London midday: Stocks eke out gains in low volumes as miners rally
London stocks had managed to eke out small gains by midday on Friday as strength in the mining sector offset weak housebuilders, with all eyes on US Fed chairman Jerome Powell's speech at the Jackson Hole symposium.
Just before midday, the FTSE 100 was 0.1% higher at 7,573.27, while the pound was up 0.4% against the dollar at 1.2857 and flat versus the euro at 1.1101. Volumes on the top-flight index were down 38% compared to the 100-day moving average, with many traders already off for the bank holiday weekend and the rest probably falling asleep at their desks.
Trade relations between the US and China were still in focus. There was no breakthrough in this week's talks as both countries imposed 25% tariffs on $16n worth of each other's goods, although the Chinese commerce ministry did say that discussions had been "constructive" and "candid".
Chinese finance minister Liu Kun told Reuters that while China doesn't want to engage in a trade war, it will "resolutely respond" to the "unreasonable measures" taken by the US.
"With the US mulling $200bn in additional 25% tariffs, this is not going away," said Neil Wilson, chief market analyst at Markets.com. "The real worry is what does China do then. While Beijing cannot match the US in terms of raw firepower as it imports far less from the US, it can respond with ‘qualitative’ measures, which could seriously impede US firms doing business in China."
The main focus on Friday will be a speech by Jerome Powell at Jackson Hole, due at 1500 BST. Wilson said markets will be interested in anything he has to say on rates, with participants eyeing any potential signal that the FOMC could be prepared to take its foot off the gas in light of Trump’s warnings and concerns about yield curve inversion.
"But this year’s meeting is more about market structure than current monetary policy and so prepare for a non-event - hard to see Powell using this to signal a retreat."
Mining stocks were on the front foot as copper and zinc prices rebounded, with Anglo American, BHP Billiton, Glencore and Rio Tinto all higher. This helped to offset losses in the housebuilding sector, with Berkeley, Barratt, Persimmon and Taylor Wimpey lower after the latest figures from UK Finance showed mortgage approvals fell in July. Mortgage approvals declined to 39,584 from 40,330 in June, versus consensus expectations for a rise to 40,700.
Meanwhile, gross mortgage lending was up around 7.6% on the year before to £24.6bn, while credit card spending was up 8.1% and personal deposits grew 1.2% in the last 12 months.
Samuel Tombs, chief economist at Pantheon Macroeconomics, said the renewed fall in mortgage approvals in July, to below their post-referendum average of 40.4k, demonstrates that the housing market still is fundamentally slowing.
"Approvals likely will languish at their current low level, given that the new buyer enquiries balance of the RICS Residential Market Survey remained close to zero in July. In addition, the number of people searching for 'mortgage' on Google - a good leading indicator of lending activity - was down 3.8% year-over-year in July. Meanwhile, the MPC’s decision to increase Bank Rate in August likely will hit lending volumes."
Shire gained after the US Food and Drug Administration approved a first-of-its-kind drug, Takhzyro, to treat patients aged 12 plus suffering from a rare hereditary disease that causes swelling.
Computacenter ticked higher as the IT infrastructure and services provider posted a 24.3% jump in first-half pre-tax profit as revenue exceeded £2bn, marking the first time this milestone has been reached in the first half.
Petrofac rallied after saying it was selling Petrofac GSA Holdings to Ithaca Energy for up to $292m.
In broker note action, Antofagasta was boosted by an upgrade to 'outperform' at RBC Capital Markets, while OnTheBeach got a lift after Berenberg upped its price target on the stock.
John Laing Group was cut to 'sector perform' by RBC Capital Markets, while N Brown, Ted Baker and Henry Boot were all lifted to 'add' at Peel Hunt and McBride was upgraded to 'buy' at Jefferies.
Market Movers
FTSE 100 (UKX) 7,573.27 0.13%
FTSE 250 (MCX) 20,698.89 0.16%
techMARK (TASX) 3,552.91 0.35%
FTSE 100 - Risers
Antofagasta (ANTO) 830.20p 3.13%
Shire Plc (SHP) 4,517.50p 2.15%
Glencore (GLEN) 315.85p 1.72%
Anglo American (AAL) 1,560.20p 1.58%
Micro Focus International (MCRO) 1,284.00p 1.22%
Rio Tinto (RIO) 3,703.00p 1.13%
Johnson Matthey (JMAT) 3,570.00p 1.08%
BHP Billiton (BLT) 1,643.40p 1.07%
TUI AG Reg Shs (DI) (TUI) 1,463.50p 0.90%
Barclays (BARC) 184.76p 0.88%
FTSE 100 - Fallers
Ocado Group (OCDO) 1,091.50p -2.06%
Berkeley Group Holdings (The) (BKG) 3,639.00p -1.65%
Barratt Developments (BDEV) 537.69p -1.59%
British American Tobacco (BATS) 3,986.10p -1.52%
Imperial Brands (IMB) 2,806.63p -1.33%
GVC Holdings (GVC) 1,093.00p -1.26%
Sainsbury (J) (SBRY) 336.70p -1.12%
Morrison (Wm) Supermarkets (MRW) 266.35p -1.06%
Persimmon (PSN) 2,463.00p -1.04%
Taylor Wimpey (TW.) 169.63p -1.03%
FTSE 250 - Risers
Sophos Group (SOPH) 529.00p 3.62%
On The Beach Group (OTB) 492.50p 3.47%
Ferrexpo (FXPO) 157.65p 3.07%
Just Group (JUST) 94.70p 2.93%
Kaz Minerals (KAZ) 463.16p 2.92%
AA (AA.) 115.85p 2.52%
Bakkavor Group (BAKK) 188.80p 2.50%
Clarkson (CKN) 2,835.00p 2.35%
OneSavings Bank (OSB) 424.40p 2.02%
Stobart Group Ltd. (STOB) 242.50p 1.89%
FTSE 250 - Fallers
UDG Healthcare Public Limited Company (UDG) 740.00p -3.77%
Greencore Group (GNC) 174.50p -2.76%
McCarthy & Stone (MCS) 110.60p -1.78%
Bovis Homes Group (BVS) 1,124.00p -1.40%
Intu Properties (INTU) 157.75p -1.38%
Playtech (PTEC) 518.00p -1.37%
Redrow (RDW) 543.00p -1.36%
TalkTalk Telecom Group (TALK) 132.20p -1.34%
Jupiter Fund Management (JUP) 414.40p -1.29%
Fisher (James) & Sons (FSJ) 1,800.00p -1.21%