London midday: StanChart and Pru lead equity relief rebound
London stocks staged a mini relief rally on Monday as the sabre-rattling between USA and North Korea quietened ahead of what will be a busier week for European macroeconomic activity.
At 20 minutes past noon, the FSTE 100 was up 41 points or 0.56% to 7,351.15, aided further by a mid-morning fall in the pound against the dollar. Sterling was down 0.3% against the dollar at 1.2972, having maintained levels above 1.3 for most of the last six weeks, while there was a pause in the long slide against the euro, staying roughly flat at 1.1003.
Helping market sentiment amid the thin summer volumes was the simmering down of tensions between the US and North Korea, helped by a phone call between US president Donald Trump and Chinese counterpart Xi Jinping.
Xi urged calm on both sides and told Trump that all sides needed to show restraint and avoid making inflamatory remarks, with both leaders in agreement that North Korea needed to avoid provocative behaviour.
"Risk appetite is slowly returning to the markets on Monday, with no further escalation between the US and North Korea incentivising a gradual move back towards 'riskier' assets," said analyst Craig Erlam at Oanda.
"I don’t think this signifies a belief that relations between the two countries will suddenly improve, it’s more a case of no news being good news and that will likely continue for as long as it lasts. The problem is that both sides can be rather unpredictable so things could escalate at any point and trigger another dash for safety. Gold, the yen and the Swiss franc may be coming off their highs at the moment but I’m not convinced it will last."
Aiding the mood was preliminary Japanese second quarter GDP figures coming in significantly stronger than expected at 4.0% year-on-year versus the 2.5% expected, driven by an increase in domestic consumption.
This was balanced by weaker Chinese industrial production, retail sales and fixed asset investment data, all missing consensus forecasts.
UK retail data was focused on footfall into shops, with the a dip of 1.1% in July according to figures by the British Retail Consortium and Springboard, coming as a taster of the consumer environment ahead of official figures out later in the week that are expected to show a further squeeze on living standards, with wage growth forecast to have fallen further behind inflation.
In company news, Standard Life Aberdeen rose as the two Scottish savings and investment groups completed their merger, also confirming the make-up of the new combined board.
It was topped by Standard Chartered as the Asia-focused bank and a host of fellow financials sector players rebounded amid a relief of tensions around North Korea. The sector was hit hardest by the sabre-rattling last week, especially those with a heavy reliance on Asia.
That includes insurer Prudential, which was also subject of newspaper reports that Legal & General had expressed an interest in bidding for a £10bn tranche of its annuity portfolio. The news is likely to fuel speculation of a break-up, The Times suggested following its announcement last week of a major review of operations that will result in the merger of its UK insurance operation with the fund manager M&G.
Elsewhere, travel operator TUI was lifted by an upgrade to a 'neutral' rating by Credit Suisse from its previous 'underperform' given a "material valuation shift" in the shares relative value to rival Thomas Cook.
Ship broker Clarkson was up slightly after reporting profits tax before rising by a quarter to reach £21.9m at the half-year stage as the shipping services group's top line increased from £147.2m to £156.8m. Clarkson saw an improved outlook with the expectation of a resurgent China, though analyst Joshua Mahony at IG said if the morning's data is anything to go by, "China still has some way to go before we can expect global trade to get back on course".
Greencoat UK Wind slid slightly after agreeing to acquire the North Hoyle and Slieve Divena wind farms from institutional investors for close to £105m. The acquisitions, which are expected to be completed in August 2017, will add 90 MW capacity and are being funded by an existing revolving credit facility.
Ladbrokes Coral was down after its shares were downgraded by Credit Suisse as part of a review of the gaming sector, which saw coverage begin on Playtech with an 'outperform' rating and Paddy Power Betfair seen as the top sector pick.
Market Movers
FTSE 100 (UKX) 7,355.46 0.62%
FTSE 250 (MCX) 19,653.97 0.56%
techMARK (TASX) 3,373.88 0.51%
FTSE 100 - Risers
TUI AG Reg Shs (DI) (TUI) 1,290.00p 4.79%
Standard Chartered (STAN) 771.10p 2.32%
Glencore (GLEN) 328.75p 2.10%
British Land Company (BLND) 614.50p 1.57%
Scottish Mortgage Inv Trust (SMT) 424.80p 1.53%
Prudential (PRU) 1,809.50p 1.51%
Convatec Group (CTEC) 290.10p 1.47%
St James's Place (STJ) 1,183.00p 1.46%
CRH (CRH) 2,666.00p 1.45%
RSA Insurance Group (RSA) 650.00p 1.40%
FTSE 100 - Fallers
Experian (EXPN) 1,490.00p -1.78%
G4S (GFS) 296.40p -1.00%
Fresnillo (FRES) 1,536.00p -0.97%
Provident Financial (PFG) 1,959.00p -0.86%
Next (NXT) 4,367.00p -0.75%
Marks & Spencer Group (MKS) 325.10p -0.61%
Coca-Cola HBC AG (CDI) (CCH) 2,578.00p -0.54%
Kingfisher (KGF) 304.80p -0.52%
Randgold Resources Ltd. (RRS) 7,440.00p -0.47%
Imperial Brands (IMB) 3,160.00p -0.35%
FTSE 250 - Risers
NMC Health (NMC) 2,300.00p 5.36%
SIG (SHI) 183.90p 4.79%
OneSavings Bank (OSB) 400.40p 3.76%
Ferrexpo (FXPO) 263.50p 3.50%
Aldermore Group (ALD) 223.30p 3.43%
BGEO Group (BGEO) 3,497.00p 3.10%
TBC Bank Group (TBCG) 1,604.00p 2.82%
Playtech (PTEC) 974.50p 2.80%
Ted Baker (TED) 2,445.00p 2.60%
CYBG (CYBG) 290.30p 2.47%
FTSE 250 - Fallers
Carillion (CLLN) 54.50p -4.13%
Marshalls (MSLH) 385.30p -3.04%
Ladbrokes Coral Group (LCL) 115.30p -2.95%
Savills (SVS) 872.00p -2.02%
Tullow Oil (TLW) 160.70p -1.71%
Petrofac Ltd. (PFC) 434.90p -1.65%
Hunting (HTG) 427.40p -1.34%
UDG Healthcare Public Limited Company (UDG) 817.00p -1.21%
William Hill (WMH) 245.10p -1.21%
Essentra (ESNT) 519.00p -1.14%