London midday: Stocks rally as earnings impress; US Q2 GDP eyed
London stocks firmed up by midday on Friday, underpinned by solid earnings from the likes of BT, Pearson and Reckitt, as investors eyed the advance reading on US second-quarter GDP.
The FTSE 100 was up 0.5% to 7,700.06, while the pound was down 0.1% against the dollar at 1.3096 and flat versus the euro at 1.1258, showing some resilience in the face of news that the European Commission's chief Brexit negotiator, Michel Barnier, has ruled out a key part of Prime Minister Theresa May's customs plan.
Barnier said the EU could not agree to let another country collect European customs duties on its behalf.
IG analyst Joshua Mahony said: "It is becoming increasingly clear that the EU see it as a hard Brexit, or no Brexit at all, with their insistence that the UK cannot pick and choose meaning that the ability to obtain a ‘softer’ Brexit would also entail free movement of labour and adhering to EU regulations."
Meanwhile, following a veritable avalanche of earnings on Thursday, the UK corporate front was a lot quieter to finish off the week, but the news was mostly good.
Reckitt Benckiser surged after the consumer goods company upgraded its revenue guidance following a good first half.
Education publisher Pearson gained ground as its flat interim adjusted operating profit came in ahead of expectations and the company said it remains on track to return to underlying profit growth.
"Results ok on surface, details not so great," said broker Liberum, noting that it looks like the company is "no nearer" to selling its US K-12 Courseware business and that "the language on US Higher Ed Courseware sounds quite cautious", with digital sales in US higher education only grew "modestly".
BT Group rallied as it posted a jump in first-quarter pre-tax profit and backed its profit guidance for the year and Equiniti rocketed after saying it expects full-year earnings to be towards the top end of market expectations.
BHP Billiton pushed up after agreeing to sell its US shale assets to BP for $10.5bn, but BP lost ground. IG's Mahony said: "Interestingly, despite the fall in BP shares in early trade, this is a boon for the firm who are one of several companies who have been seeking to gain ground in the US oil fields after US corporate tax cuts helped reduce costs where production is already relatively cheap.
"The challenging 2015-2017 period of low oil prices also serves to benefit these new BP assets, with efficiencies that were necessary to make at the time meaning that they acquire a lean and efficient operation which should prove highly profitable now that crude prices have recovered."
ITV was a little higher after reports that it has written to Virgin Media warning that it could remove its channels as soon as this weekend if an agreement cannot be reached. "We believe Virgin is likely to start to pay retransmission fees to avoid such a move," said Liberum.
On the downside, Rightmove fell despite reporting a rise in first-half revenue and operating profit, lifting its interim dividend and expressing confidence in delivering on its full-year expectations.
Jupiter Fund Management was also weaker as the company's first-half net flows were slightly weaker than expected and Greencoat UK Wind slipped despite saying that first-half pre-tax profit nearly doubled.
In broker note action, William Hill was lifted to 'hold' by Peel Hunt. Howden Joinery was cut to 'hold' at Canaccord, Inchcape was downgraded to 'hold' at HSBC and SSE was reduced to 'hold' at HSBC.
There are no major UK data releases due, but second-quarter US GDP figures are at 1330 BST.
Trump said on Thursday that the figures will be "terrific" and that he would be happy with US economic growth of around 4% or more.
"Somebody actually predicted today, 5.3. I don't think that's going to happen - 5.3. If it has a 4 in front of it, we're happy. If it has like a 3 but it's a 3.8, 3.9, 3.7, we're OK," the president said in a speech about trade in Illinois.
Oanda anlyst Craig Erlam said: "The economy is expected to have grown 4.1% on an annualised basis, which will naturally be championed by Trump as being rewards for his hard work. It will be interesting to see how markets react, should the economy outperform expectations, with the Federal Reserve already on course to raise rates twice more this year."
Market Movers
FTSE 100 (UKX) 7,700.06 0.48%
FTSE 250 (MCX) 20,825.80 0.28%
techMARK (TASX) 3,591.22 0.70%
FTSE 100 - Risers
Reckitt Benckiser Group (RB.) 6,799.00p 7.73%
BT Group (BT.A) 233.55p 3.87%
Pearson (PSON) 956.80p 3.57%
BHP Billiton (BLT) 1,725.80p 3.17%
Vodafone Group (VOD) 180.44p 1.89%
Sainsbury (J) (SBRY) 328.50p 1.64%
Ocado Group (OCDO) 1,138.55p 1.52%
Royal Mail (RMG) 474.60p 1.52%
Antofagasta (ANTO) 991.00p 1.33%
Croda International (CRDA) 5,140.00p 1.30%
FTSE 100 - Fallers
Rightmove (RMV) 4,969.23p -2.41%
Relx plc (REL) 1,683.50p -1.72%
British American Tobacco (BATS) 4,116.00p -1.46%
Just Eat (JE.) 873.20p -1.15%
Imperial Brands (IMB) 2,825.00p -1.03%
Admiral Group (ADM) 1,899.00p -0.94%
Burberry Group (BRBY) 2,120.00p -0.84%
Schroders (SDR) 3,063.00p -0.84%
AstraZeneca (AZN) 5,748.00p -0.83%
CRH (CRH) 2,660.00p -0.78%
FTSE 250 - Risers
Equiniti Group (EQN) 230.00p 10.58%
Sophos Group (SOPH) 487.80p 3.79%
Cobham (COB) 123.05p 3.75%
Inmarsat (ISAT) 569.60p 3.56%
Superdry (SDRY) 1,243.00p 2.64%
Drax Group (DRX) 356.80p 2.06%
Renishaw (RSW) 5,650.00p 1.99%
Petrofac Ltd. (PFC) 599.80p 1.90%
Greencore Group (GNC) 184.80p 1.71%
Essentra (ESNT) 501.12p 1.69%
FTSE 250 - Fallers
Inchcape (INCH) 736.50p -6.00%
Jupiter Fund Management (JUP) 420.90p -4.95%
Britvic (BVIC) 797.50p -3.92%
888 Holdings (888) 241.80p -2.50%
Stagecoach Group (SGC) 163.70p -2.09%
Centamin (DI) (CEY) 119.00p -1.98%
TI Fluid Systems (TIFS) 256.00p -1.54%
Lancashire Holdings Limited (LRE) 542.00p -1.28%
Rathbone Brothers (RAT) 2,456.00p -1.21%
Wetherspoon (J.D.) (JDW) 1,213.00p -0.98%