London midday: FTSE pushes higher as pound dips; housebuilders and miners rally
London stocks had extended gains by midday on Friday thanks to solid performances from the mining and housebuilding sectors and a dip in the pound, as global markets recovered from two days of heavy losses.
The FTSE 100 was up 0.6% to 7,048.19 - although still down 3.5% over the week - as sterling erased earlier gains to tick down 0.1% against the dollar at 1.3221 and trade flat versus the euro at 1.1413.
The worries about rising US interest rates that contributed to this week's global equity markets rout were assuaged a little after US inflation data for September released on Thursday revealed a slowdown.
Rebecca O'Keeffe, head of investment at Interactive Investor, said investors are breathing a sigh of relief, with stock markets across Europe clawing back some of their recent losses.
"However, the verdict is still out about current valuations and while some investors are viewing this as a buying opportunity, many others are maintaining a more cautious stance and waiting for clear signs that this was a temporary pull-back rather than the start of a more pronounced correction.
"Trade wars, rising interest rates and slowing growth have been front and centre in terms of big macro reasons for the rout, but the reality is that investors need to be asking whether valuations can be justified by company profits or have markets got ahead of themselves? The start of the US earnings season sees JP Morgan, Wells Fargo and Citigroup all reporting today, and good results could provide the catalyst that sees markets recover their recent losses, while disappointing numbers are likely to jeopardise any positive sentiment."
In terms of sectors, miners were on the front foot, with Antofagasta and Anglo American both higher, while housebuilders Barratt Developments, Taylor Wimpey and Persimmon all gained after a big drop in the previous session on the back of the latest RICS survey.
In individual company news, hedge fund manager Man Group racked up strong gains after saying its funds under management edged up to $114.1bn from $113.7bn in the past three months. There were net inflows of $0.4bn despite the previously announced $2.2bn infrastructure mandate redemption.
Fund manager Ashmore advanced as it recorded net inflows of $1.9bn in the first quarter of its financial year as clients looked to take advantage of price volatility across emerging markets. Assets under management by $2.5bn during the three months ended 30 September, up 3% to $76.4bn.
Budget airline Wizz Air rose sharply as Berenberg reiterated its 'buy' rating as it said fears about a profit warning offer considerable upside for investors as the current share price now factors in a sizeable cut to FY2019 guidance. Analysts still cut their price target on the stock to 3,800p from 4,000p.
Diploma shares rallied as the technical products group announced the acquisition of Actios for an undisclosed sum, while logistics warehouse specialist Tritax Big Box ticked up as it announced it was investing £89.3m in a new National Distribution Centre at Midlands Logistics Park in Corby.
House of Fraser owner Sports Direct gained after saying it was buying the Frasers department store in Glasgow for £95m.
On the downside, tobacco stocks were under pressure amid worries about tougher regulations, with Imperial Brands and British American Tobacco both lower. Traders pointed to a Morgan Stanley note mentioning a presentation from the US FDA, which proposed reducing nicotine to 0.2mg per cigarette compared to 10-14mg for the average cigarette. The FDA also proposed an immediate cut rather than gradual decline and for the nicotine cap to go into effect in 2020.
On the broker note front, Paddy Power was lifted to 'hold' at Berenberg, while DCC was initiated at 'buy' at HSBC. Chemring was cut to 'underweight' at Barclays and Victrex was downgraded to 'underweight' at Morgan Stanley. ASOS was upgraded to 'neutral' from 'underperform' by Credit Suisse.
FTSE 100 - Risers
Barratt Developments (BDEV) 515.40p 5.66%
Scottish Mortgage Inv Trust (SMT) 480.10p 5.66%
Antofagasta (ANTO) 799.80p 4.14%
Anglo American (AAL) 1,682.20p 3.84%
Next (NXT) 5,454.00p 3.81%
Taylor Wimpey (TW.) 163.70p 3.71%
Persimmon (PSN) 2,254.00p 3.49%
GVC Holdings (GVC) 931.00p 3.44%
Randgold Resources Ltd. (RRS) 5,899.39p 3.39%
Ocado Group (OCDO) 802.80p 3.00%
FTSE 100 - Fallers
Imperial Brands (IMB) 2,559.63p -4.42%
NMC Health (NMC) 3,086.00p -1.66%
British American Tobacco (BATS) 3,351.50p -1.57%
Smith (DS) (SMDS) 412.80p -0.86%
Compass Group (CPG) 1,548.00p -0.45%
Just Eat (JE.) 607.40p -0.43%
United Utilities Group (UU.) 701.64p -0.39%
Johnson Matthey (JMAT) 3,077.00p -0.39%
Severn Trent (SVT) 1,843.00p -0.38%
Royal Dutch Shell 'A' (RDSA) 2,477.50p -0.30%
FTSE 250 - Risers
Wizz Air Holdings (WIZZ) 2,513.00p 7.90%
Sirius Minerals (SXX) 25.20p 6.33%
WH Smith (SMWH) 1,902.00p 5.67%
Genus (GNS) 2,212.00p 5.43%
Centamin (DI) (CEY) 103.65p 5.38%
Ferrexpo (FXPO) 220.50p 5.25%
Kaz Minerals (KAZ) 500.60p 5.06%
JPMorgan Indian Investment Trust (JII) 594.50p 5.04%
Greencore Group (GNC) 209.70p 4.69%
Amigo Holdings (AMGO) 219.66p 4.60%
FTSE 250 - Fallers
Victrex plc (VCT) 2,562.00p -6.63%
Cobham (COB) 107.40p -3.11%
Stobart Group Ltd. (STOB) 229.00p -2.97%
Ultra Electronics Holdings (ULE) 1,433.00p -2.58%
IP Group (IPO) 110.00p -2.31%
Senior (SNR) 284.60p -2.27%
Bank of Georgia Group (BGEO) 1,647.20p -2.05%
Dunelm Group (DNLM) 564.50p -1.22%
Millennium & Copthorne Hotels (MLC) 489.00p -1.21%
National Express Group (NEX) 387.60p -1.02%