London close: Shares gains as Brexit worries send pound lower
London stocks pushed higher on Wednesday as Brexit worries sent the pound tumbling to its lowest level versus the dollar in nearly a year, while a late plunge in oil prices came too late to have an effect.
The FTSE 100 closed up 58.17 points or 0.75% at 7,776.65 as sterling dropped below $1.29, trading down 0.5% at 1.2879, with a similar fall to lowest level since November against the euro to 1.1102 amid jitters about the potential for a no-deal Brexit.
"The pound continues its slide versus the dollar on fears of a ‘No Deal’ Brexit, providing at least a pleasing tailwind for UK stocks," said Chris Beauchamp, chief market analyst at IG. "Outside of the British Isles, however, there is little sign of yesterday’s bullishness, as trade war fears knock back equities after Tuesday’s strong session."
Lukman Otunuga, research analyst at FXTM, said the currency is likely to remain depressed ahead of Friday’s second quarter UK GDP report, which could offer fresh insight into the health of Britain’s economy.
"While a solid GDP print could throw the bruised pound a short-term lifeline, any meaningful gains may be obstructed by Brexit-related uncertainty and an appreciating dollar," he said.
A weaker sterling tends to benefit the top-flight index as around 70% of its constituents derive most of their earnings from abroad.
Despite the positive tone, trade war concerns were never far from investors' minds as the US said it will start collecting 25% tariffs on $16bn worth of Chinese imports from 23 August.
Beijing was not slow to came back with its tit for Washington's tat, as the country's commerce ministry announced plans to impose 25% import duties targeting $16bn-worth of US goods.
Worries about trade combined with fresh data to hit oil prices late in the session. BP shares dipped into the red right at the before the close, but Shell was little moved, after oil prices stumbled. Brent crude lost 3.% to $71.95 a barrel after US oil stockpiles fell less than expected, according to EIA data.
Market participants were also digesting Chinese trade balance data released overnight, showing July exports up 12.2%, accelerating from the month before and beating expectations for a 10% jump. Imports increased 27.3% compared to a 14.1% rise in June and ahead of analysts' forecasts for a 16.2% increase.
Meanwhile, China’s surplus with the US shrank a touch to $28.09bn last month from a record $28.97bn in June.
In corporate news, Prudential led the Footsie charge as it said the planned split of its UK and Asian businesses was "progressing well" in a half-year that saw profits hit by currency swings but still beat expectations.
Bloomberg reported that Ping An Insurance has looked at acquiring the M&G Prudential business once it goes it alone.
Standard Life Aberdeen was up for the second day in a row after saying on Tuesday that it would accelerate its £1.75bn share buyback programme. Broker Numis was among those reacting on Wednesday, updating its forecasts and saying there was a "deep value opportunity for patient investors".
Shares in Spirax-Sarco Engineering climbed the front foot after posting a rise in first-half operating profit, while insurer Hastings made a late surge after reporting a jump in first-half pre-tax profit as gross written premiums and net revenue grew.
Quilter, formerly Old Mutual Wealth Management, climbed but saw its gains dissipate over the day, following the release of its maiden set of results as a standalone company.
Automotive brake fluid and fuel specialist TI Fluid Systems was the top riser on the mid-cap index after reporting revenue growth of 4.5% period-over-period at constant currency for the first six months of the year. The company attributed its first-half performance to the successful execution of its hybrid electric vehicle (HEV) and electric vehicle (EV) strategy, which had created further organic growth opportunities.
Glencore fell initially but climbed into the green as its adjusted earnings for the first half fell slightly short of analysts' expectations, while recruiter PageGroup ticked up after saying that first-half revenue rose 12%.
Going the other way, Paddy Power Betfair was under the cosh as the bookmaker lowered its guidance for full-year EBITDA to £460-480m from £470-490m, partly due to losses from its new US fantasy sports business, FanDuel.
Hill & Smith lost almost a quarter of its value as the motorway barriers supplier posted a 12% drop in first-half core earnings and warned that it does not expect to make up for the fall in profits seen in the first half of the year.
UDG Healthcare slumped as it released a third-quarter trading update and announced the sale of its Aquilant division for up to €23m.
Housebuilder Bellway subsided after saying it has broken through the 10,000 homes barrier for the first time and reported a jump in full-year revenue but warned over a slowdown in house price growth.
In broker note action, Rio Tinto was upgraded to 'add' at AlphaValue and Countrywide was lifted to 'neutral' at Credit Suisse.
Pendragon was boosted to 'neutral' at JPMorgan, while BBA Aviation was upgraded to 'buy' at Investec. Spire Healthcare was under the cosh after a double downgrade to 'sell' at Berenberg and Rotork was downgraded to 'hold' at SocGen.
Market Movers
FTSE 100 (UKX) 7,776.65 0.75%
FTSE 250 (MCX) 20,770.64 0.46%
techMARK (TASX) 3,616.96 0.17%
FTSE 100 - Risers
Prudential (PRU) 1,822.00p 3.67%
Standard Life Aberdeen (SLA) 331.30p 3.11%
Micro Focus International (MCRO) 1,229.50p 2.72%
Ashtead Group (AHT) 2,410.00p 2.64%
Rentokil Initial (RTO) 334.60p 2.32%
Intertek Group (ITRK) 5,414.00p 2.23%
Whitbread (WTB) 3,988.00p 2.13%
Barclays (BARC) 193.12p 1.99%
Hargreaves Lansdown (HL.) 2,070.00p 1.92%
Admiral Group (ADM) 1,991.00p 1.87%
FTSE 100 - Fallers
Paddy Power Betfair (PPB) 7,540.00p -7.14%
Ocado Group (OCDO) 1,050.00p -0.94%
London Stock Exchange Group (LSE) 4,508.00p -0.68%
Anglo American (AAL) 1,727.60p -0.50%
British Land Company (BLND) 647.20p -0.40%
BHP Billiton (BLT) 1,719.00p -0.32%
Lloyds Banking Group (LLOY) 62.18p -0.27%
Rio Tinto (RIO) 3,952.00p -0.25%
Smith & Nephew (SN.) 1,360.00p -0.22%
Reckitt Benckiser Group (RB.) 6,902.00p -0.19%
FTSE 250 - Risers
TI Fluid Systems (TIFS) 266.00p 6.40%
Aggreko (AGK) 861.00p 4.80%
Synthomer (SYNT) 572.00p 4.67%
BBA Aviation (BBA) 311.60p 4.07%
AA (AA.) 115.10p 3.93%
Capita (CPI) 127.90p 3.56%
Domino's Pizza Group (DOM) 297.40p 3.55%
esure Group (ESUR) 206.80p 2.89%
Virgin Money Holdings (UK) (VM.) 421.70p 2.85%
Go-Ahead Group (GOG) 1,610.00p 2.74%
FTSE 250 - Fallers
Hill & Smith Holdings (HILS) 1,122.00p -23.67%
UDG Healthcare Public Limited Company (UDG) 733.50p -10.49%
Spire Healthcare Group (SPI) 172.70p -9.01%
On The Beach Group (OTB) 415.50p -3.60%
Just Group (JUST) 96.00p -3.03%
Renewi (RWI) 70.60p -2.62%
Polypipe Group (PLP) 360.00p -2.49%
Centamin (DI) (CEY) 111.15p -2.29%
Hikma Pharmaceuticals (HIK) 1,651.50p -2.28%
Premier Oil (PMO) 122.50p -2.00%