London midday: FTSE trims gains as gilt yields continue to rise

Stocks had trimmed most of their earlier gains come midday on Monday as sovereign bond yields continued moving higher, with investors trying to digest the implications of the new US administration for America's economic policy.

At 1210 GMT, the FTSE 100 was up by 0.23% or 15.73 points to 6,745.34.

In an interview with CBS's 60 minutes, aired on 13 November, President-elect Donald Trump announced he would appoint Reince Preibus, the chairman of the Republican National Committee, as his chief of staff.

Some analysts suggested that was a market-friendly outcome.

Nonetheless, Trump's decision to retain his controversial campaign chairman, Stephen Bannon, as a senior counsellor, was described by the BBC as his "keeping an outsider devil on his shoulder".

As regards economic policy, analysts at Morgan Stanley optimistically said that under the most likely scenario, trade protectionism would go little further than strong rhetoric and Trump would deliver measurable tax reform and infrastructure spending that, on net, provide a healthy lift to the economy and enable a pick-up in the pace of monetary policy normalisation.

In such a scenario, GDP growth is lifted by 0.3 percentage points in both 2017 and 2018, while the Federal Reserve would hike rates two times in 2017 and three times in 2018, Morgan Stanley said.

However, other analysts broached the possibility of more adverse scenarios as well.

As of 1205 GMT the yield on the benchmark 10-year gilt was up by 10 basis points to 1.46% and that on French debt of a similar maturity by 11 basis points to 0.86%.

Linked to the above, on Monday ratings agency Moody's said the outlook for government debt markets around the world in 2017 was "negative" based on its expectations for continued low growth and a shift towards fiscal stimulus that would increase already high public sector debt.

Meanwhile, oil prices were again heading lower. West Texas Intermediate was off 1.59% to $42.73 a barrel and Brent crude was losing 1.13% at $44.25.

On the corporate front, housebuilder Taylor Wimpey advanced as it said in a trading update that the UK housing market remained resilient, despite the implications of Brexit still being unclear, and reported strong trading in the second half.

Irish distribution and business support services company DCC surged after reporting a rise in half-year revenue and saying full-year operating profit is likely to be ahead of market expectations.

Legal & General was on the front foot after announcing the completion of a £1.10bn pension buyout deal with Rolls-Royce.

Standard Life gained ground despite saying that the possible combination involving its Indian joint venture, HDFC Life, and Max Life Insurance Company, Max Financial Services and Max India, had hit a roadblock.

Bookmaker William Hill pushed higher after saying it expects full-year adjusted operating profit to be at the top end of its guidance, while Tesco rallied as HSBC upped its stance on the stock to ‘buy’ from ‘hold’.

Irish convenience food group Greencore was a high riser after reporting a jump in full-year revenue and earnings as it hiked its dividend and announced the proposed acquisition of Peacock Foods for an enterprise value of $747.5m.

Shares in gaming software development company Playtech rose as it agreed to buy Consolidated Financial Holdings for up to $120m – a deal it said will enhance its position as it continues to build a B2B offering in its financials division.

Market Movers

FTSE 100 (UKX) 6,750.32 0.30%
FTSE 250 (MCX) 17,458.24 0.08%
techMARK (TASX) 3,310.97 0.05%

FTSE 100 - Risers

DCC (DCC) 6,285.00p 4.14%
Barclays (BARC) 208.85p 3.52%
Royal Bank of Scotland Group (RBS) 208.00p 3.17%
Marks & Spencer Group (MKS) 337.50p 3.15%
Wolseley (WOS) 4,630.00p 2.93%
Legal & General Group (LGEN) 236.30p 2.78%
Prudential (PRU) 1,513.00p 2.40%
Capita (CPI) 563.00p 2.27%
Dixons Carphone (DC.) 333.80p 2.24%
Aviva (AV.) 461.50p 2.17%

FTSE 100 - Fallers

Polymetal International (POLY) 804.50p -3.83%
Mediclinic International (MDC) 733.00p -3.68%
National Grid (NG.) 931.10p -2.57%
Associated British Foods (ABF) 2,535.00p -2.42%
Sky (SKY) 770.50p -2.22%
Severn Trent (SVT) 2,132.00p -2.07%
United Utilities Group (UU.) 861.50p -1.99%
Randgold Resources Ltd. (RRS) 5,840.00p -1.93%
SSE (SSE) 1,455.00p -1.89%
Fresnillo (FRES) 1,408.00p -1.88%

FTSE 250 - Risers

Greencore Group (GNC) 327.60p 12.23%
Playtech (PTEC) 913.00p 3.46%
Shawbrook Group (SHAW) 256.40p 3.05%
OneSavings Bank (OSB) 318.00p 2.91%
Crest Nicholson Holdings (CRST) 448.60p 2.80%
GVC Holdings (GVC) 642.00p 2.64%
G4S (GFS) 249.50p 2.59%
JRP Group (JRP) 127.90p 2.32%
Paragon Group Of Companies (PAG) 348.60p 2.32%
Stagecoach Group (SGC) 204.90p 2.14%

FTSE 250 - Fallers

Centamin (DI) (CEY) 136.10p -3.54%
Pennon Group (PNN) 770.00p -3.08%
Tullow Oil (TLW) 239.30p -3.04%
Hochschild Mining (HOC) 239.70p -2.88%
AO World (AO.) 165.10p -2.71%
Hill & Smith Holdings (HILS) 1,210.00p -2.58%
Countrywide (CWD) 197.30p -2.47%
Mitchells & Butlers (MAB) 276.10p -2.27%
DFS Furniture (DFS) 221.20p -2.12%
Countryside Properties (CSP) 234.10p -2.01%