London midday: Stocks rise as investors shrug off Italian PM's resignation
London stocks gained on Monday as investors digested strong services data and shrugged off the resignation of Italian PM Matteo Renzi following a referendum on constitutional reform.
Renzi stepped down after suffering a defeat in the referendum on his reforms to reduce the power of the country’s Senate, which currently has the same amount of power as the lower house of parliament.
European equities and the euro reversed initial declines despite the uncertainty Renzi’s resignation brings to Italy. The euro was up 0.33% against the dollar at $1.0699 at 1130 GMT.
“Fears over the future for Italian banks will persist, with recapitalisation plans thrown into doubt after Renzi’s exit,” said IG’s Joshua Mahony.
“However, this morning’s recovery is a clear sign that market perception is that despite causing uncertainty, this result is unlikely to spark a major crisis for the banks.”
On the data front, the Markit/CIPS UK purchasing managers’ index on services rose to 55.2 from 54.4 the month before, beating expectations for a reading of 54.2 and signalling the fastest rate of expansion since January. A reading above 50 indicates an expansion in sector activity while a level below that suggests a contraction.
Chris Williamson, chief business economist at IHS Markit, said: “The further upturn in the vast services sector shows that the pace of UK economic growth remains resiliently robust in the fourth quarter, despite ongoing uncertainty caused by Brexit.”
Earlier, the Caixin China services PMI edged up to 53.1 in November from 52.4 in October.
The eurozone services PMI was revised lower to 53.8 in November from a flash estimate of 54.1 but up from October’s 52.8.
In other eurozone data, Eurostat revealed retail sales were up 1.1% in October from September, beating expectations of a 0.9% increase. On the year, sales were up 2.4%, compared to a 1% jump in September.
Looking ahead, US services PMI from Markit will be released at 1445 GMT and ISM publishes its services data at 1500 GMT. Federal Reserve officials William Dudley and Charles Evans speak at 1330 GMT and 1425 GMT respectively. Market participants will be looking out for clues on interest rates ahead of next week’s Fed policy meeting.
Meanwhile, oil prices reached $55 per barrel for the first time in 16 months after OPEC members agreed on a landmark deal to cut production last week. Brent crude gushed 1.3% higher to $55.22 per barrel and West Texas Intermediate oozed up 1.2% to $52.36 per barrel at 1139 GMT.
On the company front, Burberry was a high riser following reports the company has rejected multiple takeover bids from US peer Coach.
Tullett Prebon shares slid as HSBC downgraded the inter-dealer money broker’s stock to ‘hold’ from buy’ but raised the target price to 480p from 460p
Gold and silver miners Randgold Resources and Fresnillo slumped on a drop in prices of the two metals.
Market Movers
FTSE 100 (UKX) 6,754.19 0.35%
FTSE 250 (MCX) 17,446.06 0.06%
techMARK (TASX) 3,231.54 0.42%
FTSE 100 - Risers
Antofagasta (ANTO) 711.00p 2.52%
Tesco (TSCO) 211.70p 2.39%
Burberry Group (BRBY) 1,440.00p 1.98%
ITV (ITV) 170.00p 1.86%
BHP Billiton (BLT) 1,327.00p 1.76%
Rolls-Royce Holdings (RR.) 672.50p 1.74%
Unilever (ULVR) 3,159.00p 1.56%
CRH (CRH) 2,610.00p 1.36%
Prudential (PRU) 1,582.00p 1.35%
Barclays (BARC) 215.80p 1.34%
FTSE 100 - Fallers
Fresnillo (FRES) 1,158.00p -3.34%
Randgold Resources Ltd. (RRS) 5,635.00p -3.26%
Polymetal International (POLY) 732.50p -1.88%
United Utilities Group (UU.) 872.00p -1.19%
Severn Trent (SVT) 2,103.00p -1.13%
BT Group (BT.A) 354.65p -1.10%
Land Securities Group (LAND) 950.00p -0.99%
Babcock International Group (BAB) 941.00p -0.95%
Hammerson (HMSO) 530.00p -0.93%
Intu Properties (INTU) 259.80p -0.88%
FTSE 250 - Risers
Kaz Minerals (KAZ) 386.40p 2.96%
Debenhams (DEB) 57.85p 2.75%
Computacenter (CCC) 748.00p 2.68%
Rotork (ROR) 245.00p 2.60%
CMC Markets (CMCX) 185.20p 2.38%
AO World (AO.) 177.00p 2.31%
Vedanta Resources (VED) 865.00p 2.25%
Halfords Group (HFD) 351.70p 2.24%
Carillion (CLLN) 250.30p 2.20%
Greencore Group (GNC) 282.90p 2.13%
FTSE 250 - Fallers
Acacia Mining (ACA) 386.40p -3.57%
G4S (GFS) 235.40p -3.17%
Grafton Group Units (GFTU) 516.00p -3.01%
Sports Direct International (SPD) 300.50p -2.66%
Fisher (James) & Sons (FSJ) 1,636.00p -2.56%
Daejan Holdings (DJAN) 5,780.00p -2.36%
Tullett Prebon (TLPR) 437.30p -2.32%
Centamin (DI) (CEY) 126.60p -2.31%
Kennedy Wilson Europe Real Estate (KWE) 970.00p -2.27%
Ashmore Group (ASHM) 275.20p -2.03%