London midday: Stocks maintain gains as investors mull data; Shire surges
London stocks were holding on to gains by midday on Tuesday as investors digested the latest government borrowing figures, with Shire pacing the advance as it was said to be nearing a preliminary agreement with Japan's Takeda.
The FTSE 100 was up 0.3% to 7,422.64, while the pound was flat versus the dollar and the euro at 1.3942 and 1.1416, respectively, having briefly ticked a little higher on news that the UK had its first budget surplus since 2002.
Figures from the Office for National Statistics revealed that public sector borrowing was £1.35bn last month, below the £3.25bn forecast and down £0.8bn compared to the same period a year ago.
Borrowing for the full year was £42.6bn, £2.6bn lower than the Office for Budget Responsibility's forecast and the lowest since 2007.
Howard Archer, chief economic advisor at the EY Item Club, said: "The Chancellor will be heartened by the better than expected public finances in 2017/18 but he is unlikely to make any significant decisions on fiscal policy ahead of the November budget. There have been some hints that he could lift public spending in the next budget, particularly on health.
"However, the chief secretary to the Treasury has recently stated that there will be no further rises in public spending unless the UK economy grows faster than official projections and boosts revenues"
Elsewhere, the latest survey from the Confederation of British Industry showed that manufacturing growth slowed over the three months to April, but remained well above average. The headline balance of total orders remained at +4, versus expectations for an increase to +6.
“Although manufacturing growth has slowed again this month, manufacturers continue to enjoy the fruits of stronger growth in Europe and the lower pound," said Rain Newton-Smith, the CBI's chief economist. "For manufacturing to continue its resurgence in the years ahead, it will be critical for trade to remain as frictionless as possible with the EU - our closest and biggest trading partner."
On the corporate front, Shire was the standout gainer as Bloomberg cited people with knowledge of the matter as saying that the drug company and Takeda Pharmaceutical could announce a preliminary agreement as early as Tuesday after the Japanese group sweetened its offer last week.
London Stock Exchange was in the black after it reported first-quarter trading broadly in line with expectations before an annual shareholder meeting that will seek to draw a line under the group’s recent troubles.
Meggitt ticked up after announcing the sale of photo etching group Precision Micro for £22.5m in cash, while FTSE 250 defence technology group QinetiQ rallied after saying it has agreed to buy German airborne training services provider EIS Aircraft Operations, currently part of EIS Aircraft Group, for €70m.
Polymetal gained after buying the 50% of the Prognoz silver project in Russia that it didn't already own from Garden Ring Capital for $140m in shares.
On the downside, bookies Paddy Power and William Hill were under pressure following a report that a move to cut the maximum stake on gambling machines to £2 is set to be announced within weeks. According to the Times, Chancellor Philip Hammond is understood to have accepted expert recommendations that stakes for fixed-odd betting terminals should be reduced to £2. Ladbrokes-Coral owner GVC Holdings and Rank Group also lost ground.
Melrose fell after revealing that GKN's profit and cash generation were below market expectations in the first three months of the year prior to the completion of the takeover earlier this month.
AstraZeneca was under the cosh after saying that a third-line cancer combination study had missed its primary endpoint.
Anglo American slipped after cautioning that its earnings this year will be hit by around $300m to $400m due to problems at its Brazilian iron ore unit. Separately, the company also reported a 4% rise in total production for the first quarter.
Wealth manager St James's Place retreated as it posted a drop in first-quarter assets under management, but beat expectations with net inflows of £2.60bn versus consensus of £2.30bn.
BAE Systems was boosted by an upgrade to 'buy' at Berenberg, but Victrex was hit by a downgrade to 'hold' by the same outfit.
Card Factory, Dixons Carphone and Superdry were all knocked lower by downgrades to 'hold' at Liberum, while shipbroker Clarkson was cut to 'neutral' by JPMorgan Cazenove.
Market Movers
FTSE 100 (UKX) 7,422.64 0.32%
FTSE 250 (MCX) 20,263.47 -0.26%
techMARK (TASX) 3,452.92 0.22%
FTSE 100 - Risers
Shire Plc (SHP) 4,018.50p 5.75%
BAE Systems (BA.) 618.60p 2.21%
Royal Mail (RMG) 574.00p 1.49%
BP (BP.) 529.10p 1.44%
BHP Billiton (BLT) 1,558.20p 1.41%
Ashtead Group (AHT) 2,121.00p 1.29%
WPP (WPP) 1,132.00p 1.25%
Unilever (ULVR) 3,914.00p 1.24%
Antofagasta (ANTO) 966.80p 1.13%
Old Mutual (OML) 251.90p 1.08%
FTSE 100 - Fallers
Paddy Power Betfair (PPB) 6,960.00p -4.92%
Marks & Spencer Group (MKS) 279.70p -1.51%
Johnson Matthey (JMAT) 3,247.00p -1.40%
CRH (CRH) 2,497.00p -1.23%
Anglo American (AAL) 1,755.20p -1.15%
TUI AG Reg Shs (DI) (TUI) 1,629.00p -1.12%
Standard Life Aberdeen (SLA) 365.84p -1.02%
GKN (GKN) 455.30p -1.00%
Kingfisher (KGF) 306.35p -0.99%
Next (NXT) 5,158.00p -0.96%
FTSE 250 - Risers
QinetiQ Group (QQ.) 236.90p 5.20%
Purecircle Limited (DI) (PURE) 394.00p 5.07%
Sirius Minerals (SXX) 29.50p 2.64%
IP Group (IPO) 140.80p 2.03%
Sports Direct International (SPD) 399.00p 2.02%
Workspace Group (WKP) 1,054.00p 1.54%
Unite Group (UTG) 814.00p 1.50%
Polymetal International (POLY) 713.60p 1.48%
PZ Cussons (PZC) 248.00p 1.47%
Assura (AGR) 58.85p 1.47%
FTSE 250 - Fallers
William Hill (WMH) 294.21p -12.46%
GVC Holdings (GVC) 900.00p -7.31%
Card Factory (CARD) 227.40p -5.41%
Superdry (SDRY) 1,510.00p -5.03%
Spire Healthcare Group (SPI) 229.20p -4.10%
Euromoney Institutional Investor (ERM) 1,258.00p -3.68%
Victrex plc (VCT) 2,640.00p -3.37%
Dunelm Group (DNLM) 561.50p -2.85%
Playtech (PTEC) 801.00p -2.77%
Essentra (ESNT) 438.80p -2.66%