London midday: Stocks extend gains as oil giants, retailers rally

London stocks had extended gains by midday on Tuesday thanks to a strong showing from retailer Next and the oil majors, although worries about the US-China trade conflict remained.

The FTSE 100 was up 0.4% to 7,490.88, while the pound was 0.3% higher against the dollar at 1.3156 and 0.1% firmer versus the euro at 1.1184.

Investors were keeping an eye on developments between the US and China following reports that China’s vice commerce minister Wang Shouwen said at a news conference on Tuesday that it was difficult to go ahead with negotiations at the moment and that the discussions would depend on the will of the US.

Meanwhile, political instability in the US was also a concern following reports on Monday that Deputy Attorney General Rod Rosenstein was about to quit or be sacked. These reports were later dismissed by the White House, however, with Rosenstein due to meet Trump on Thursday.

Closer to home, Brexit was still the main focus as PM Theresa May prepared to meet President Trump on Wednesday at the United Nations General Assembly in New York to discuss trade and Brexit. In addition, Labour's Brexit spokesman Keir Starmer said earlier that his party would vote against any deal Prime Minister Theresa May agrees with the European Union and is open to a second referendum with the option of staying in the bloc.

Oil stocks put in a solid performance, with BP and Royal Dutch Shell both higher as Brent continued on its upward trajectory, hitting a fresh four-year high above $82 a barrel.

IG’s chief market analyst Chris Beauchamp said that without the contribution from BP and Shell over the past two days we would be looking at quite a different picture for the UK’s top index.

"Poor OPEC (not a phrase often uttered) continues to get the blame for the ongoing squeeze in prices, but with a declining share of overall global output the president continues to mis-direct his ire. In reality, the cartel’s ability to influence prices remains on a downward trend," he said.

In individual stocks, Next was the standout gainer, surging 8% as it raised its guidance for annual profit after trading in August and early September was better than expected. Group pre-tax profit will be £727m in 2018, broadly in line with the year before, Next predicted. In May it estimated profit would fall to £717m.

"A relatively low valuation of 12 times forward earnings and strong operating margins, plus the usual positives from the online division, continue to make Next an investor favourite, now that memories of its steep dive from £75 to £35 have receded," said Beauchamp.

Marks & Spencer and Primark owner Associated British Foods were also in the green.

Glencore was a high riser after saying it will buy back more of its shares worth up to $1bn, increasing the size of an existing buyback programme. It also benefited from a broker upgrade.

Imperial Brands ticked up after saying its tobacco business was enjoying "much stronger" second-half sales and announcing plans to launch its heat-not-burn tobacco product early in 2019, while SSE nudged up as it announced the acquisition of Seagreen Wind Energy.

Close Brothers slipped after its final results were in line with expectations and British American Tobacco lost ground as it promoted Jack Bowles, currently chief operating officer of its international business, to the role of chief executive, succeeding Nicandro Durante.

Irn Bru maker AG Barr fizzed lower even as it reported a rise in first-half revenue and profit and Card Factory retreated it posted a drop in underlying pre-tax profit and like-for-like sales due to extreme weather and consumer caution.

EasyJet and British Airways parent IAG flew lower as oil prices continued to climb.

In broker note action, Glencore was raised to ‘overweight’ at Morgan Stanley, while BHP Billiton was downgraded to ‘equalweight’.

Savills was upgraded to buy at Peel Hunt, but JD Wetherspoon was cut to ‘hold’. Spire Healthcare was resumed at ‘hold’ by Liberum and Auto Trader was cut to ‘equalweight’ at Barclays.

Sky was downgraded to ‘hold’ at Jefferies and Smiths was cut to ‘hold’ at Deutsche Bank.

Market Movers

FTSE 100 (UKX) 7,490.88 0.44%
FTSE 250 (MCX) 20,518.05 0.15%
techMARK (TASX) 3,488.89 -0.02%

FTSE 100 - Risers

Next (NXT) 5,556.00p 8.43%
Randgold Resources Ltd. (RRS) 5,444.00p 4.29%
Just Eat (JE.) 678.20p 3.23%
Glencore (GLEN) 339.60p 2.91%
BP (BP.) 582.60p 2.19%
Intertek Group (ITRK) 4,901.00p 2.19%
Evraz (EVR) 560.00p 1.93%
Royal Dutch Shell 'B' (RDSB) 2,677.00p 1.71%
ITV (ITV) 154.05p 1.65%
Royal Dutch Shell 'A' (RDSA) 2,637.00p 1.64%

FTSE 100 - Fallers

easyJet (EZJ) 1,337.50p -3.15%
International Consolidated Airlines Group SA (CDI) (IAG) 668.80p -2.59%
Paddy Power Betfair (PPB) 6,685.00p -1.40%
British American Tobacco (BATS) 3,498.55p -1.28%
London Stock Exchange Group (LSE) 4,622.00p -0.88%
Rolls-Royce Holdings (RR.) 988.80p -0.86%
Royal Bank of Scotland Group (RBS) 256.80p -0.77%
DCC (DCC) 7,340.00p -0.68%
Mondi (MNDI) 2,114.00p -0.66%
NMC Health (NMC) 3,340.00p -0.65%

FTSE 250 - Risers

Thomas Cook Group (TCG) 60.00p 7.14%
Drax Group (DRX) 381.20p 5.60%
Premier Oil (PMO) 135.60p 4.87%
Entertainment One Limited (ETO) 392.20p 4.09%
Ferrexpo (FXPO) 193.75p 4.00%
Tullow Oil (TLW) 263.00p 3.54%
Hays (HAS) 208.40p 3.07%
Cairn Energy (CNE) 233.80p 3.00%
Greencore Group (GNC) 182.75p 2.99%
Petrofac Ltd. (PFC) 663.60p 2.95%

FTSE 250 - Fallers

Plus500 Ltd (DI) (PLUS) 1,455.00p -4.46%
Genus (GNS) 2,340.00p -4.41%
Card Factory (CARD) 180.00p -3.33%
Spire Healthcare Group (SPI) 153.80p -3.09%
Wizz Air Holdings (WIZZ) 2,898.60p -2.83%
TalkTalk Telecom Group (TALK) 129.50p -2.70%
Just Group (JUST) 79.25p -2.64%
Kaz Minerals (KAZ) 564.80p -2.52%
IG Group Holdings (IGG) 760.64p -2.11%
AA (AA.) 122.35p -2.04%