London midday: Stocks race higher as selling in pound intensifies
Stocks raced higher at the start of the week after the Prime Minister surprised financial markets yet again, threatening to unseat any MP who sided with Jeremy Corbyn to stop a 'no deal' Brexit and sending the pound immediately lower.
Labour was expected to table a bill in Parliament on Tuesday that would force the government to ask the European Union for another extension to Article 50 if he could not clinch a deal.
And one of the options under consideration at 10 Downing Street was to call an election, perhaps even during the current week, the BBC's Laura Kuenssberg reported.
Against that backdrop, as 1205 BST the FTSE 100 was jumping by 1.31% or 94.41 points to 7,301.55 and the pound was retreating by 0.67% to 1.20826 and by 0.53% to 1.1010 versus the euro.
"There is the potential for a bill to be signed into law within days assuming it is not confronted with too many hurdles," said Rabobank's Jane Foley.
"The government is currently being maintained with a very slim majority of 1 vote. Despite this it is not clear whether the Opposition’s bill will be passed into law – this uncertainty can be linked with the drop in the value of the pound this morning."
Also providing a boost to share prices was a better-than-expected reading on China's manufacturing sector in August.
Caixin's factory sector Purchasing Managers' Index rose from July's reading of 49.9 to 50.4, beating forecasts for a reading of 49.8 and pointing again to growth in the space. It was the strongest reading since March.
Nonetheless, while a gauge of the new orders received by companies was reportedly stable, the pace of decline in new export orders quickened and firms' confidence in the outlook 12 months ahead was "among the weakest in the series history".
In the background meanwhile, the US President said on Sunday that trade talks with China were still set to go ahead in September.
Although they had been long and widely anticipated, a 15.0% US tariff on another $112.0bn-worth of Chinese exports kicked-in on Sunday, as did Chinese levies on US exports.
Back on home turf, IHS Markit reported an unexpected decline in its UK manufacturing sector PMI from July's level of 48.0 to 47.4 (consensus: 48.3) - its softest reading in over seven years - led by a drop in a sub-index tracking new orders.
Input prices climbed however, stoked by weakness in the pound, and as in China or on the Continent, manufacturing firms' confidence in the outlook for the year ahead was at multi-year lows.
"The renewed fall in the manufacturing PMI in August—to its lowest level since July 2012—indicates that support from another round of no-deal Brexit preparations currently is too modest to insulate U.K. producers from the global downturn," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
"The U.K.’s PMI is only trivially above the Eurozone’s—47.0 in August—and the former might even fall further, given that the new orders index slumped to 44.4, from 46.9 in July."
To take note of, US financial markets were set to remain closed on Monday in observance of the Labor Day holiday, meaning that many traders in the City were likely to also be away from their desks at the start of the week and that trading volumes were likely to be below average as a result.
Shares of US dollar earning exporters including AstraZeneca, Diageo, British American Tobacco, BAE Systems and CRH were all near the top of the leaderboard thanks to the softer pound.
Also boosting stock in AstraZeneca were positive trial results for two seperate cardiovascular drugs. The pharmaceutical giant said a recent trial of its 'Brilinta' drug used in conjunction reduced the relative risk of heart attack or stroke by 10% compared with aspirin alone. A separate trial of diabetes drug Farxiga saw the drug demonstrate a 30% decrease in the risk of experiencing a first episode of worsening heart failure and an 18% decrease in the risk of dying from cardiovascular causes when the treatment was used in conjunction with standard care.
Shares of Cobham were little changed despite the assurances provided by US private equity outfit Advent that its £4.0bn bid for the company would not harm the UK's industrial base nor pose any danger to the country's national security.
Centamin reported further progress in refreshing its board of directors as part of what the company described as a push to reach an optimal balance between its members' core skills, experience and diversity, adding two new independent executive directors, Catherine Farrow and Marna Cloete. As part of the ongoing reshuffle, Alison Baker, one of its previous non-executive directors, announced her decision to step down.
Among some of the most noteworthy broker notes published on Monday, analysts at Goldman Sachs reinstated their coverage of Marks&Spencer at 'sell' while those at Berenberg reiterated a 'buy' for Hurricane Energy and their peers at ShoreCap reiterated a 'buy' on Tesco.
Market Movers
FTSE 100 (UKX) 7,302.70 1.33%
FTSE 250 (MCX) 19,499.22 0.54%
techMARK (TASX) 3,861.63 1.28%
FTSE 100 - Risers
AstraZeneca (AZN) 7,576.00p 3.53%
Experian (EXPN) 2,590.00p 2.86%
Diageo (DGE) 3,585.50p 2.34%
Intertek Group (ITRK) 5,552.00p 2.28%
Tesco (TSCO) 224.00p 2.19%
BAE Systems (BA.) 557.40p 2.16%
Relx plc (REL) 2,005.00p 1.96%
British American Tobacco (BATS) 2,932.50p 1.82%
Centrica (CNA) 70.90p 1.72%
GlaxoSmithKline (GSK) 1,741.00p 1.72%
FTSE 100 - Fallers
Antofagasta (ANTO) 853.00p -1.50%
NMC Health (NMC) 2,472.00p -1.20%
Marks & Spencer Group (MKS) 191.20p -0.55%
Just Eat (JE.) 782.20p -0.46%
WPP (WPP) 966.40p -0.39%
Micro Focus International (MCRO) 1,106.80p -0.18%
Evraz (EVR) 495.60p -0.14%
Aveva Group (AVV) 3,700.00p 0.00%
JD Sports Fashion (JD.) 617.40p 0.06%
Sage Group (SGE) 701.20p 0.09%
FTSE 250 - Risers
Rank Group (RNK) 166.80p 3.47%
FDM Group (Holdings) (FDM) 779.00p 3.18%
GVC Holdings (GVC) 648.28p 3.07%
Hays (HAS) 144.00p 2.86%
Network International Holdings (NETW) 618.00p 2.83%
Daejan Holdings (DJAN) 5,340.00p 2.50%
Genus (GNS) 2,694.00p 2.43%
Dunelm Group (DNLM) 896.00p 2.28%
Lancashire Holdings Limited (LRE) 696.00p 2.20%
Hikma Pharmaceuticals (HIK) 2,060.00p 2.13%
FTSE 250 - Fallers
Intu Properties (INTU) 39.20p -3.80%
Amigo Holdings (AMGO) 76.60p -3.77%
Provident Financial (PFG) 390.66p -3.13%
Hammerson (HMSO) 220.60p -2.82%
Wood Group (John) (WG.) 366.70p -2.71%
Premier Oil (PMO) 79.18p -1.96%
Aston Martin Lagonda Global Holdings (AML) 471.30p -1.94%
Softcat (SCT) 1,020.00p -1.92%
Ferrexpo (FXPO) 198.85p -1.61%
IP Group (IPO) 56.00p -1.41%