London midday: Stocks tick up as sterling drops to 11-month low
London stocks had picked up by midday on Monday as sterling fell to an 11-month low against the dollar due to Brexit concerns.
The FTSE 100 was up 0.2% at 7,672.80, while the pound was trading down 0.4% against the dollar at 1.2944 and 0.3% lower versus the euro at 1.1210 after international trade secretary Liam Fox said the probability of a no-deal Brexit was now at 60-40. Fox, in an interview with the Sunday Times, pinned the blame on the European Commission and Brussels' chief negotiator Michel Barnier.
A weaker pound tends to boost the top-flight index as around 70% of its constituents derive most of their earnings from abroad.
Investors were also digesting the latest trade war rhetoric from US President Trump over the weekend, after he defended his use of tariffs at a rally in Ohio on Saturday and said he now has the upper hand over China.
On Friday, China unveiled plans to impose retaliatory tariffs on $60bn worth of US imports.
IG analyst Joshua Mahony said: "While this trade war appears be showing no signs of letting up, we have now seen the lion’s share of all trade between the two countries targeted with tariffs. Soon enough, something must give, and with the Chinese exports to the US far outweighing imports, any such breakthrough is likely to come from the Chinese side."
Miners were on the back foot, weighed down by concerns about China's economic growth and a stronger dollar, with Rio Tinto, Anglo and Antofagasta all in the red.
HSBC slipped as it said pre-tax profits rose 5% to $10.7bn (£8.23bn), reflecting a net favourable movement in significant items and favourable currency translation. However, adjusted profit before tax of $12.1bn was 2% lower, as revenue growth and lower expected credit losses were partly offset by higher operating expenses.
The bank also announced the appointment of Jonathan Symonds, formerly chairman of HSBC Bank plc, as its deputy chairman.
IWG slumped after saying it has called off the months-long talks with three suitors, Starwood, Terra Firma and TDR, as the serviced office company's directors believe none of them "capable" of buying the business for a price they could recommend to shareholders. IWG also posted a 7.1% rise in in interim group revenue to £1.2bn, but a 31% drop in operating profit to £60.0m.
Neil Wilson, chief market analyst at Markets.com, said: " If you consider that IWG has been in talks with multiple potential partners but failed to agree terms with any of them; either it’s reflective of management’s confidence in the future growth or they’re holding out for too high a price.
"They clearly have an eye on the kind of valuation that WeWork enjoys and think they should be achieving something similar. But this corporate Penelope may be playing it too cool."
Spire Healthcare tumbled after warning that 2018 earnings will be "materially" lower than the previous year amid weakness in the NHS business.
Low-cost carrier easyJet flew a touch lower as it said passenger numbers rose 4.5% year-on-year and the load factor improved 0.1 percentage points to 96.9%, but Wizz Air was in the green after posting a 23% jump in passenger numbers for July.
Ultra Electronics was on the front foot despite reporting a drop in first-half profit as it took a hit from cost overruns on certain development contracts, as its order book increased.
Synthomer rallied as it said interim underlying pre-tax profit increased 6.4% and backed its full-year expectations and John Laing Infrastructure Fund advanced as it agreed to a takeover by a consortium of funds for £1.4bn.
In broker note action, Morgan Advanced Materials was upgraded to 'buy' at Berenberg , Mitie was upgraded to 'buy' at Stifel, and William Hill was lifted to 'overweight' at Barclays.
TP ICAP was boosted to 'buy' by Peel Hunt, while Ferrexpo was lifted to 'outperform' at Credit Suisse. Quilter was initiated at 'neutral' by JPMorgan and at 'buy' by Goldman Sachs, while IG Group was downgraded to 'sell' at Shore Capital.
Elsewhere, Credit Suisse downgraded its stance on UK equities to 'benchmark' from 'overweight', noting that since the upgrade at the end of April, they have outperformed euro area stocks by around 3% and global stocks by around 1%. It cited a more cautious view on commodities and said a relatively soft Brexit is likely, which should support sterling. In addition, the bank said the UK equity market is now overbought, adding that it underperforms 70% of the time this happens.
Market Movers
FTSE 100 (UKX) 7,672.80 0.18%
FTSE 250 (MCX) 20,678.73 0.21%
techMARK (TASX) 3,606.49 0.50%
FTSE 100 - Risers
Ashtead Group (AHT) 2,346.00p 1.78%
Hargreaves Lansdown (HL.) 2,111.00p 1.64%
GlaxoSmithKline (GSK) 1,574.60p 1.38%
InterContinental Hotels Group (IHG) 4,771.00p 1.25%
BP (BP.) 567.30p 1.21%
Persimmon (PSN) 2,461.00p 0.98%
WPP (WPP) 1,188.50p 0.98%
Pearson (PSON) 916.60p 0.95%
ITV (ITV) 165.50p 0.95%
Informa (INF) 793.40p 0.92%
FTSE 100 - Fallers
Fresnillo (FRES) 984.80p -2.93%
Royal Bank of Scotland Group (RBS) 250.53p -2.82%
Micro Focus International (MCRO) 1,200.00p -2.36%
Randgold Resources Ltd. (RRS) 5,490.00p -2.14%
Rio Tinto (RIO) 3,922.00p -1.75%
Just Eat (JE.) 793.80p -1.56%
Anglo American (AAL) 1,668.00p -1.47%
Antofagasta (ANTO) 945.80p -1.44%
Glencore (GLEN) 313.80p -1.35%
BHP Billiton (BLT) 1,677.80p -1.20%
FTSE 250 - Risers
Morgan Advanced Materials (MGAM) 366.40p 4.27%
Ascential (ASCL) 418.53p 3.70%
Drax Group (DRX) 362.60p 3.36%
Synthomer (SYNT) 537.00p 3.27%
John Laing Infrastructure Fund Ltd (JLIF) 144.20p 3.00%
AA (AA.) 112.40p 2.93%
Ferrexpo (FXPO) 165.55p 2.92%
Hikma Pharmaceuticals (HIK) 1,678.00p 2.91%
BCA Marketplace (BCA) 236.00p 2.61%
Sophos Group (SOPH) 517.00p 2.48%
FTSE 250 - Fallers
Spire Healthcare Group (SPI) 193.69p -21.65%
IWG (IWG) 236.46p -21.18%
Essentra (ESNT) 474.80p -6.35%
Softcat (SCT) 812.00p -2.99%
Capita (CPI) 129.10p -2.86%
IG Group Holdings (IGG) 895.00p -2.61%
Mediclinic International (MDC) 500.80p -2.61%
Telecom Plus (TEP) 1,034.00p -2.45%
Centamin (DI) (CEY) 113.83p -2.29%
Energean Oil & Gas (ENOG) 505.00p -1.94%