London midday: FTSE rises as traders continue to mull Italy referendum

The FTSE 100 rose on Tuesday as the market continued to assess the implications of the Italian referendum and Prime Minister Matteo Renzi’s resignation.

London's top index climbed 0.13% to 6,755.69 points around the midday mark.

Oil prices dipped after Brent crude reached a 16-month high on Monday on the back of last week's landmark OPEC deal to cut production. At not long before noon, Brent was down 0.27% to $54.79 per barrel and West Texas Intermediate 0.64% lower at $51.46 per barrel.

With a lack of fresh catalysts, investors were still mulling over the Italian referendum. Italian President Sergio Mattarella has accepted PM Renzi’s resignation but has asked him to stay on to oversee the 2017 budget at the end of this week.

“The Italian referendum result came as no surprise, but it is the market reaction which has caught many off guard with the euro surging to a three-week high against the dollar,” said IG’s Joshua Mahony.

"Today sees precious few big events to spark substantial volatility, yet given the backdrop of Italian elections, there are likely to still be residual effects from Sundays vote.

“One of the biggest worries surrounding the referendum was the impact it could have upon the nation’s banking system, with the likes of Unicredit and Monte dei Paschi in the midst of a recapitalisation and bank rescue plan.”

On the data front, the final reading of eurozone economic growth in the third quarter was unexpectedly revised higher. Eurostat raised its estimate on gross domestic product to year-on-year growth of 1.7% from a previous 1.6%. Second quarter growth was also revised higher by one tenth of a percentage point to 1.7%.

German manufacturing orders rose 4.9% on the month, according to Destatis, which was well ahead of the 0.6% increase economists had been expecting. Meanwhile, September’s figure was revised down to show a 0.3% drop.

Closer to home, a survey showed UK retail sales continued to improve in November. The British Retail Consortium and KPMG found like-for-like retail sales were up by 0.6% in November compared to what was a decline seen in the same month last year, while total sales rose 1.3%.

Looking ahead to afternoon trade, the US sees trade balance and non-farm productivity data at 1330 GMT followed by factory orders and durable goods orders at 1500 GMT

In company news, shares in spreadbetting firms IG, CMC Markets and Plus500 tumbled as the Financial Conduct Authority announced plans to tighten rules around contract for difference products.

Tullow Oil slipped as Goldman Sachs downgraded the stock to ‘sell’ from ‘neutral’ and cut the target price to 221.8p from 247.2p.

Mining stocks were sitting lower, including Rio Tinto, Anglo American and BHP Billiton, as gold, silver and copper prices declined.

HSBC rallied after Morgan Stanley upgraded the bank to ‘equal weight’ from ‘underweight’ and raised its price target to 645p from 550p.

Power generation firm Drax gained after announcing a conditional agreement to buy Opus Energy for £340m and an agreement to acquire four open cycle gas turbine (OCGT) development projects for electricity generation, as it said full-year earnings were still likely to be at the bottom end of market forecasts.

FTSE 250 supplier of high performance polymer solutions Victrex was sharply higher. Although the company reported a drop in profit and revenue for the year to the end of September, analysts said revenue was bang in line and noted the fact the group remains comfortable with current market expectations.

Thomas Cook advanced after the travel company said it will take full ownership of its UK retail store network late next year.

Market Movers

FTSE 100 (UKX) 6,755.69 0.13%
FTSE 250 (MCX) 17,430.39 -0.18%
techMARK (TASX) 3,223.62 -0.01%

FTSE 100 - Risers

HSBC Holdings (HSBA) 646.70p 3.19%
Royal Bank of Scotland Group (RBS) 203.50p 2.88%
British Land Company (BLND) 597.50p 1.96%
Land Securities Group (LAND) 967.50p 1.95%
Intu Properties (INTU) 264.70p 1.81%
Polymetal International (POLY) 743.00p 1.57%
Centrica (CNA) 209.60p 1.55%
Randgold Resources Ltd. (RRS) 5,725.00p 1.51%
SSE (SSE) 1,492.00p 1.50%
Smith & Nephew (SN.) 1,122.00p 1.36%

FTSE 100 - Fallers

Anglo American (AAL) 1,200.00p -3.46%
BHP Billiton (BLT) 1,303.50p -2.69%
Legal & General Group (LGEN) 236.20p -2.28%
Rio Tinto (RIO) 3,000.00p -1.77%
Sage Group (SGE) 622.50p -1.66%
Barratt Developments (BDEV) 466.20p -1.58%
Rolls-Royce Holdings (RR.) 655.00p -1.58%
Persimmon (PSN) 1,678.00p -1.53%
Kingfisher (KGF) 344.40p -1.46%
Johnson Matthey (JMAT) 3,049.00p -1.42%

FTSE 250 - Risers

Drax Group (DRX) 327.80p 18.08%
OneSavings Bank (OSB) 332.00p 5.40%
AA (AA.) 272.70p 4.12%
Victrex plc (VCT) 1,770.00p 3.63%
UDG Healthcare Public Limited Company (UDG) 672.00p 3.31%
Grafton Group Units (GFTU) 531.50p 2.90%
Savills (SVS) 690.50p 2.75%
Supergroup (SGP) 1,607.00p 2.75%
Centamin (DI) (CEY) 129.20p 2.54%
Derwent London (DLN) 2,474.00p 2.27%

FTSE 250 - Fallers

CMC Markets (CMCX) 126.50p -31.40%
IG Group Holdings (IGG) 540.00p -31.39%
Euromoney Institutional Investor (ERM) 1,080.00p -5.26%
Berendsen (BRSN) 806.50p -4.73%
Evraz (EVR) 226.70p -3.53%
Tullow Oil (TLW) 321.50p -3.28%
ICAP (IAP) 469.30p -3.06%
Hunting (HTG) 586.00p -2.58%
PayPoint (PAY) 957.00p -2.45%
Laird (LRD) 143.20p -2.25%