London close: US tax cut hopes kick-off 'Santa rally' in stocks

London stocks jumped on Monday amid expectations the US tax reform bill will be passed soon and on the back of thinner trading volumes as traders headed off on their holidays.

The FTSE 100 gained 0.62% to stand at 7,537.01, while the pound edged higher by 0.12% against the euro to 1.1352 and tacked on 0.5% versus the US dollar to 1.3393.

IG analyst Joshua Mahony said: "The Santa rally is well and truly on, with last week closing out with a bang, as record highs across the Dow, S&P 500, and Nasdaq pointed towards a strong end to the year. Despite a few bumps in the road, the US tax reform bill looks increasingly likely to be passed, as [Senators] Rubio and Corker both shifted their views to indicate they would back the bill in its current form.

"While the income tax element of the reforms is questionable, it is the corporate tax element that has markets interested, with profitability looking likely to improve under such a plan. It comes as no surprise that we are expecting to see another record open for US markets, with many expecting to see the reforms voted on and signed into law later this week."

Mid-morning figures from the Confederation of British Industry showed UK manufacturing orders held steady in December.

The CBI's order balance was unchanged from November at +17, beating expectations for a drop to +15 and joint-highest with last month and August 1988.

The balance of export orders weakened a little to +16 from +20, while the balance of output expectations was steady at +13. Volume of output in the last three months rose to +30 from +28.

Anna Leach, CBI head of economic intelligence, said: "As we head towards the end of 2017, UK manufacturers' total order books remain at a near 30-year high, with export order books remaining at their strongest since the mid-1990s.

"While the lower level of sterling continues to support exporters, cost pressures remain intense. Businesses will expect to see the government’s industrial strategy make rapid progress next year to support manufacturing and the wider economy in every corner of the UK."

In corporate news, IG Group slumped as it called new leverage limits being proposed by the European financial regulator "disproportionate" and said the broader set of proposals would have an impact of between 5% and 10% on historic revenues. The European Securities and Markets Authority said it was considering measures to prohibit the marketing, distribution or sale to retail clients of binary options, together with restricting the marketing, distribution or sale to retail clients of CFDs, including rolling spot forex. Shares in CMC Markets and Plus500 also tumbled.

Babcock rose as its subsidiary Cavendish Nuclear, the UK's largest nuclear services business, was awarded a 10-year contract to supply Sellafield with specialist handling and containment systems to process nuclear material.

AstraZeneca edged up as it announced that the US Food and Drug Administration has accepted a supplemental New Drug Application (sNDA) for the use of Tagrisso (osimertinib) in the first line treatment of patients with metastatic non-small cell lung cancer whose tumours have epidermal growth factor receptor (EGFR) mutations.

Supergroup advanced after saying its sportswear label has been appointed as the official clothing supplier to the UK delegation for the 2018 Invictus Games in Sydney, Australia. The retailer is also expecting to complete the buy-out of the operations of its Dutch wholesale agent, Portare, in January for an estimated payment of £2m.

3i Infrastructure gained after agreeing to sell its stake in Anglian Water Group, the parent company of Anglian Water, to a consortium of Dalmore Capital and GLIL Infrastructure.

Hunting gushed higher as it said that, as it anticipated in its trading update on 24 October, revenue for the full year was expected to be around the $700m mark, with results strongly weighted to the second half of the year.

Great Portland Estates lost some ground as it sold its high-profile Southbank tower 240 Blackfriars Road to Emirati investors.

Market Movers

FTSE 100 (UKX) 7,537.01 0.62%
FTSE 250 (MCX) 20,166.54 0.59%
techMARK (TASX) 3,488.61 0.66%

FTSE 100 - Risers

Anglo American (AAL) 1,480.50p 5.00%
Old Mutual (OML) 213.10p 4.77%
Rolls-Royce Holdings (RR.) 855.50p 2.95%
Ashtead Group (AHT) 1,947.00p 2.80%
3i Group (III) 915.00p 2.64%
NMC Health (NMC) 2,870.00p 2.50%
Barratt Developments (BDEV) 641.50p 2.39%
Persimmon (PSN) 2,685.00p 2.25%
Prudential (PRU) 1,888.50p 2.22%
Mondi (MNDI) 1,857.00p 2.15%

FTSE 100 - Fallers

easyJet (EZJ) 1,377.00p -2.82%
WPP (WPP) 1,365.00p -1.73%
Morrison (Wm) Supermarkets (MRW) 213.40p -0.97%
BT Group (BT.A) 275.35p -0.79%
Tesco (TSCO) 206.05p -0.60%
Next (NXT) 4,230.00p -0.38%
Worldpay Group (WPG) 433.80p -0.37%
Informa (INF) 737.50p -0.34%
Whitbread (WTB) 3,851.00p -0.34%
SSE (SSE) 1,311.00p -0.30%

FTSE 250 - Risers

Hunting (HTG) 586.65p 6.37%
Genus (GNS) 2,573.00p 5.71%
Hochschild Mining (HOC) 241.40p 5.69%
Ferrexpo (FXPO) 281.10p 5.40%
Investec (INVP) 510.00p 5.35%
Dignity (DTY) 1,697.00p 4.37%
Homeserve (HSV) 788.00p 4.10%
IWG (IWG) 204.00p 4.03%
Cineworld Group (CINE) 599.00p 3.99%
Supergroup (SGP) 1,977.00p 3.83%

FTSE 250 - Fallers

IG Group Holdings (IGG) 665.00p -9.28%
RHI Magnesita N.V. (DI) (RHIM) 4,004.00p -3.63%
TalkTalk Telecom Group (TALK) 138.00p -3.43%
Euromoney Institutional Investor (ERM) 1,217.00p -2.84%
Purecircle Limited (DI) (PURE) 450.50p -2.07%
Sirius Minerals (SXX) 22.52p -2.04%
TI Fluid Systems (TIFS) 238.75p -1.75%
Wizz Air Holdings (WIZZ) 3,404.00p -1.62%
F&C Global Smaller Companies (FCS) 1,367.00p -1.58%
Clarkson (CKN) 2,815.00p -1.23%