London midday: Stocks edge up as investors mull consumer confidence, public deficit
London stocks edged higher by midday on Thursday as investors digested the passing of the US tax reform bill and the latest readings on UK consumer confidence and public finances, with trading volumes thin in the run-up to Christmas.
The FTSE 100 was up 0.3%% to 7,549.73 as volumes on the top-flight index were down 41% compared to the 100-day average. Meanwhile the pound was flat versus the euro at 1.1263 and off 0.1% against the dollar at 1.3369
David Cheetham, chief market analyst at XTB, said: "The FTSE 100 remains in the green and is outperforming its continental peers who have possibly been hampered by a fairly strong rise in the single currency this week.
"It should be noted that the Santa Rally actually refers to a rise in stocks during the week between Christmas and New Year’s and therefore to claim it has faltered already would be wide of the mark. Nonetheless the FTSE remains well supported above 7,500 and within striking distance of its all-time high."
Overnight, the US House of Representatives and the Senate passed a $1.5trn tax reform bill, sending it to President Trump for his signature.
The bill, which Trump hailed as a “historic victory for the American people", will see corporate tax cut to 21% from 35%, while income tax rates will be reduced across all seven individual tax brackets. It will give individuals and married couples who fall into the highest income bracket of $500,000 and over the largest tax cut, to 37% from 39.6%.
"I promised the American people a big, beautiful tax cut for Christmas. With final passage of this legislation, that is exactly what they are getting,” Trump said.
Closer to home, a survey released on UK consumer confidence fell to a four-year low in December.
GfK's consumer confidence index declined to -13 this month from -12 in November, missing expectations for it to remain unchanged and surpassing the post-Brexit lows to fall to its lowest level since December 2013.
Investors were also digesting news that UK public finances improved slightly in November as the government reaped the rewards of rising income tax revenue.
Public sector net borrowing, excluding state-owned banks, was £8.7bn in November, a 1.9% decline from a year earlier, the Office for National Statistics said. The figure was slightly below the average economist's forecast of £8.9bn.
November's result took borrowing since the start of the financial year in April to £48.1bn, down 6.1% from a year earlier and the lowest figure for this point in the year since 2007. It kept the chancellor, Philip Hammond, on track to meet a borrowing target revised down at November's Budget.
Revenue from income and capital gains tax rose 6.2% in November from a year earlier and 3.4% for the year to date. Sales tax revenues were 4.1% higher so far this year, tracking a rise in inflation. Corporation tax revenues were flat.
In corporate news, infrastructure group Balfour Beatty rallied as it announced the sale of a 12.5% stake in Connect Plus, the company which operates the M25 orbital motorway, for £103m, and lifted its 2017 profit expectations.
Holiday Inn owner InterContinental Hotels rose after it commented on the impact of US President Donald Trump's tax reform bill. Based on initial estimates, the Republican tax reforms are expected to reduce IHG's group effective tax rate "by mid to high single digit percentage points" from 1 January 2018. For 2017, IHG's group effective tax rate is still expected to be in the low 30s.
Kaz Minerals was on the front foot as it said that the expansion of its Aktogay copper mine has been approved.
On the downside, housebuilders were weaker, with Berkeley, Persimmon, Barratt Developments and Taylor Wimpey all down after the Department for Communities and Local Government's proposal to set all ground rents to zero. Retirement housebuilder McCarthy & Stone was sharply lower as it protested about its being lumped in with the rest of the residential sector.
Greencoat Renewables fell after agreeing to buy the Dromadda More wind farm from Impax Asset Management for €88.4m funded by a €250m credit facility, while outsourcer Capita retreated despite saying it had won an internet network contract with Transport for London.
Home furnishings retailer Dunelm was in the red after saying it has appointed Nick Wilkinson - a former chief executive of Evans Cycles - as it new CEO.
Market Movers
FTSE 100 (UKX) 7,549.73 0.33%
FTSE 250 (MCX) 20,376.66 0.13%
techMARK (TASX) 3,502.18 0.28%
FTSE 100 - Risers
NMC Health (NMC) 2,814.00p 2.78%
Mediclinic International (MDC) 600.00p 2.21%
Old Mutual (OML) 225.10p 1.72%
InterContinental Hotels Group (IHG) 4,684.50p 1.70%
Tesco (TSCO) 209.41p 1.58%
British American Tobacco (BATS) 4,996.00p 1.54%
Next (NXT) 4,355.00p 1.44%
Just Eat (JE.) 774.00p 1.44%
Micro Focus International (MCRO) 2,520.70p 1.44%
BHP Billiton (BLT) 1,453.00p 1.29%
FTSE 100 - Fallers
United Utilities Group (UU.) 812.50p -1.63%
Berkeley Group Holdings (The) (BKG) 4,151.00p -1.40%
Persimmon (PSN) 2,692.00p -1.10%
Carnival (CCL) 4,917.00p -0.95%
Admiral Group (ADM) 1,909.00p -0.93%
Burberry Group (BRBY) 1,745.00p -0.80%
Standard Chartered (STAN) 762.80p -0.73%
Barratt Developments (BDEV) 639.00p -0.62%
Taylor Wimpey (TW.) 204.80p -0.58%
London Stock Exchange Group (LSE) 3,729.00p -0.56%
FTSE 250 - Risers
Sirius Minerals (SXX) 23.17p 5.34%
Beazley (BEZ) 508.00p 3.86%
TI Fluid Systems (TIFS) 249.00p 3.32%
RDI Reit (RDI) 35.87p 2.49%
Mitchells & Butlers (MAB) 274.20p 2.01%
Balfour Beatty (BBY) 287.32p 2.00%
Thomas Cook Group (TCG) 120.60p 1.94%
Cairn Energy (CNE) 213.20p 1.91%
Kaz Minerals (KAZ) 814.93p 1.87%
Ferrexpo (FXPO) 290.60p 1.82%
FTSE 250 - Fallers
McCarthy & Stone (MCS) 155.60p -8.31%
Greencore Group (GNC) 219.20p -3.82%
Softcat (SCT) 501.00p -3.19%
Capita (CPI) 394.95p -2.70%
Dignity (DTY) 1,745.55p -2.37%
Drax Group (DRX) 265.10p -2.14%
TalkTalk Telecom Group (TALK) 145.00p -2.09%
Travis Perkins (TPK) 1,522.00p -1.87%
Convatec Group (CTEC) 205.30p -1.82%
Countryside Properties (CSP) 345.20p -1.74%