London midday: Stocks muted as investors eye Brexit talks; Rolls-Royce surges
London stocks were still little changed by midday on Thursday following solid gains in the previous session, with Brexit talks in focus as the end of December deadline looms.
The FTSE 100 was up just 0.1% at 6,467.21.
Neil Wilson, chief market analyst at Markets.com, said: "Britain’s decision to rollout the Pfizer/BioNTech vaccine in the coming days is being treated as a positive and supportive of the reopening/rotation trade that was the major market theme of November. This saw the FTSE 100 rise over 1% yesterday and the index now looks reasonably well supported above 6,400.
"As discussed yesterday, UK equities are fast becoming a consensus buy with cyclical weighting and relative cheapness to peers making them look more attractive as the economy bounces back next year thanks to vaccines. European markets were lower in early trade on Thursday with the FTSE outperforming remaining broadly flat."
Brexit talks were in focus after France said it would push for a no-deal if the UK refuses to give ground.
CMC Markets analyst Michael Hewson said: "France is starting to sabre rattle saying it could veto a deal if it doesn’t like the terms, a move that appears to be designed to exert pressure on Michel Barnier and EU negotiators not to give too much away, when it comes to fishing.
"While some of this noise is no doubt designed for domestic consumption, the reality is if France were to veto a deal, French fishermen would lose legal access to UK waters completely in the event of no deal. A no deal would also rebound viciously back into Northern France, an area that already has very high structural unemployment."
Investors were also mulling over news the UK services sector eased in November, although optimism for the year ahead hit fresh highs as hopes grew that the pandemic would be soon brought under control.
The IHS Markit/CIPS UK Services PMI Business Activity Index for November eased to 47.6 from 51.4 in October, as lockdown measures were re-introduced across England. A reading below 50.0 indicates contraction, while a reading above shows growth.
It marks the end of a four-month period of recovery in the services sector. However, the decline was softer than the slump seen in the second quarter of 2020, and an improvement on the flash reading of 45.8. It also beat forecasts of 45.8.
There was a "modest" fall in new business volumes, reflecting temporary closures across hospitality, travel and leisure businesses. But looking ahead, the degree of confidence for the year ahead outlook was the highest since February, boosted by positive news on vaccines.
In equity markets, Rolls-Royce rallied after the engine maker’s director of energy and technology told Bloomberg the coronavirus crisis may provide the company with space for development of critical new engine technologies and a possible re-entry into the narrow-body jetliner market.
IG analyst Chris Beauchamp said: "Rolls-Royce has always managed to demonstrate a capacity to adapt to even the toughest times, and today’s announcement about a move back towards the narrow-body jetliner market has provided the spark the shares have been searching for in order to maintain their rebound from the November lows.
"The shares have only recouped around a third of their losses from late October, and the bounce since the beginning of November is perhaps only the latest in a series of false dawns for a share price that has yet to find a low."
Sainsbury's rose after becoming the latest supermarket to bow to pressure and repay more than £400m in business rates relief received from the government to help cope with the pandemic.
Plumbing and heating products distributor Ferguson was boosted by an upgrade to ‘outperform’ at Exane BNP Paribas.
Investment platform AJ Bell rallied as it hiked its dividend and reported a jump in full-year profit and revenue after gaining a record number of customers.
Shares in Hochschild Mining plunged after JPMorgan placed 61.7m shares in the gold miner at 200p each for Pelham Investment Corporation, which is owned by the company’s chairman, Eduardo Hochschild.
Market Movers
FTSE 100 (UKX) 6,467.21 0.06%
FTSE 250 (MCX) 19,927.64 0.25%
techMARK (TASX) 4,009.18 0.52%
FTSE 100 - Risers
Rolls-Royce Holdings (RR.) 126.60p 8.44%
GVC Holdings (GVC) 1,084.50p 4.28%
Sainsbury (J) (SBRY) 216.30p 3.05%
Berkeley Group Holdings (The) (BKG) 4,866.00p 2.42%
Sage Group (SGE) 591.00p 2.14%
Flutter Entertainment (FLTR) 13,635.00p 2.02%
Ferguson (FERG) 8,668.00p 1.95%
Ocado Group (OCDO) 2,226.00p 1.88%
Persimmon (PSN) 2,814.00p 1.85%
Taylor Wimpey (TW.) 165.10p 1.82%
FTSE 100 - Fallers
Croda International (CRDA) 5,896.00p -1.99%
Severn Trent (SVT) 2,345.00p -1.96%
BP (BP.) 262.75p -1.65%
Admiral Group (ADM) 2,846.00p -1.56%
Diageo (DGE) 2,882.00p -1.42%
Smith & Nephew (SN.) 1,480.00p -1.33%
Just Eat Takeaway.Com N.V. (CDI) (JET) 7,924.00p -1.32%
Prudential (PRU) 1,214.50p -1.14%
London Stock Exchange Group (LSE) 8,656.00p -1.12%
Unilever (ULVR) 4,351.00p -1.09%
FTSE 250 - Risers
Cineworld Group (CINE) 67.14p 5.30%
WH Smith (SMWH) 1,631.00p 5.23%
Airtel Africa (AAF) 88.20p 4.50%
Micro Focus International (MCRO) 379.50p 4.29%
Howden Joinery Group (HWDN) 673.20p 3.70%
Royal Mail (RMG) 334.10p 3.69%
Ascential (ASCL) 376.60p 3.69%
Man Group (EMG) 124.85p 3.40%
Paragon Banking Group (PAG) 445.80p 3.34%
Crest Nicholson Holdings (CRST) 324.40p 3.31%
FTSE 250 - Fallers
Hochschild Mining (HOC) 203.00p -14.27%
TUI AG Reg Shs (DI) (TUI) 453.60p -5.79%
Ninety One (N91) 217.60p -3.12%
TP ICAP (TCAP) 221.00p -2.90%
Big Yellow Group (BYG) 1,105.00p -2.64%
Hipgnosis Songs Fund Limited C Shs NPV (SONC) 112.00p -2.61%
CMC Markets (CMCX) 371.00p -2.37%
Pets at Home Group (PETS) 401.20p -2.05%
Mediclinic International (MDC) 280.40p -1.96%
Investec (INVP) 195.00p -1.91%