London midday: Miners pace the advance as ITV, M&S disappoint
After US mid-term elections panned out pretty much as expected, London stocks extended gains as Wednesday's session wore on, as strength in the mining sector helped to offset disappointing updates from M&S, ITV and G4S.
The FTSE 100 was up 1.2% to 7,127.28, while the pound was up 0.5% against the dollar at 1.3168 and down 0.1% versus the euro at 1.1455.
The mid-term election results in the US saw the Democrats wrest control of the House of Representatives while the Republicans tightened their grip on the Senate.
Potential political gridlock in Congress is not undesirable for financial markets, said Oanda analyst Craig Erlam said: "Much of Trump’s pro-growth and pro-market agenda was passed in the first two years of his term so losing control of one isn’t the end of the world.
"From a markets perspective, the most important thing is that the blue wave never fully materialised as this could have led to the scaling back of some of those market-friendly policies, including tax reform. While this was never the base case scenario, or in many people’s view, even particularly likely, it was possible and that’s enough to make investors nervous."
Back in the UK, the latest housing market survey from mortgage lender Halifax showed that annual price growth slowed to 1.5% in the three months to October from 2.5% in September, marking the slowest rate of growth since March 2013 and falling short of the 1.2% growth expected. On the month, house prices were up 0.7% in October following a 1.3% decline the month before, beating expectations for a 0.3% increase.
Halifax managing director Russell Galley said growth was still within Halifax's forecast annual range of between 0% and 3% for 2018 and that house prices continue to be supported by the fact that the supply of new homes and existing properties available for sale remains low.
"Further house price support comes from an already high and improving employment rate and historically low mortgage rates which are creating higher rates of relative affordability. We see this continuing to be the case over the coming months and we remain supportive of our 0-3% forecast range," Galley said.
Miners were the standout gainers, with Antofagasta, Anglo, Rio Tinto and Glencore benefiting from rising copper prices and a weaker greenback, which makes dollar-denominated commodities cheaper to buy for holders of other currencies.
Precious metals miner Fresnillo was the top gainer as gold prices rose on the back of the softer dollar.
On the downside, ITV was the worst performer as the broadcaster warned that it has seen some softening in advertising revenues at the start of the fourth quarter due to Brexit uncertainty and now expects total advertising to be broadly flat over the full year.
Marks & Spencer followed close behind as the retailer reported sales down 3.1% in the first half of the year but higher underlying profits thanks to phasing of cost cuts. The retailer's food like-for-like sales fell 2.9% amid tough competition in the supermarket sector, while clothing and home sales shrank 1.1%.
There may well be a link between the two companies, said Russ Mould, investment director at AJ Bell, with ITV's warning ad revenues falling 3% in the fourth quarter, with the key month of December down by 6-8%.
“That suggests that major ad spenders are retrenching and one of those may be Marks & Spencer, whose Christmas marketing campaigns in the past have featured everyone from Paddington to Peter Kay," Mould added, noting that a drop in the retailer's day-to-day running costs included a £7.4m cut to marketing spend.
Housebuilder Persimmon slipped as it announced that chief executive Jeff Fairburn will step down at the end of the year following outrage over his £110m pay package, while sector peer Redrow fell as it announced the retirement of chairman and founder Steve Morgan and said the London sales market remained subdued in the first 18 weeks of its trading year.
Pub group JD Wetherspoon slumped, taking rivals Greene King, Mitchells & Butlers and EI Group, down with it, after warning that rising wage costs will hit full year results profits.
Security software group Sophos tumbled 26% as its first-half revenues fell short of analysts' expectations and the company warned on billings and future growth.
Security services firm G4S also suffered heavy losses after a disappointing trading statement, with organic growth for the third quarter coming in at 2.5% versus expectations of around 4.5%.
In broker note action, British Land was cut to 'equalweight' by Barclays, while Hammerson was downgraded to 'underweight'. Royal Bank of Scotland was lifted to 'outperform' at Macquarie.
FTSE 100 - Risers
Fresnillo (FRES) 907.40p 4.18%
Anglo American (AAL) 1,754.00p 3.18%
Antofagasta (ANTO) 820.60p 2.94%
Associated British Foods (ABF) 2,532.00p 2.93%
BHP Billiton (BLT) 1,646.80p 2.86%
Melrose Industries (MRO) 172.00p 2.69%
Rio Tinto (RIO) 3,965.49p 2.51%
Royal Dutch Shell 'A' (RDSA) 2,467.50p 2.36%
Glencore (GLEN) 319.10p 2.31%
BP (BP.) 551.80p 2.26%
FTSE 100 - Fallers
ITV (ITV) 146.02p -5.34%
Marks & Spencer Group (MKS) 290.80p -3.87%
BT Group (BT.A) 247.50p -1.39%
Direct Line Insurance Group (DLG) 318.70p -1.24%
Schroders (SDR) 2,567.00p -1.19%
Coca-Cola HBC AG (CDI) (CCH) 2,250.00p -1.01%
Land Securities Group (LAND) 846.15p -0.92%
Whitbread (WTB) 4,563.00p -0.54%
Halma (HLMA) 1,333.00p -0.52%
Berkeley Group Holdings (The) (BKG) 3,584.00p -0.44%
FTSE 250 - Risers
Mediclinic International (MDC) 388.70p 5.62%
Hochschild Mining (HOC) 167.85p 4.25%
Wizz Air Holdings (WIZZ) 2,764.03p 3.64%
IWG (IWG) 263.00p 3.22%
Ultra Electronics Holdings (ULE) 1,430.00p 3.17%
Kaz Minerals (KAZ) 545.60p 2.87%
Investec (INVP) 507.80p 2.84%
Tullow Oil (TLW) 223.00p 2.76%
On The Beach Group (OTB) 452.00p 2.73%
AA (AA.) 108.50p 2.70%
FTSE 250 - Fallers
Sophos Group (SOPH) 338.48p -25.87%
G4S (GFS) 188.40p -12.94%
Wetherspoon (J.D.) (JDW) 1,186.00p -9.53%
Contour Global (GLO) 176.00p -4.97%
Greene King (GNK) 481.70p -3.78%
Sports Direct International (SPD) 311.10p -3.74%
Redrow (RDW) 545.00p -3.54%
Entertainment One Limited (ETO) 403.80p -3.03%
NewRiver REIT (NRR) 242.89p -2.84%
William Hill (WMH) 195.00p -2.84%