London midday: FTSE gains as traders continue to mull May's Brexit speech
The FTSE 100 rose on Wednesday as the pound reversed gains from the previous session and investors continued to mull Prime Minister Theresa May's Brexit speech.
At 1156 GMT the index increased 0.10% to 7,227.03 points while the pound dipped 0.86% against the dollar to $1.2307 and dropped 0.58% versus the euro to €1.1521.
On Tuesday, UK equities fell and sterling strengthened after May confirmed Britain would be leaving the European Union’s single market but said parliament would get a vote on the Brexit deal.
“UK markets have managed to hold off further significant declines this morning after yesterday’s fall out, with sterling dropping back following some profit taking,” said Michael Hewson, chief market analyst at CMC Markets.
He said May’s speech "seems to have simply caused some short term volatility as opposed to a trend change, as investors come to realise that there is still a long road ahead”.
On Wednesday’s agenda, official UK jobs data seemed to underwhelm the market. Unemployment fell by 52,000 to 1.6m in the three months to November, the Office for National Statistics said, though the headline rate remained at 4.8% as expected.
Employment also dropped slightly, falling 9,000 in the three months to November but the unemployment number climbed due to an 85,000 increase in inactivity levels.
Basic wage growth including bonuses rose to 2.8% from 2.5% in October, exceeding the consensus forecast of 2.6% and reaching a 14-month high. Excluding bonuses it accelerated to 2.7%, ahead of the consensus estimate of 2.6%.
“Despite a couple of positive surprises the UK jobs report failed to chance much this morning, the market’s continuing to trade in the shadow of yesterday’s Brexit speech from Theresa May,” said Connor Campbell, financial analyst at Spreadex.
“Most notable was the average wage index growth, which exceeded expectations at 2.8% for the three months to the end of November. That’s the best number since the end of 2015, and good news for those feeling their wallets pinched by the UK’s rapidly increasing inflation.”
Looking ahead to afternoon trade, US inflation is due at 1330 GMT. Economists expect the consumer price index rose an annualised 2.1% in December compared to 1.7% in November.
Also on the agenda, US industrial and manufacturing production figures at 1415 GMT and the NAHB housing market index at 1500 GMT. Dallas Federal Reserve President Robert Kaplan speaks at 1400 GMT and Minneapolis Fed President Neel Kashkari speaks at 1600 GMT.
After the closing bell, Fed chair Janet Yellen will speak in San Francisco at 2000 GMT.
Among corporate stocks, shares in Pearson – which has already issued a string of profit warnings in recent years – tanked after it cut its profit forecast for this year and said its future dividends will be lower.
Hikma Pharmaceuticals was a top riser on the FTSE 100 after its US subsidiary Roxane Laboratories received approval from the US Food and Drug Administration for its sodium oxybate oral solution for the treatment of patients with narcolepsy.
Burberry edged higher after posting 4% growth in underlying retail sales for the third quarter, boosted by a return to growth for the Asia Pacific region but with the Americas still in decline.
JD Wetherspoon gained after saying sales slowed and profit margins narrowed in the second quarter but it expects full year results to have "slightly improved".
Outsourcer Mitie was under the cosh following its third profit warning since September and as it announced the appointment of a new finance director.
Inmarsat slipped after JPMorgan Cazenove downgraded the satellite company to ‘neutral’ from ‘overweight’ and cut the price target to 830p from 950p.
Market Movers
FTSE 100 (UKX) 7,226.52 0.09%
FTSE 250 (MCX) 18,224.64 -0.09%
techMARK (TASX) 3,370.71 -0.10%
FTSE 100 - Risers
Burberry Group (BRBY) 1,628.00p 2.20%
Hikma Pharmaceuticals (HIK) 1,950.00p 1.88%
British American Tobacco (BATS) 4,660.00p 1.75%
HSBC Holdings (HSBA) 678.10p 1.68%
Compass Group (CPG) 1,446.00p 1.47%
TUI AG Reg Shs (DI) (TUI) 1,123.00p 1.45%
Wolseley (WOS) 4,928.00p 1.27%
Diageo (DGE) 2,157.00p 1.20%
Reckitt Benckiser Group (RB.) 6,852.00p 1.18%
AstraZeneca (AZN) 4,583.50p 1.17%
FTSE 100 - Fallers
Pearson (PSON) 571.00p -29.33%
Experian (EXPN) 1,540.00p -2.41%
Sage Group (SGE) 646.00p -2.05%
Smurfit Kappa Group (SKG) 2,069.00p -1.94%
Capita (CPI) 508.50p -1.74%
Barclays (BARC) 227.65p -1.71%
Anglo American (AAL) 1,302.00p -1.66%
Persimmon (PSN) 1,962.00p -1.65%
Fresnillo (FRES) 1,403.00p -1.54%
Lloyds Banking Group (LLOY) 64.55p -1.38%
FTSE 250 - Risers
Ferrexpo (FXPO) 132.50p 6.00%
Ladbrokes Coral Group (LCL) 129.30p 3.86%
Wetherspoon (J.D.) (JDW) 929.50p 3.05%
IP Group (IPO) 179.70p 2.92%
Spectris (SXS) 2,472.00p 2.66%
Henderson Group (HGG) 241.20p 2.59%
Serco Group (SRP) 149.40p 2.54%
Pennon Group (PNN) 800.50p 2.43%
Vesuvius (VSVS) 435.70p 2.40%
Hastings Group Holdings (HSTG) 234.30p 1.96%
FTSE 250 - Fallers
Mitie Group (MTO) 191.20p -6.96%
Inmarsat (ISAT) 667.50p -5.32%
Fidessa Group (FDSA) 2,243.00p -2.82%
AO World (AO.) 158.80p -2.58%
Brown (N.) Group (BWNG) 204.40p -2.48%
Redefine International (RDI) 39.44p -2.38%
SSP Group (SSPG) 387.30p -2.34%
Virgin Money Holdings (UK) (VM.) 304.10p -2.22%
Thomas Cook Group (TCG) 83.65p -2.11%
Savills (SVS) 780.50p -2.01%