London midday: Stocks extend gains as HSBC rallies; Budget in focus
London stocks extended gains by midday on Monday, buoyed by a solid set of earnings from HSBC and potential boosts from the Budget later in the session.
The FTSE 100 was up 1.8% to 7,061.89, while the pound was 0.1% firmer against the dollar and the euro at 1.2838 and 1.1261, respectively.
"The smoke signals from those supposedly in the know is that the Budget will be conditioned heavily by the eventual outcome of the negotiations on the UK's separation with the EU. Hence, we should perhaps be measured in the expectations of too much too soon," said analysts at Shore Capital.
"From a UK consumer economy perspective what the Chancellor does on personal allowances and taxation is always important; there have been repeated newspaper debates about easing the advance of allowances and changing the taxpayer's support for pensions to fund commitments around the NHS and the Prime Minister's promise to end austerity. We'll see."
Many newspaper reports have suggested there will be an easing in the business rate relief for small shopkeepers and a further evolution of digital taxation. "These two areas may gain considerable headline coverage although whether the former will be a meaningful help to large chains grappling with over-sized retail estates remains to be seen; we have our doubts," ShoreCap added.
Ahead of the Budget at around 1530 GMT, data from the bank of England showed that the amount of unsecured lending fell sharply in September as British consumers opted against buying new cars.
New consumer borrowing excluding mortgages was £0.8bn in September, down from £1.2bn in August. The growth rate in unsecured lending was 7.7%, down from August’s rate of 8.2% and the slowest growth since August 2015.
In the three months to September, on an annualised basis growth was ahead 5.5%, the weakest since January 2014. The Bank attributed the decline to weaker net borrowing for other loans and advances, which fell from £0.7bn to £0.3bn.
The Bank also said that mortgage lending improved in September, up to £3.9bn after "two relatively weak months".
The annual growth rate of mortgage lending was unchanged at 3.2%. The rate has now been around 3% since late 2016. The number of mortgages approved for house purchase was broadly unchanged at 65,000.
On the company front, Melrose Industries - due to its GKN business - was sitting pretty near the top of the FTSE 100 leader board following a Bloomberg report that China's regulator is considering cutting tax for most cars in half to boost flagging sales in its automotive market.
Johnson Matthey, which supplies catalytic converters, and TI Fluid Systems, which makes brake fluid and fuel lines, also racked up solid gains on the back of the report.
HSBC rallied as it reported stronger profit growth than expected for the third quarter as all three of the bank's main businesses enjoyed good growth and progress was made with cost cutting efforts. Profit before tax for quarter of $5.9bn was 28% higher than the same quarter last year, with adjusted PBT up 16% to $6.2bn. Shares of fellow Asia-focused bank Standard Chartered was also given a boost.
Miner Rio Tinto advanced on the back of the lapsing of a non-binding 2016 agreement for Chinalco to acquire the company’s stake in the Simandou iron ore project in Guinea. Rio holds 45.05% of the project, with Chinalco (39.95%) and the Guinea government 15%.
IWG was in the green following a report that the serviced offices provider has held talks with Guy Hands - the owner of private equity firm Terra Firma - about a potential spin-off its Spaces co-working brand.
Transport operator Firstgroup advanced following a weekend press report that some of its shareholders are pushing for a breakup of the company.
Metro Bank surged as Citi recommended buying the challenger bank after the selloff, saying growth was "still excellent".
On the downside, Just Eat retreated as Peel Hunt cut its stance on the stock to 'sell' from 'buy', pointing to recent reports of a tie-up between Uber and Deliveroo.
Market Movers
FTSE 100 (UKX) 7,061.89 1.76%
FTSE 250 (MCX) 18,711.00 1.95%
techMARK (TASX) 3,279.88 2.10%
FTSE 100 - Risers
Melrose Industries (MRO) 163.60p 6.23%
Evraz (EVR) 530.40p 5.45%
HSBC Holdings (HSBA) 637.80p 5.42%
Johnson Matthey (JMAT) 2,954.00p 4.16%
Halma (HLMA) 1,296.00p 4.01%
Standard Chartered (STAN) 542.70p 3.87%
Experian (EXPN) 1,819.00p 3.82%
Royal Mail (RMG) 360.70p 3.44%
Ashtead Group (AHT) 1,872.50p 3.34%
International Consolidated Airlines Group SA (CDI) (IAG) 604.80p 3.28%
FTSE 100 - Fallers
Just Eat (JE.) 582.00p -3.29%
Randgold Resources Ltd. (RRS) 6,224.00p -2.99%
Fresnillo (FRES) 895.80p -1.54%
Morrison (Wm) Supermarkets (MRW) 244.85p -1.47%
WPP (WPP) 862.00p -1.37%
Tesco (TSCO) 210.00p -1.32%
Unilever (ULVR) 4,131.50p -0.84%
Diageo (DGE) 2,675.50p -0.72%
Centrica (CNA) 146.75p -0.61%
Whitbread (WTB) 4,346.00p -0.41%
FTSE 250 - Risers
Superdry (SDRY) 772.00p 8.73%
TI Fluid Systems (TIFS) 205.00p 7.95%
Metro Bank (MTRO) 2,223.85p 7.12%
Amigo Holdings (AMGO) 239.65p 6.27%
UDG Healthcare Public Limited Company (UDG) 638.00p 5.28%
CYBG (CYBG) 267.40p 4.70%
Ferrexpo (FXPO) 220.80p 4.64%
BTG (BTG) 545.50p 4.60%
IMI (IMI) 984.50p 4.57%
Babcock International Group (BAB) 610.20p 4.52%
FTSE 250 - Fallers
Plus500 Ltd (DI) (PLUS) 1,345.00p -1.90%
Ibstock (IBST) 216.80p -1.28%
Serco Group (SRP) 95.55p -0.78%
Nex Group (NXG) 1,082.00p -0.64%
Thomas Cook Group (TCG) 44.42p -0.63%
Vietnam Enterprise Investments (DI) (VEIL) 430.00p -0.46%
Polymetal International (POLY) 719.40p -0.36%
GCP Infrastructure Investments Ltd (GCP) 126.00p -0.32%
FDM Group (Holdings) (FDM) 818.00p -0.24%
Great Portland Estates (GPOR) 698.40p -0.09%