London midday: Shares and sterling higher on cautious Brexit optimism
London stocks kept hold of most of their early gains by midday on Friday as encouraging noises emerging from Brussels mingled with optimism stateside over proposed tax reforms.
At 1205 BST, the FTSE 100 had added 0.24% to 7,541.22, while the pound recovered from an earlier 0.3% deficit against the resurgent dollar to rise 0.2% to 1.3183 and rallied from an earlier one-month low versus the euro to climb 0.6% to 1.1165.
European leaders said they agreed to move internal discussions on Brexit onto the 'stage 2' issues of trade and the exit transition, confirming rumours from earlier in the week.
While EU 27 leaders formally agreed that these discussions will not yet take place with the UK team due to the "insufficient progress" made in negotiations, Prime Minister Theresa May revealed the UK is examining “line by line” how much it will pay the EU in its divorce bill and refused to deny than the UK will pay more than the €20bn (£17.9bn) she offered in her recent Florence speech.
This gave pound a minor boost, said analyst Craig Erlam at Oanda: "May’s acknowledgement that the UK will honour its financial commitments to the EU while claiming her counterparts will consider a vision for a future partnership is a small step forward in negotiations that has seemingly failed to be achieved in discussions between David Davis and Michel Barnier."
Overnight, the dollar surged against the pound and other currencies after the US Senate agreed a budget blueprint for the 2018 fiscal year that would seem to allow Republicans to pursue Donald Trump's proposed tax-cut package without the need for Democratic support.
This deal goes a long way to paving the way for the $1.5tn US tax cut package, said analyst Mike van Dulken at Accendo Markets, and would represent "the first major reform from President Trump’s administration following several stumbles, seen as supportive of US growth, Fed rate hikes and, of course, equity markets."
Pressure on the pound early in the session was also coming from diminishing expectations for a November rate hike, after Wednesday's decline in real wages, poor retail sales and comments overnight from Bank of England deputy governor Jon Cunliffe that cast further doubt on a November rate hike, as he argued that the UK is "not seeing sustained signs of domestic inflation pressure".
But better news on UK public finances would not have done any harm.
Public public sector net borrowing continued to shrink more than expected, with September's PSNB excluding stakes in banks coming out at £5.90bn, the lowest September borrowing figure for a decade and below the consensus forecast of £6.5bn.
However, economists warned that the Chancellor's Budget next month is not expected to see many big fiscal giveaways, as the deficit is forecast to have a tougher time later in the year, with Philip Hammond also expected to keep his fiscal powder dry for Brexit clean-up operations.
Looking at individual shares, mining heavyweights were among those leading the charge, with Antofagasta top of the tree after copper prices jumped to the highest level in over three years. Anglo American, Rio Tinto, Glencore and BHP Billiton were also on the front foot.
Recent oil gains were being unwound though as Brent fell back to the lowest level in a week.
Fresnillo was a faller, however, after being downgraded by Credit Suisse.
Barclays was higher as a Berenberg upgrade came alongside news that Red Kite, a hedge fund specialising in metals investments, was reported to have filed an $850m lawsuit against the bank, accusing it of causing it vast losses by front-running its trades in the copper market.
Going the other way was Acacia Mining, a day after a deal to resolve its dispute with the Tanzanian government sent its shares shooting higher. The gold miner reported revenue down 40% for the third quarter and a much diminished cash balance.
InterContinental Hotels Group was lower despite reporting a third quarter of “good” performance, with revenue per available room up 2.3%. This meant for the year-to-date, revpar edged up 2.2% from 2.1% in the first half, including 1.5% in the second quarter.
Market Movers
FTSE 100 (UKX) 7,542.28 0.26%
FTSE 250 (MCX) 20,193.42 0.31%
techMARK (TASX) 3,560.52 0.19%
FTSE 100 - Risers
Antofagasta (ANTO) 1,015.00p 2.78%
Standard Chartered (STAN) 766.20p 2.34%
G4S (GFS) 281.20p 2.14%
easyJet (EZJ) 1,318.00p 1.78%
International Consolidated Airlines Group SA (CDI) (IAG) 662.50p 1.77%
NMC Health (NMC) 2,879.00p 1.73%
Anglo American (AAL) 1,453.00p 1.54%
Royal Bank of Scotland Group (RBS) 284.40p 1.54%
Rentokil Initial (RTO) 318.80p 1.53%
CRH (CRH) 2,787.00p 1.49%
FTSE 100 - Fallers
Fresnillo (FRES) 1,397.00p -1.48%
Unilever (ULVR) 4,237.00p -1.44%
Reckitt Benckiser Group (RB.) 6,693.00p -1.43%
Whitbread (WTB) 3,935.00p -1.11%
Associated British Foods (ABF) 3,324.00p -1.07%
InterContinental Hotels Group (IHG) 4,058.00p -1.00%
Hammerson (HMSO) 534.00p -0.84%
Shire Plc (SHP) 3,719.00p -0.79%
GKN (GKN) 300.10p -0.66%
ITV (ITV) 175.50p -0.51%
FTSE 250 - Risers
Petrofac Ltd. (PFC) 432.10p 4.37%
Spire Healthcare Group (SPI) 257.50p 4.25%
Evraz (EVR) 326.40p 3.16%
Just Group (JUST) 156.00p 2.50%
Dixons Carphone (DC.) 188.10p 2.17%
Vedanta Resources (VED) 889.00p 2.01%
IWG (IWG) 220.50p 1.94%
Indivior (INDV) 334.00p 1.89%
Paragon Banking Group (PAG) 471.90p 1.86%
Daejan Holdings (DJAN) 6,210.00p 1.80%
FTSE 250 - Fallers
Acacia Mining (ACA) 198.90p -6.18%
Brown (N.) Group (BWNG) 311.10p -4.48%
CLS Holdings (CLI) 214.10p -3.03%
JD Sports Fashion (JD.) 342.10p -2.90%
Computacenter (CCC) 989.00p -2.08%
Dechra Pharmaceuticals (DPH) 2,034.00p -1.98%
Essentra (ESNT) 503.00p -1.95%
Hunting (HTG) 457.10p -1.76%
Tate & Lyle (TATE) 632.50p -1.40%
Greencore Group (GNC) 195.60p -1.36%