London midday: FTSE gains as pound weakens against stronger dollar
The FTSE 100 rose on Tuesday as the pound weakened against a stronger dollar on growing expectations the Federal Reserve will hike interest rates earlier than anticipated.
At 1204 GMT, the index edged up 0.62% to 7,216.52 points.
The pound fell 0.82% against the dollar to $1.2367. The greenback was underpinned by the latest comments from Federal Reserve Bank of Philadelphia President Patrick Harker, who said in a speech on Monday that March was “on the table” for a possible rate hike, depending on the economic data that comes out between now and then.
Harker pointed to last week’s strong non-farm payrolls report and continued good news surrounding GDP growth.
Meanwhile, disappointing UK retail sales figures and ongoing Brexit concerns weighed on the pound.
January's BRC-KMPW retail sales monitor showed sales dropping 0.6% on a like-for-like basis, with total sales rising 0.1%.
The sector fared badly in comparison to the strong start last year, when LFL sales increased 2.6% and total sales 3.3%, while total sales were well below the three-month average of 1.1% and the 12-month average of 0.9%.
"With the signs pointing to upward pressures on shop prices given rising import costs, all eyes will be on the impact of inflation on consumer spending,” said British Retail Consortium chief executive Helen Dickinson.
“That said, retailers are a resilient and innovative bunch. They have become increasingly adept at responding to the challenging environment, and as a result the industry has been a key driver of recent UK productivity growth.”
On the corporate front, housebuilders recovered from lows in the previous session even as data from Halifax showed a month-on-month drop in house prices in January. Prices fell 0.9% in January compared to a month ago to an average of £220,260, after a 1.6% surge in December. Compared to the same month a year ago, house prices gained 5.7% after a 6.5% increase in December.
Taylor Wimpey, Barratt Developments and Persimmon were among the top risers on the FTSE 100 after falling a day earlier on news that a white paper this week will reveal tighter policy for housebuilders.
Housebuilder Bellway also rallied as it posted a 6.5% jump in housing completions in the six months to the end of January and said it expects to build 5% more homes this year.
Elsewhere, DCC's shares surged after it reported a strong third quarter profit and announced a deal to buy Esso’s retail petrol station network in Norway as part of its plan to extend its presence in Europe.
On the downside, oil giant BP gushed lower after its fourth-quarter profits fell short of target and the company said cash flow will not increase in 2017 as it hikes its level of disposals and capital expenditure to return the business to growth in the medium term. A fourth-quarter underlying replacement cost profit of $400m resulted in a full year profit of $2.6bn, a 56% drop from the previous year.
Sector peer Royal Dutch Shell followed suit, with its shares also in the red.
Market Movers
FTSE 100 (UKX) 7,222.63 0.70%
FTSE 250 (MCX) 18,548.21 0.93%
techMARK (TASX) 3,316.74 0.99%
FTSE 100 - Risers
DCC (DCC) 6,765.00p 6.12%
Taylor Wimpey (TW.) 174.80p 2.94%
Barratt Developments (BDEV) 507.50p 2.84%
Persimmon (PSN) 1,991.00p 2.73%
Rolls-Royce Holdings (RR.) 699.00p 2.72%
Legal & General Group (LGEN) 241.10p 2.29%
Pearson (PSON) 658.50p 2.25%
Fresnillo (FRES) 1,521.00p 2.22%
Associated British Foods (ABF) 2,450.00p 2.13%
Bunzl (BNZL) 2,174.00p 2.07%
FTSE 100 - Fallers
BP (BP.) 465.55p -2.31%
Standard Chartered (STAN) 795.00p -1.07%
easyJet (EZJ) 927.00p -0.59%
London Stock Exchange Group (LSE) 3,154.00p -0.16%
Royal Dutch Shell 'B' (RDSB) 2,280.50p -0.02%
Kingfisher (KGF) 334.90p 0.00%
Ashtead Group (AHT) 1,641.00p 0.00%
Sky (SKY) 1,007.00p 0.10%
Coca-Cola HBC AG (CDI) (CCH) 1,790.00p 0.11%
Johnson Matthey (JMAT) 3,183.00p 0.13%
FTSE 250 - Risers
Berendsen (BRSN) 895.50p 5.85%
FirstGroup (FGP) 110.00p 5.77%
Cairn Energy (CNE) 243.60p 5.55%
Hochschild Mining (HOC) 261.90p 5.48%
AO World (AO.) 162.00p 5.47%
Kaz Minerals (KAZ) 538.00p 5.08%
Ferrexpo (FXPO) 159.90p 4.44%
Indivior (INDV) 337.80p 3.72%
Savills (SVS) 826.00p 3.64%
Bellway (BWY) 2,602.00p 3.42%
FTSE 250 - Fallers
Euromoney Institutional Investor (ERM) 1,073.00p -2.19%
Tullow Oil (TLW) 299.00p -2.13%
Millennium & Copthorne Hotels (MLC) 416.10p -2.09%
NMC Health (NMC) 1,705.00p -1.79%
Petra Diamonds Ltd.(DI) (PDL) 146.20p -1.28%
Keller Group (KLR) 848.50p -1.11%
Spectris (SXS) 2,443.00p -0.81%
Hastings Group Holdings (HSTG) 228.00p -0.74%
CLS Holdings (CLI) 1,582.00p -0.69%
Evraz (EVR) 232.90p -0.68%