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London midday: Stocks gain as sterling slumps on Brexit woes

By Michele Maatouk

Date: Tuesday 16 Jul 2019

(Sharecast News) - London stocks had pushed into the green by midday on Tuesday following a lacklustre start, as sterling slumped on Brexit woes, despite the release of solid UK jobs data.
The FTSE 100 was up 0.4% at 7,560.60, while the pound fell to its lowest level against the dollar since April 2017, trading down 0.8% at $1.2417. Against the euro, it hit a six-month low, down 0.5% at 1.1065.

Sterling was under pressure after Tory leadership frontrunner Boris Johnson and fellow hopeful Jeremy Hunt said overnight that they were prepared to abandon the Irish backstop plan. Both Johnson and Hunt said they would not accept a five-year time limit or a unilateral exit clause from the backstop.

Oanda analyst Craig Erlam said: "Various Brexit reports may have contributed to the decline, but it's interesting that the UK jobs report failed to slow the decline.

"While unemployment was unchanged and the claimant count rose, wages were strong which if sustained and no deal can be avoided would surely strengthen the case for no rate cuts and maybe even rate hikes.

"Unfortunately, traders are finding it hard to look past no-deal risks or at the very least a delay and hard Brexit, which continues to weigh on the currency."

Data released earlier by the Office for National Statistics showed that British wages are growing at their fastest rate for more than a decade. Total pay including bonuses in the three months to May increased 1.4% year-on-year when adjusted for inflation. Excluding bonuses pay rose 1.7%.

Annual wage growth in average weekly earnings increased to 3.4% in May, against 3.2% in April, or 3.6% once bonuses were excluded. That was the highest rate for nearly 11 years and well ahead of forecasts; economists had been looking for growth of around 3.1% including bonuses.

Meanwhile, the employment rate remained at a record high of 76%, compared to 75.6% a year earlier, with 32.75m people in work. Unemployment was estimated to be unchanged at 3.8%, the lowest since October to December 1974 and in line with forecasts.

In equity markets, luxury fashion brand Burberry was sitting pretty at the top of the FTSE 100 after it reported a 4% jump in first-quarter sales - double what analysts were expecting - as it enjoyed a good response to a collection by new chief designer Riccardo Tisci and a solid performance in China.

Broadcaster ITV rallied after an upgrade to 'buy' at Liberum, while Aston Martin Lagonda revved higher after an upgrade to 'hold' at Jefferies.

Education publisher Pearson was up after it said that all future releases of its 1,500 active US titles will be published in digital format before being printed.

Building materials group CRH rose as it agreed to sell off its Europe distribution business to private equity funds managed by Blackstone for €1.64bn in cash.

On the downside, credit-checking firm Experian was weaker as it posted a 4% increase in first-quarter revenue thanks to a solid performance in North America, but a drop in revenue in all the UK and Ireland.

AG Barr tumbled as the Irn-Bru maker warned on profits, pointing to poor volumes following the introduction of the soft drinks levy and disappointing spring and early summer weather. Fellow drinks maker Britvic also fizzed lower.

Insurer Hastings was under the cosh after saying it will take a one-off pre-tax charge of £8.4m this year as a result of the change to the Ogden rate to -0.25% from -0.75%, which takes effect from 5 August.

Recruiter Hays lost ground as it posted flat new fees for the fourth quarter, while Lloyds was hit by a downgrade to 'neutral' at JPMorgan.

Market Movers

FTSE 100 (UKX) 7,560.60 0.38%
FTSE 250 (MCX) 19,584.36 0.00%
techMARK (TASX) 3,682.48 0.18%

FTSE 100 - Risers

Burberry Group (BRBY) 2,225.00p 11.78%
Pearson (PSON) 890.00p 3.03%
International Consolidated Airlines Group SA (CDI) (IAG) 468.70p 2.97%
TUI AG Reg Shs (DI) (TUI) 790.60p 2.57%
ITV (ITV) 112.49p 2.35%
GlaxoSmithKline (GSK) 1,669.00p 1.86%
CRH (CRH) 2,690.00p 1.51%
Rolls-Royce Holdings (RR.) 865.20p 1.50%
London Stock Exchange Group (LSE) 5,744.00p 1.41%
AstraZeneca (AZN) 6,420.00p 1.41%

FTSE 100 - Fallers

Rightmove (RMV) 519.60p -2.33%
Experian (EXPN) 2,375.26p -1.77%
Auto Trader Group (AUTO) 553.20p -1.25%
Vodafone Group (VOD) 128.82p -1.06%
Persimmon (PSN) 1,913.50p -0.96%
Coca-Cola HBC AG (CDI) (CCH) 2,685.00p -0.85%
National Grid (NG.) 831.00p -0.82%
Rio Tinto (RIO) 4,829.50p -0.79%
Micro Focus International (MCRO) 1,651.40p -0.76%
Flutter Entertainment (FLTR) 6,960.00p -0.71%

FTSE 250 - Risers

Aston Martin Lagonda Global Holdings (AML) 971.50p 3.57%
Syncona Limited NPV (SYNC) 238.07p 2.40%
IWG (IWG) 349.70p 2.31%
Mediclinic International (MDC) 334.90p 2.29%
Fisher (James) & Sons (FSJ) 1,950.00p 1.99%
Wizz Air Holdings (WIZZ) 3,563.00p 1.80%
B&M European Value Retail S.A. (DI) (BME) 356.80p 1.74%
Pagegroup (PAGE) 427.60p 1.57%
Elementis (ELM) 132.40p 1.53%
Ferrexpo (FXPO) 269.40p 1.39%

FTSE 250 - Fallers

Barr (A.G.) (BAG) 650.00p -25.20%
Hastings Group Holdings (HSTG) 195.20p -4.78%
Hays (HAS) 147.50p -2.64%
Sports Direct International (SPD) 232.40p -2.43%
Britvic (BVIC) 865.50p -2.15%
Cairn Energy (CNE) 169.50p -2.08%
Rank Group (RNK) 155.00p -2.02%
FDM Group (Holdings) (FDM) 893.85p -1.77%
Computacenter (CCC) 1,318.00p -1.72%
Tullow Oil (TLW) 206.20p -1.67%


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