London midday: Stocks dip into the red but Imperial Brands smokes higher
London stocks had dipped into the red by midday on Monday as investors continued to mull last week's better-than-expected non-farm payrolls report and looked ahead to some key events later in the week.
The FTSE 100 was down 0.1% at 7,546.45, while the pound was steady against the dollar and the euro at 1.2522 and 1.1164, respectively.
Spreadex analyst Connor Campbell said: "It is one of those weeks that currently appears to be centred around a single day. Here that’d be Wednesday, which sees the Chinese inflation readings, the monthly UK GDP and manufacturing figures and, most importantly, the minutes from June’s dovish, market-lifting Fed meeting.
"Following last Friday’s surprisingly perky non-farm jobs report, and the announcement of a US/China trade truce before that, an element of doubt has entered investors’ minds regarding whether or not the Fed will actually cut rates this month, so they will be keen to see what exactly was said in the central bank’s last get-together."
In equity markets, Imperial Brands rallied as the company announced a share buyback worth up to £200m and said it was revising its dividend policy. The tobacco company reaffirmed its 10% dividend growth for the current financial year and said the revised dividend policy thereafter will be progressive, growing annually from the current level, taking into account the performance of the underlying business.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "Imperial Brands’ large, stable and growing dividend has been the stock’s main attraction for decades. Recently though that hasn’t been enough to support the share price, which is down over 50% since 2016 despite dividends rising by 10% a year.
"With the dividend yield now over 10%, management have clearly decided enough is enough, and while payments to shareholders will continue to grow going forwards, share buybacks and debt reduction have moved up the list of priorities.
"All this makes sense, a double digit dividend yield is more than any investor needs or can reasonably expect in the current climate, and throwing more money at shareholders has failed to make the shares more attractive. Buying back shares has become a cheaper option, with significant benefits for the remaining shareholders, and debt reduction and growth investments will strengthen the group’s long term prospects."
Peer British American Tobacco was also on the rise.
Acacia Mining advanced as it said second quarter gold production rose 19% year-on-year to 158,774 ounces mainly due to higher production at its North Mara mine in Tanzania.
Cineworld pushed up as RBC Capital Markets flagged the stock as a "fantastic" buying opportunity for investors and private equity alike, following the weak film slate in the first half.
IAG flew lower as it said its British Airways airline faces a £183.4m fin from the Information Commissioner's Office for last year's breach of its security systems.
Woodford Patient Capital Trust fell after the Sunday Times reported that technology company Benevolent AI, one of Woodford's biggest holdings, was preparing to slash its valuation.
Schroders was knocked lower by a downgrade to 'equalweight' at Barclays, while Hiscox was hit by a downgrade to 'sell' from 'hold' at Canaccord Genuity, which also cut its stance on Lancashire Holdings and Beazley to 'hold' from 'buy'.
Elsewhere, 3i Infrastructure was cut to 'underperform' at Jefferies, while Inchcape and Severn Trent were downgraded to 'neutral' and 'underweight' at JPMorgan, respectively.
Barclays lifted Computacenter to 'equalweight'.
FTSE 100 - Risers
Imperial Brands (IMB) 2,013.50p 2.69%
Fresnillo (FRES) 899.20p 2.14%
British American Tobacco (BATS) 3,035.50p 1.73%
BHP Group (BHP) 1,983.00p 1.40%
Rio Tinto (RIO) 4,783.00p 1.26%
ITV (ITV) 112.20p 1.04%
St James's Place (STJ) 1,146.50p 0.92%
Experian (EXPN) 2,385.72p 0.88%
Diageo (DGE) 3,455.00p 0.83%
Just Eat (JE.) 646.80p 0.72%
FTSE 100 - Fallers
Centrica (CNA) 86.32p -2.00%
Ocado Group (OCDO) 1,201.50p -1.92%
JD Sports Fashion (JD.) 609.75p -1.91%
Johnson Matthey (JMAT) 3,294.00p -1.82%
Schroders (SDR) 3,053.00p -1.58%
CRH (CRH) 2,643.00p -1.53%
AstraZeneca (AZN) 6,428.00p -1.52%
Severn Trent (SVT) 2,072.00p -1.47%
Mondi (MNDI) 1,766.50p -1.45%
Smurfit Kappa Group (SKG) 2,444.16p -1.45%
FTSE 250 - Risers
Cineworld Group (CINE) 262.00p 2.87%
Centamin (DI) (CEY) 112.70p 2.55%
Hochschild Mining (HOC) 197.40p 2.39%
Plus500 Ltd (DI) (PLUS) 623.85p 2.07%
Equiniti Group (EQN) 229.80p 1.68%
TI Fluid Systems (TIFS) 202.00p 1.61%
Bank of Georgia Group (BGEO) 1,559.00p 1.56%
Pets at Home Group (PETS) 193.70p 1.52%
Stagecoach Group (SGC) 127.60p 1.51%
Hunting (HTG) 521.00p 1.46%
FTSE 250 - Fallers
GVC Holdings (GVC) 646.00p -4.58%
Inchcape (INCH) 602.50p -4.29%
Kainos Group (KNOS) 624.00p -3.70%
Woodford Patient Capital Trust (WPCT) 55.68p -3.17%
Fisher (James) & Sons (FSJ) 1,872.00p -2.40%
B&M European Value Retail S.A. (DI) (BME) 335.00p -2.33%
Jupiter Fund Management (JUP) 390.50p -2.33%
Elementis (ELM) 134.40p -2.11%
Fidelity China Special Situations (FCSS) 218.01p -2.02%
Entertainment One Limited (ETO) 418.20p -1.78%