London close: Stocks pedal higher after gruelling week

The FTSE 100 peloton crested the summit of 7,700 to finish a demanding results season week, underpinned by well-received earnings reports from a small breakaway group of blue chip giants, as traders mulled confirmation that the US economy remained good shape but not quite top gear.

As British cyclist Geraint Thomas tightened his grip on the Tour de France title in a mountainous Friday battle, London's equity benchmark pedalled up 0.5% on the day to end the session at the psychologically significant level, up 0.34% for the week to 7,701.31, as the pound remained enfeebled against the dollar at 1.3114 but picked up from earlier lows after the US GDP print came in line with expectations but not as high as some optimists were expecting.

GDP came out at 4.1% growth for the second quarter, the highest level seen since 2014 and an "amazing rate" according to President Trump, in line with what the market expected and the "solid rate" the Federal Reserve anticipated. Personal consumption was strong at 4.0%, reflecting underlying momentum due to a strong labour market and White House's tax cuts.

"Global stock markets are surging higher as we see out the week, with buoyant US growth helping dust off any fears of a negative impact from deteriorating trade ties," said IG analyst Joshua Mahony, after a week that saw a breakthrough between the US and the EU on trade.

"On the FX front, the decline of the US dollar this afternoon highlights the fact that many were hoping for an even bigger GDP read, with Donald Trump’s pre-release excitement leading many to believe we would see a figure significantly higher than market expectations. However, with the prospect of US growth continuing to rise in H2, there is little reason to believe that the Fed will do anything other than continue raising rates through the rest of the year."

Sterling was down 0.1% versus the euro at 1.1250, showing some resilience in the face of news that the European Commission's chief Brexit negotiator, Michel Barnier, has ruled out a key part of Prime Minister Theresa May's customs plan. Barnier said the EU could not agree to let another country collect European customs duties on its behalf.

Meanwhile, following a veritable avalanche of earnings on Thursday, the UK corporate front was a lot quieter to finish off the week, but the news was mostly good.

Reckitt Benckiser surged after the consumer goods company upgraded its revenue guidance following a good first half.

BT rallied as it posted a jump in first-quarter pre-tax profit and backed its profit guidance for the year. EBITDA, free cash flow and capex were all better than City analysts expected.

Education publisher Pearson gained ground as its flat interim adjusted operating profit came in ahead of expectations and the company said it remains on track to return to underlying profit growth.

"Results ok on surface, details not so great," said broker Liberum, noting that it looks like the company is "no nearer" to selling its US K-12 Courseware business and that "the language on US Higher Ed Courseware sounds quite cautious", with digital sales in US higher education only grew "modestly".

Equiniti jumped after saying it expects full-year earnings to be towards the top end of market expectations.

BHP Billiton pushed up after agreeing to sell its US shale assets to BP for $10.5bn, but BP shares lost ground until crude prices picked up late in the day. IG's Mahony said: "Interestingly, despite the fall in BP shares in early trade, this is a boon for the firm who are one of several companies who have been seeking to gain ground in the US oil fields after US corporate tax cuts helped reduce costs where production is already relatively cheap.

"The challenging 2015-2017 period of low oil prices also serves to benefit these new BP assets, with efficiencies that were necessary to make at the time meaning that they acquire a lean and efficient operation which should prove highly profitable now that crude prices have recovered."

ITV was a little higher after reports that it has written to Virgin Media warning that it could remove its channels as soon as this weekend if an agreement cannot be reached. "We believe Virgin is likely to start to pay retransmission fees to avoid such a move," said Liberum.

On the downside, Rightmove fell despite reporting a rise in first-half revenue and operating profit, lifting its interim dividend and expressing confidence in delivering on its full-year expectations.

Jupiter Fund Management was also weaker as the company's first-half net flows were slightly weaker than expected and Greencoat UK Wind slipped despite saying that first-half pre-tax profit nearly doubled.

In broker note action, William Hill was lifted to 'hold' by Peel Hunt. Howden Joinery was cut to 'hold' at Canaccord, Inchcape was downgraded to 'hold' at HSBC, which also reduced SSE to 'hold'.

Market Movers

FTSE 100 (UKX) 7,705.67 0.55%
FTSE 250 (MCX) 20,868.94 0.48%
techMARK (TASX) 3,592.10 0.73%

FTSE 100 - Risers

Reckitt Benckiser Group (RB.) 6,834.00p 8.29%
BT Group (BT.A) 236.00p 4.96%
Pearson (PSON) 957.40p 3.64%
BHP Billiton (BLT) 1,713.00p 2.40%
Barratt Developments (BDEV) 537.60p 1.66%
Vodafone Group (VOD) 180.00p 1.64%
International Consolidated Airlines Group SA (CDI) (IAG) 691.00p 1.44%
Royal Dutch Shell 'B' (RDSB) 2,661.00p 1.31%
Smith & Nephew (SN.) 1,378.50p 1.29%
Standard Chartered (STAN) 702.70p 1.22%

FTSE 100 - Fallers

Rightmove (RMV) 4,934.00p -3.10%
Just Eat (JE.) 865.60p -2.49%
CRH (CRH) 2,632.00p -1.83%
British American Tobacco (BATS) 4,115.00p -1.48%
Relx plc (REL) 1,690.50p -1.31%
Burberry Group (BRBY) 2,114.00p -1.17%
AstraZeneca (AZN) 5,734.00p -1.07%
Admiral Group (ADM) 1,897.00p -1.04%
Kingfisher (KGF) 308.50p -1.03%
Evraz (EVR) 545.20p -0.87%

FTSE 250 - Risers

Sophos Group (SOPH) 499.40p 6.26%
Equiniti Group (EQN) 221.00p 6.25%
Alfa Financial Software Holdings (ALFA) 168.20p 4.73%
Cobham (COB) 123.25p 3.92%
Intu Properties (INTU) 170.75p 3.48%
Wood Group (John) (WG.) 656.60p 3.40%
Inmarsat (ISAT) 568.60p 3.38%
Greencore Group (GNC) 187.60p 3.25%
Vietnam Enterprise Investments (DI) (VEIL) 440.00p 3.04%
Petrofac Ltd. (PFC) 604.60p 2.72%

FTSE 250 - Fallers

Inchcape (INCH) 727.00p -7.21%
Centamin (DI) (CEY) 117.60p -3.13%
Jupiter Fund Management (JUP) 429.30p -3.05%
Britvic (BVIC) 808.00p -2.65%
Stagecoach Group (SGC) 163.00p -2.51%
National Express Group (NEX) 410.80p -2.42%
Daejan Holdings (DJAN) 6,260.00p -2.19%
888 Holdings (888) 243.60p -1.77%
Primary Health Properties (PHP) 113.40p -1.73%
Contour Global (GLO) 240.00p -1.64%