London midday: Stocks extend gains as pound hit by manufacturing data

London stocks had extended gains by midday on Monday as the pound was hit by weak manufacturing data, while sentiment got a boost from the Sino-US trade truce reached over the weekend.

The FTSE 100 was up 1.2% at 7,516.36, trading at its best level in two months, while the pound was down 0.5% against the dollar at 1.2638 and 0.1% lower versus the euro at 1.1158 as it emerged that the UK manufacturing sector suffered its worst contraction in more than six years in June.

The IHS Markit CIPS purchasing managers’ index came in at 48.0 in June compared 49.4 in May, marking the lowest reading since February 2013, weighed down by a slowing global economy and Brexit uncertainty.

The third consecutive month the index has fallen, June's reading also significantly undershot forecasts, with most economists looking for around 49.5. A reading below 50 represents contraction.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The PMI now is only trivially higher than the eurozone’s - 47.6 in June - following an eight-month-long period of outperformance. Demand predictably has softened, now that customers have up inventories in case of a no-deal Brexit. The intermediate goods sector has fared the worst, as these products are the most commonly traded across the Channel.

"We’re hopeful, however, that manufacturing output will edge up in the third quarter, given the robust outlook for households’ real incomes, recent positive news on the global trade war and the possibility of another stockpiling boost ahead of the October Brexit deadline."

More broadly, investors were cheering a trade truce between the US and China reached over the weekend.

Joshua Mahony, senior market analyst at IG, said: "The G20 meeting managed to deliver for markets, as Donald Trump avoided levying any further tariffs and instead laid out a plan to get the US-China trade talks back on track.

"Sharp gains throughout Asia certainly provided European markets with a guide, while the S&P 500 futures point towards a record high open this afternoon. There is plenty reason to be optimistic for markets, for with a US-China deal back on the cards, we still have a bout of monetary easing to look forward to from the eurozone and US."

In UK equity markets, specialist media platform Future surged as it said full-year results would be above expectations, underpinned by acquisitions and good audience growth. The company added that chief financial officer Penny Ladkin-Brand would step down from her role to become chief strategy officer from 1 January 2020. In a brief trading update, Future said the positive trends seen in the first half of the year had continued into the second six months.

Aston Martin saw its shares rise after Strategic European Investment Group, a subsidiary of Italian private equity firm Investindustrial Advisors, said it was considering buying a 3% stake worth £68m in the luxury car maker.

Market Movers

FTSE 100 (UKX) 7,516.36 1.22%
FTSE 250 (MCX) 19,633.07 0.88%
techMARK (TASX) 3,686.66 0.91%

FTSE 100 - Risers

Smurfit Kappa Group (SKG) 2,470.00p 3.69%
Melrose Industries (MRO) 187.41p 3.63%
Flutter Entertainment (FLTR) 6,140.00p 3.58%
NMC Health (NMC) 2,487.00p 3.50%
Burberry Group (BRBY) 1,920.50p 3.14%
Scottish Mortgage Inv Trust (SMT) 547.12p 3.13%
ITV (ITV) 110.92p 2.71%
CRH (CRH) 2,630.00p 2.65%
Antofagasta (ANTO) 952.60p 2.47%
Imperial Brands (IMB) 1,890.00p 2.34%

FTSE 100 - Fallers

Fresnillo (FRES) 839.80p -3.49%
Just Eat (JE.) 614.20p -1.73%
Next (NXT) 5,434.00p -1.66%
United Utilities Group (UU.) 772.80p -1.28%
International Consolidated Airlines Group SA (CDI) (IAG) 471.70p -1.09%
Associated British Foods (ABF) 2,437.00p -1.06%
Marks & Spencer Group (MKS) 208.80p -0.90%
Reckitt Benckiser Group (RB.) 6,158.00p -0.90%
Severn Trent (SVT) 2,032.00p -0.78%
National Grid (NG.) 830.20p -0.67%

FTSE 250 - Risers

Future (FUTR) 1,044.00p 7.74%
Wood Group (John) (WG.) 475.90p 5.29%
Hunting (HTG) 535.50p 4.90%
Drax Group (DRX) 271.60p 4.38%
Premier Oil (PMO) 80.22p 4.32%
Fidelity China Special Situations (FCSS) 227.78p 3.54%
Mediclinic International (MDC) 315.20p 3.38%
Playtech (PTEC) 440.70p 3.31%
Kaz Minerals (KAZ) 623.54p 3.27%
GVC Holdings (GVC) 671.40p 3.01%

FTSE 250 - Fallers

Funding Circle Holdings (FCH) 159.70p -11.18%
Contour Global (GLO) 183.00p -3.68%
Stagecoach Group (SGC) 122.40p -3.55%
PayPoint (PAY) 942.00p -2.89%
Vivo Energy (VVO) 128.80p -2.87%
UDG Healthcare Public Limited Company (UDG) 779.00p -2.50%
Centamin (DI) (CEY) 112.00p -2.10%
Amigo Holdings (AMGO) 195.00p -2.01%
Pennon Group (PNN) 729.80p -1.75%
Genus (GNS) 2,604.00p -1.66%