the board.
Sirius Minerals was up on the back of a materials handling agreement and lease signed with Redcar Bulk Terminal to provide port and ship loading services for up to 10m tonnes of fertiliser a year. The company said the deal will provide greater flexibility in storage and port operations and reduced construction risk and capital expenditure requirements during its current construction programme.
Workspace Group was a little higher after exchanging contracts for the disposal of three properties in London for a total of £51.85m, a premium of 23.2% the March valuation.
Student accommodation manager and developer Unite edged up after it issued a quarterly property valuation of its UK Student Accommodation Fund and the London Student Accommodation Joint Venture, with the former independently valued up 1.2% at £2.32bn and the latter up 2.5% to £1.2bn.
Aerospace group Meggitt got a lift from Berenberg analysts hiking the stock to ‘buy’.
On the downside, Egyptian gold miner Centamin reported production for the second quarter of 92,803 ounces, a 25% reduction year-on-year.
Hikma Pharmaceuticals was down despite signing a licensing and distribution agreement to distribute Perrigo's over-the-counter consumer healthcare products in the Middle East and North Africa.
Hargreaves Landown was on the slide after JPMorgan downgraded it to ‘underweight'.
Outside the FTSE 350, Mothercare was tumbling again as the retailer went cap-in-hand to shareholders in an effort to raise £32.5m through a one-for-one placing and open offer and said it was now shutting 60 shops instead of the 50 originally earmarked. It added that its Childrens World division was being placed into administration after creditors failed to back a company voluntary arrangement.
"Mothercare’s latest troubles demonstrate how difficult life is for high street retailers," said analyst Rebecca O'Keefe at Interactive Investor. "Transforming legacy businesses, making them relevant, and generating enough footfall that goes on to buy your product instore, rather than testing it out and then going home to get a better deal online, is incredibly tough. Many investors have given up on the high street retail sector altogether and others are wondering just how long they will have to wait for management to deliver their turnaround strategies, or if it is worth the wait at all."
Market Movers
FTSE 100 (UKX) 7,648.93 0.41%
FTSE 250 (MCX) 20,738.63 0.58%
techMARK (TASX) 3,538.91 0.28%
FTSE 100 - Risers
Next (NXT) 5,924.00p 2.14%
International Consolidated Airlines Group SA (CDI) (IAG) 683.40p 2.09%
Antofagasta (ANTO) 963.40p 2.06%
Marks & Spencer Group (MKS) 313.50p 2.02%
Just Eat (JE.) 836.40p 1.95%
Ashtead Group (AHT) 2,294.00p 1.73%
Melrose Industries (MRO) 211.40p 1.59%
BHP Billiton (BLT) 1,690.40p 1.57%
Kingfisher (KGF) 296.60p 1.51%
NMC Health (NMC) 3,516.00p 1.50%
FTSE 100 - Fallers
Vodafone Group (VOD) 189.26p -0.91%
Rentokil Initial (RTO) 342.90p -0.70%
Standard Chartered (STAN) 689.50p -0.69%
Persimmon (PSN) 2,454.00p -0.65%
Taylor Wimpey (TW.) 171.95p -0.55%
SEGRO (SGRO) 674.00p -0.53%
Berkeley Group Holdings (The) (BKG) 3,558.00p -0.53%
Burberry Group (BRBY) 2,061.00p -0.43%
Barratt Developments (BDEV) 481.00p -0.41%
Experian (EXPN) 1,891.00p -0.40%
FTSE 250 - Risers
Premier Oil (PMO) 125.26p 5.53%
Hunting (HTG) 769.00p 4.91%
Bank of Georgia Group (BGEO) 1,885.20p 4.79%
Energean Oil & Gas (ENOG) 547.00p 4.59%
Stobart Group Ltd. (STOB) 239.50p 4.59%
TalkTalk Telecom Group (TALK) 117.20p 4.18%
Inmarsat (ISAT) 503.80p 4.13%
Tullow Oil (TLW) 236.80p 3.50%
Quilter (QLT) 154.70p 3.48%
Dunelm Group (DNLM) 499.80p 3.26%
FTSE 250 - Fallers
Centamin (DI) (CEY) 110.65p -6.03%
Hikma Pharmaceuticals (HIK) 1,408.00p -4.15%
Kier Group (KIE) 917.65p -1.96%
Bakkavor Group (BAKK) 190.00p -1.55%
esure Group (ESUR) 205.20p -1.54%
Savills (SVS) 848.00p -1.40%
Wetherspoon (J.D.) (JDW) 1,245.00p -1.35%
BBA Aviation (BBA) 337.60p -1.29%
Intu Properties (INTU) 186.35p -1.22%
Alfa Financial Software Holdings (ALFA) 164.92p -1.13%