London midday: Stocks push higher as cyclicals rally; Opec eyed
London stocks had extended gains by midday on Friday, recovering from the previous session's losses as investors continued to digest a more hawkish than expected policy announcement from the Bank of England and kept an eye on developments from the Opec meeting in Vienna.
The FTSE 100 was up 0.7% to 7,584.03, rebounding but still on track for its third weekly drop. The pound was up 0.1% against the euro at 1.1420 and 0.4% firmer versus the dollar at 1.3286. Stocks ended the previous session in the red as sterling rallied after the Bank of England's chief economist, Andy Haldane, joined dissenters McCafferty and Saunders in voting for a 25 basis points rate hike.
Oil prices were in focus on Friday amid expectations that the Opec cartel will end its production ceiling and lift supply capacity by between 500,000 and 1m barrels a day. Brent crude was 1.4% firmer at $74.05 per barrel and West Texas Intermediate was up 1.1% to $66.24.
Market analyst Joshua Mahony at IG said: "Volatility has been the name of the game for oil prices, with markets attempting to second guess what decision the cartel will reach after all is said and done. There is no doubt that markets are already pricing in some form of production increase, and thus the market reaction is likely to be dictated by quite how much the group will raise output by. With sanctions shrinking output, Iran certainly has reason to push for higher prices. However, in the past it has always been the case that whatever the Saudis want, they get."
In addition, the EU’s tariffs on £2.4bn worth of US goods kicked in at midnight. Mahony said: "While initial threats from Donald Trump were largely disregarded, we are now seeing a clear sign that trade wars are moving into a new stage, with today’s implementation unlikely to be the end of an increasingly fraught relationship between the US and their traditional allies."
Housebuilders were on the front foot, clawing back losses suffered on Thursday when the BoE's policy announcement raised the prospect of an August rate hike, sparking worries about the impact of higher borrowing costs on demand. Barratt, Berkeley, Taylor Wimpey and Persimmon all gained. Analysts at Liberum said that nervousness around rate rises on Thursday was overdone, especially as the bond market did not seem to show much reaction to the extra dissenter in the MPC vote.
Luxury fashion brand Burberry advanced after UBS upped its share price target to 2,150p from 1,900p but kept its stance at 'neutral'.
Playtech gained after Italian financial market regulator Consob approved the gambling software group’s mandatory takeover offer for the remaining shares of Italian gaming firm Snaitech that it does not own.
Syncona was a high riser after saying that its portfolio company, Autolus Therapeutics, had confirmed pricing of its US initial public offering at the top end of the indicated scale. Syncona's 33.8% stake in the business will be valued at $231m (£174.4m).
Investors looked to take on more risk, piling into cyclicals such as banks and mining shares, with Glencore, RBS and Barclays atop the FTSE 100 leaderboard. On the other side of the coin, this saw defensive and dollar-exposed stocks in the doldrums, with the likes of AstraZeneca, GlaxoSmithKline and Coca-Cola HBC and Ashtead among the fallers.
Elsewhere, Shire slipped despite saying that tests of patients with metastatic pancreatic cancer have been shown to benefit from a combined treatment with its Onivyde drug.
In broker note action, CYBG was cut to ‘sell’ at Investec, while Bodycote was under the cosh after a downgrade to ‘sell’ at Goldman Sachs and Renishaw fell after a downgrade to ‘neutral’ at GS.
Spire Healthcare was initiated at ‘add’ by Peel Hunt and FirstGroup rose after an initiation at ‘buy’ by Goldman.
Market Movers
FTSE 100 (UKX) 7,611.23 0.73%
FTSE 250 (MCX) 20,860.92 0.64%
techMARK (TASX) 3,516.89 -0.21%
FTSE 100 - Risers
Glencore (GLEN) 379.05p 2.00%
Royal Bank of Scotland Group (RBS) 261.90p 1.95%
Legal & General Group (LGEN) 269.80p 1.73%
Barclays (BARC) 193.30p 1.63%
Direct Line Insurance Group (DLG) 348.70p 1.51%
Rio Tinto (RIO) 4,164.50p 1.51%
Aviva (AV.) 510.60p 1.51%
Schroders (SDR) 3,166.00p 1.51%
Standard Life Aberdeen (SLA) 344.60p 1.50%
Anglo American (AAL) 1,676.80p 1.49%
FTSE 100 - Fallers
Micro Focus International (MCRO) 1,336.00p -2.20%
AstraZeneca (AZN) 5,199.00p -1.07%
GlaxoSmithKline (GSK) 1,523.73p -0.95%
Shire Plc (SHP) 4,062.00p -0.64%
SEGRO (SGRO) 656.00p -0.61%
Smith (DS) (SMDS) 515.80p -0.46%
Coca-Cola HBC AG (CDI) (CCH) 2,545.00p -0.39%
United Utilities Group (UU.) 737.00p -0.30%
Halma (HLMA) 1,386.00p -0.29%
Ashtead Group (AHT) 2,241.00p -0.22%
FTSE 250 - Risers
Syncona Limited NPV (SYNC) 234.90p 4.40%
Wood Group (John) (WG.) 643.40p 4.31%
Hikma Pharmaceuticals (HIK) 1,428.50p 3.82%
Petrofac Ltd. (PFC) 564.80p 3.25%
Premier Oil (PMO) 114.40p 3.06%
Millennium & Copthorne Hotels (MLC) 525.00p 2.94%
Hill & Smith Holdings (HILS) 1,470.00p 2.65%
Hunting (HTG) 778.00p 2.64%
Britvic (BVIC) 780.28p 2.53%
Weir Group (WEIR) 1,982.50p 2.45%
FTSE 250 - Fallers
Renishaw (RSW) 5,187.00p -5.69%
CLS Holdings (CLI) 222.50p -2.84%
Stobart Group Ltd. (STOB) 243.50p -2.01%
Ibstock (IBST) 290.88p -1.66%
Euromoney Institutional Investor (ERM) 1,336.00p -1.33%
Bodycote (BOY) 996.00p -1.29%
Spectris (SXS) 2,755.00p -1.15%
GCP Infrastructure Investments Ltd (GCP) 119.40p -1.00%
St. Modwen Properties (SMP) 411.00p -0.96%
TalkTalk Telecom Group (TALK) 108.80p -0.82%