FTSE 100 movers: Banks gain on Credit Suisse upgrade; Smith & Nephew drops again
London’s FTSE 100 was up 0.4% to 7,535.24 in afternoon trade on Tuesday, with banks providing a boost.
RBS and Lloyds advanced as Credit Suisse upgraded its ratings on the stocks. RBS was lifted to a 'neutral' rating from 'underperform' and given a target price of 275p, while Lloyds was raised to 'outperform' from 'neutral' and a share price of 80p is targeted.
The Swiss bank's base case for UK-focused high street banks is for 'soft Brexit', seeing an increasing likelihood that the transitional deal proposed by Theresa May and backed by Chancellor Philip Hammond becomes permanent.
"Our central scenario of low growth, low unemployment and moderate rate rises is supportive for domestic banks’ capital generation and we continue to believe earnings risk is to the upside."
Centrica finally found a floor as the government's proposal to impose an energy cap begins to be debated in parliament this week. Credit agency S&P said in a note on Tuesday that companies could offset the pressure on cash flow generation from a cap by lowering their operating expenses, capex, or potentially adjusting their financial policy.
Direct Line racked up healthy gains as JPMorgan Cazenove reiterated its ‘overweight’ rating on the stock and added it to its European Focus List. It said the company’s H1 results addressed a number of concerns in the market and the upward rebasing of the dividend underlined the strong capital return profit.
“After an initial sharply positive reaction, the shares have since drifted some 12% from the highs, with the only news flow being the proposed Ogden reversal - positive in our view. In our view the market continues to underappreciate the strength of the Direct Line brand, which is growing and likely to deliver better retention ratios and market leading loss ratios.”
On the downside, Smith & Nephew was in the red again after saying on Monday that Olivier Bohuon plans to retire by the end of 2018, after seven years as chief executive officer.
Royal Bank of Scotland Group (RBS) 277.60p 1.98%
Reckitt Benckiser Group (RB.) 7,069.00p 1.89%
Centrica (CNA) 176.00p 1.85%
Antofagasta (ANTO) 997.00p 1.63%
Barratt Developments (BDEV) 665.00p 1.53%
Persimmon (PSN) 2,736.00p 1.41%
Fresnillo (FRES) 1,448.00p 1.40%
Whitbread (WTB) 3,901.00p 1.30%
Lloyds Banking Group (LLOY) 67.40p 1.28%
Direct Line Insurance Group (DLG) 371.00p 1.26%
Pearson (PSON) 621.50p -1.58%
Rolls-Royce Holdings (RR.) 910.00p -1.03%
Smith & Nephew (SN.) 1,356.00p -1.02%
Sage Group (SGE) 725.00p -0.89%
Convatec Group (CTEC) 281.70p -0.81%
International Consolidated Airlines Group SA (CDI) (IAG) 605.00p -0.74%
AstraZeneca (AZN) 5,134.00p -0.73%
GKN (GKN) 353.60p -0.67%
Rio Tinto (RIO) 3,603.00p -0.66%
Babcock International Group (BAB) 818.50p -0.55%