London midday: Stocks maintain gains but worries about inflation, interest rates persist
London stocks were still firmly in the black by midday on Monday following a late rebound on Wall Street at the end of last week, but worries remained about rising inflation and higher interest rates.
The FTSE 100 was up 1.2% to 7,177.51, with only six stocks in the red, while the pound was up 0.3% against the dollar to 1.3866 and 0.1% higher versus the euro at 1.1304.
Chris Beauchamp, chief market analyst at IG, said: "Friday’s late recovery in the US continues, feeding through to European markets, although after the volatility of the past week a sense of nervousness remains. Wary dip buyers might feel justified in trying to jump back in, but the sense of last week’s see-saw action suggests that we are not through the worst yet.
"At the very least, volatility is back, while the waning strength of earnings season means that this week’s US CPI figure takes on greater importance. As noted on Friday, the kind of dip we have seen usually ends well over a longer-term time frame, for example six months, and indeed the next five days may also see a bounce, but previous sell-offs have faltered within a month, and it is this medium term view that should worry them. The worst may not yet be over."
With interest rates and inflation at the forefront of investors' minds, comments from Bank of England policymaker Gertjan Vlieghe were a highlight on Monday, as he set out reasons why he was becoming increasingly hawkish over rates.
Speaking as a panellist at a Resolution Foundation event in London earlier, he said three rate hikes from the BoE would still leave some excess demand in the economy but he wanted to stress’ that there is "huge uncertainty" around the rate path, with rates possibly rising faster or more slowly.
Following the more hawkish turn from the Bank's monetary policy committee last week, deputy governor Vlieghe said there was “increased evidence that tight labour markets are finally starting to have some upward effect on wages”.
Market participants were also mulling over the latest retail figures from Springboard/The British Retail Consortium, which showed footfall fell 1.6% in January, marking the worst outcome for the first month of the year since 2013, as customer numbers dropped 1.9%.
In addition, data from Visa showed that consumer spending was down 1.2% last month, marking the first January drop in five years.
On Tuesday, investors will be looking to the release of the latest UK inflation figures.
In corporate news, Wood Group rallied after saying it had won a new multi-million dollar, five-year contract to provide engineering and project management services on Saudi Aramco's Marjan oil field.
FTSE 250 over-50s travel and insurance group Saga advanced after saying that it has signed a new reinsurance agreement with NewRe and Hannover Re and that trading continues to be in line with the guidance given in December 2017.
BGEO gained as it said its board has approved the demerger announced last July and that its investment business, Georgia Capital, plans to increase its stake in Bank of Georgia to 19.9%, up from the previously announced 9.9%.
Barclays reversed earlier gains to trade a little lower as it emerged that its core banking business was being charged by the Serious Fraud Office over its fundraising deal with Qatar at the height of the financial crisis, adding to the charge already brought against the parent holding company and four former executives.
Acacia Mining tumbled 15% as it scrapped its dividend and reported a drop in full-year earnings after it took a hit from an export ban by the Tanzanian government, while Euromoney slipped after announcing the sale of its Global Markets Intelligence unit for $180.5m in cash to a consortium.
In broker note action, Evraz was one of the best performers after an upgrade to ‘buy’ at Goldman Sachs, while oil giant BP was boosted by an upgrade at Societe Generale and Victrex was up after a double upgrade to ‘buy’ at Bank of America Merrill Lynch.
Cineworld was higher after an upgrade to ‘buy’ at Peel Hunt, but Moneysupermarket ticked down as it was cut to ‘sector perform’ by RBC Capital Markets.
FTSE 100 - Risers
NMC Health (NMC) 3,256.00p 4.69%
Evraz (EVR) 347.20p 4.23%
DCC (DCC) 6,910.00p 2.83%
Glencore (GLEN) 370.45p 2.62%
Anglo American (AAL) 1,645.40p 2.56%
Ashtead Group (AHT) 2,008.00p 2.32%
Rio Tinto (RIO) 3,875.75p 2.30%
BP (BP.) 480.35p 2.19%
CRH (CRH) 2,432.00p 2.18%
Smurfit Kappa Group (SKG) 2,438.00p 2.18%
FTSE 100 - Fallers
Barratt Developments (BDEV) 551.60p -0.43%
Severn Trent (SVT) 1,813.00p -0.41%
Micro Focus International (MCRO) 2,000.00p -0.30%
Hammerson (HMSO) 464.70p -0.24%
Taylor Wimpey (TW.) 184.10p -0.16%
Marks & Spencer Group (MKS) 286.00p -0.03%
Land Securities Group (LAND) 937.50p 0.06%
Barclays (BARC) 193.04p 0.07%
GKN (GKN) 399.80p 0.08%
National Grid (NG.) 750.30p 0.11%
FTSE 250 - Risers
Petrofac Ltd. (PFC) 427.50p 4.75%
Victrex plc (VCT) 2,534.00p 4.54%
TalkTalk Telecom Group (TALK) 109.70p 4.48%
Ferrexpo (FXPO) 271.40p 3.98%
Hunting (HTG) 589.50p 2.88%
Kaz Minerals (KAZ) 787.20p 2.85%
Worldwide Healthcare Trust (WWH) 2,395.05p 2.79%
Howden Joinery Group (HWDN) 458.60p 2.60%
IP Group (IPO) 121.00p 2.54%
Bankers Inv Trust (BNKR) 849.97p 2.53%
FTSE 250 - Fallers
Acacia Mining (ACA) 146.15p -14.98%
Sophos Group (SOPH) 486.29p -3.70%
Capita (CPI) 189.75p -2.79%
Babcock International Group (BAB) 633.20p -2.04%
Tate & Lyle (TATE) 570.60p -1.96%
Card Factory (CARD) 193.20p -1.88%
Pennon Group (PNN) 642.00p -1.17%
AA (AA.) 118.05p -1.05%
Bovis Homes Group (BVS) 1,062.00p -0.93%
Britvic (BVIC) 664.00p -0.90%