London midday: Stocks extend gains as commodity sector rallies

London stocks extended gains by midday on Tuesday, with strength in the commodity sector helping to offset some disappointing corporate updates, as investors brushed off more trade war rhetoric from US President Trump.

The FTSE 100 was up 0.8% to 7,727.55, while the pound was up 0.2% against the dollar at 1.2968 and 0.2% lower versus the euro at 1.1187.

A day after announcing the re-imposition of sanctions against Iran, Trump warned on Twitter that anyone trading with the country would not do business with the US, as he claimed the sanctions were reinstated for the sake of world peace.

"The Iran sanctions have officially been cast. These are the most biting sanctions ever imposed, and in November they ratchet up to yet another level. Anyone doing business with Iran will NOT be doing business with the United States. I am asking for WORLD PEACE, nothing less," Trump tweeted.

Investors largely shrugged off Trump's latest Twitter tantrum, with strength in the mining sector helping to underpin the tone as copper prices rose. Anglo, Glencore and BHP Billiton were all higher, while energy shares gained as oil prices increased amid expectations that the US sanctions on Iran will tighten supply.

On the UK data front, the latest figures from lender Halifax showed that house prices rose more than expected in July, with the average house price hitting a new record.

House prices were up 1.4% on the month compared to a 0.9% jump in June, beating expectations for a 0.2% increase. June's figure was revised up from 0.3%. On the year, house prices were 3.3% higher, up from a 1.8% increase in June and ahead of expectations for a 2.7% rise. This marked the largest increase since last November.

The average house price hit its highest level on record, at £230,280, with prices in the three months to July 1.3% firmer than in the previous quarter, versus a 0.5% decline in June.

Halifax managing director Russell Galley said: "While the quarterly and annual rates of house price growth have improved, housing activity remains soft. Despite the recent modest improvement in mortgage approvals, the latest survey data for new buyer enquiries and agreed sales suggest that approvals will remain broadly flat until the end of the year.

Elsewhere, the latest figures from Barclaycard revealed that consumer spending was up 5% year-on-year in July, with essential spending up 8.7% compared to July last year, and pub spending 16.8% higher thanks to the World Cup and the heatwave.

Data from the British Retail Consortium-KPMG sales monitor was less inspiring, showing that retail sales growth eased back in July. Sales were up 0.5% on a like-for-like basis compared to the same month last year, down from a 1.1% increase in June and missing expectations of 1.5% growth. Total sales growth dipped to 1.6% year-over-year from 2.3% in June.

BRC chief executive Helen Dickinson said: "Last month’s sweltering temperatures kept shoppers focussed on eating, drinking and keeping cool. Food sales had their best July in five years, while fans and cooling equipment flew off the shelves.

"However, total sales growth slowed as the heat laid bare the underlying weakness in consumer spending."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics said he expects consumer spending to grow only at a modest rate even when the weather-drag on sales has faded.

"Real wage growth will strengthen gradually, but business surveys point to a slowdown in employment growth over the next six months, while the recent increase in Bank Rate will take more momentum out of the housing market, hitting confidence," he said.

In corporate news, Standard Life Aberdeen was in the green despite saying that profits fell in the first half, as investors cheered the early start of a buyback programme.

Moneysupermarket ticked higher after confirming the completion of the UK merger control process phase of its proposed acquisition of Decision Technologies.

On the downside, pensions and investment provider Hargreaves Lansdown was in the red as it rewarded shareholders with a bumper special dividend and said active clients for the year topped 1m, but annual numbers came in slightly short of expectations.

InterContinental Hotels Group retreated despite posting a 9.7% jump in operating profit that topped the consensus estimate of $397.7m, while Domino's Pizza tumbled even as it posted a 2.5% increase in first-half pre-tax profit to £45.7m, with analysts pointing to a disappointing overseas performance and store openings.

Meggitt ticked down after saying first-half pre-tax profit declined 39% as a result of lower gains from disposals.

Product testing company Intertek slumped even as it posted a rise in first half-profit thanks to a strong performance from its products divisions and hiked its dividend, as the shares had a strong run into the results.

Rotork declined even as the FTSE 250 maker of industrial flow equipment reported a jump in first-half pre-tax profit as revenue and order intake grew on the back of larger orders and favourable market trends.

In broker note action, William Hill was upgraded to 'neutral' at Goldman Sachs, while Ferrexpo was lifted to 'overweight' at JPMorgan.

Ocado was downgraded to 'underweight' at Barclays, while Ultra Electronics was cut to 'hold' at Kepler Cheuvreux and Man Group and Spire Healthcare were cut to 'neutral' at Bank of America Merrill Lynch. Hiscox was started at 'hold' by Jefferies.

Market Movers

FTSE 100 (UKX) 7,727.55 0.83%
FTSE 250 (MCX) 20,699.56 0.29%
techMARK (TASX) 3,615.19 0.38%

FTSE 100 - Risers

Standard Life Aberdeen (SLA) 318.90p 4.01%
Anglo American (AAL) 1,734.20p 3.35%
Glencore (GLEN) 323.95p 3.17%
BHP Billiton (BLT) 1,739.40p 3.11%
Antofagasta (ANTO) 969.80p 2.89%
Rio Tinto (RIO) 4,031.00p 2.75%
Fresnillo (FRES) 1,001.00p 2.08%
AstraZeneca (AZN) 5,938.00p 2.01%
Evraz (EVR) 556.60p 1.94%
Burberry Group (BRBY) 2,168.00p 1.88%

FTSE 100 - Fallers

Intertek Group (ITRK) 5,530.00p -5.79%
Hargreaves Lansdown (HL.) 2,045.00p -3.45%
Ocado Group (OCDO) 1,050.50p -2.55%
InterContinental Hotels Group (IHG) 4,643.00p -2.23%
Croda International (CRDA) 5,146.00p -1.61%
Barclays (BARC) 187.18p -0.73%
Royal Mail (RMG) 456.00p -0.57%
Smurfit Kappa Group (SKG) 3,246.00p -0.49%
Smith (DS) (SMDS) 504.40p -0.39%
Standard Chartered (STAN) 688.30p -0.32%

FTSE 250 - Risers

Kaz Minerals (KAZ) 628.10p 5.96%
Ferrexpo (FXPO) 170.70p 3.86%
Premier Oil (PMO) 126.60p 3.18%
Ibstock (IBST) 241.20p 2.81%
Contour Global (GLO) 234.00p 2.63%
Millennium & Copthorne Hotels (MLC) 510.00p 2.51%
IP Group (IPO) 123.80p 2.48%
Tullow Oil (TLW) 226.60p 2.44%
Thomas Cook Group (TCG) 87.65p 2.34%
Games Workshop Group (GAW) 3,145.00p 2.11%

FTSE 250 - Fallers

Domino's Pizza Group (DOM) 285.40p -10.25%
Ultra Electronics Holdings (ULE) 1,527.00p -10.12%
Capita (CPI) 122.65p -4.81%
Spire Healthcare Group (SPI) 186.20p -3.72%
Rotork (ROR) 342.90p -3.41%
TP ICAP (TCAP) 286.10p -2.15%
IWG (IWG) 233.60p -2.05%
Unite Group (UTG) 871.50p -1.69%
Sophos Group (SOPH) 509.00p -1.64%
Bakkavor Group (BAKK) 187.00p -1.58%