London midday: FTSE gains as miners, rand-exposed stocks rally

London equities were holding on to gains by midday on Thursday, underpinned by strength in the mining sector and an impressive showing from stocks with exposure to South Africa, as investors shrugged off the latest rise in US inflation.

The FTSE 100 was up 0.6% to 7,255.34, while the pound up 0.1% against the euro at 1.1261 and 0.3% firmer versus the dollar at 1.4042.

Following higher than expected US consumer price inflation a day earlier, IG analyst Joshua Mahony said markets were quickly settling back into their routine of steady gains as "the earthquake moment" prompted by the US CPI reading passes.

"The market has looked at the data, had a think, then another think, and has decided," he said. "The decision appears to be to resume selling the dollar, furiously buying up non-US assets wherever they can be found, but also going back into US equities with gusto. Yet again we have been treated to the sight of the euro and sterling rallying along with UK and European stocks, a sign that shows risk appetite is back.

"The only possible fly in the ointment is that the dollar basket is so far showing distinct reluctance to move below the low near the 88 level it hit at the end of January. Dollar bulls have this to cling to at least, but rallies here have been there for the selling for a year now, and I’m not sure why this one will be any different. Support levels are there to be broken, after all."

Old Mutual, Anglo American and Mondi, which have listings on the London Stock Exchange and the Johannesburg Securities Exchange, were up following Jacob Zuma's resignation as president of South Africa.

Analyst Neil Wilson at ETX Capital said investors were breathing a sigh of relief after nine years of scandal.

"Growth has stagnated badly under Zuma and there is hope that this will usher in a period of greater political stability and maybe some economic reforms that can get the drivers of growth going again.

"Ramaphosa is seen as good for business and will tackle corruption and mismanagement. Not that he won’t face challenges of course - there are deep economic and social problems and the ANC remains pretty divided. But whatever happens under the new president, I think markets and business assume it won’t be anything like as bad as Zuma."

Heavily-weighted miners put in a solid performance as commodity prices firmed on the back of a weaker dollar, with Rio Tinto, Glencore and BHP Billiton all up.

AstraZeneca was also firmer after it and Merck & Co announced that the US Food and Drug Administration has granted Orphan Drug Designation (ODD) for selumetinib, a MEK 1/2 inhibitor, for the treatment of neurofibromatosis type 1 (NF1).

GKN reversed earlier losses to trade higher after its chairman said the hostile bid from turnaround specialist Melrose Industries is "low price and high risk" and undervalues the group.

Medical equipment maker ConvaTec rallied as it reported better-than-forecast 2017 organic revenue growth of 2.3% to £1.76bn, while Bodycote surged after an upgrade to 'overweight' at JPMorgan.

On the downside, Standard Life Aberdeen was under the cosh as it said it was making an impairment charge of around £40m after Lloyds Bank announced it was withdrawing funds controlled by its Scottish Widows investment arm.

Elsewhere, RELX Group, the information and analytics formerly known as Reed Elsevier, was on the back foot despite lifting its final dividend 10%, pledging to repeat its £700m share buyback in 2018 and proposing to merge its UK and Dutch parent companies in a further simplification of its corporate structure. Analysts said it was likely being dumped along with other high dividend stocks.

Insurer Lancashire Holdings suffered heavy losses after saying it swung to a bigger-than-expected full-year loss as natural catastrophes took their toll, while Indivior was under pressure after it swung to a loss in the fourth quarter despite a rise in revenue.

AstraZeneca, Unilever, BP, Royal Dutch Shell and PZ Cussons were lower as their stock went ex-dividend.

Market Movers

FTSE 100 (UKX) 7,255.34 0.57%
FTSE 250 (MCX) 19,632.75 0.95%
techMARK (TASX) 3,290.73 0.92%

FTSE 100 - Risers

Old Mutual (OML) 249.00p 4.01%
Mondi (MNDI) 1,862.00p 3.94%
Rio Tinto (RIO) 4,149.50p 3.07%
Evraz (EVR) 386.10p 2.88%
Johnson Matthey (JMAT) 3,191.00p 2.80%
BAE Systems (BA.) 588.20p 2.76%
Glencore (GLEN) 392.40p 2.62%
Just Eat (JE.) 882.80p 2.48%
BHP Billiton (BLT) 1,611.00p 2.31%
Anglo American (AAL) 1,731.60p 2.26%

FTSE 100 - Fallers

Standard Life Aberdeen (SLA) 369.00p -5.21%
Severn Trent (SVT) 1,677.00p -3.06%
United Utilities Group (UU.) 653.40p -2.36%
AstraZeneca (AZN) 4,730.50p -2.06%
DCC (DCC) 6,695.25p -1.54%
Relx plc (REL) 1,440.00p -1.13%
Unilever (ULVR) 3,753.00p -1.03%
British American Tobacco (BATS) 4,395.50p -1.00%
National Grid (NG.) 736.90p -0.98%
Centrica (CNA) 126.30p -0.86%

FTSE 250 - Risers

Convatec Group (CTEC) 210.30p 6.40%
Vectura Group (VEC) 80.30p 5.66%
Galliford Try (GFRD) 844.95p 5.62%
Sophos Group (SOPH) 520.50p 5.49%
Tullow Oil (TLW) 181.50p 4.31%
JD Sports Fashion (JD.) 386.05p 4.17%
Melrose Industries (MRO) 229.60p 3.84%
Bodycote (BOY) 920.50p 3.72%
Kaz Minerals (KAZ) 853.60p 3.72%
Wood Group (John) (WG.) 621.60p 3.60%

FTSE 250 - Fallers

Indivior (INDV) 370.50p -8.50%
Barr (A.G.) (BAG) 620.00p -3.73%
Pennon Group (PNN) 607.80p -2.94%
Lancashire Holdings Limited (LRE) 636.00p -2.75%
TalkTalk Telecom Group (TALK) 104.00p -2.44%
Greencore Group (GNC) 183.55p -2.37%
Brown (N.) Group (BWNG) 200.60p -2.34%
Capita (CPI) 185.20p -2.27%
Tate & Lyle (TATE) 560.40p -1.06%
Telecom Plus (TEP) 1,188.00p -1.00%