London midday: Stocks maintain small gains as energy shares rise, Ocado shines

London stocks were still a touch higher by midday on Friday, with gold producers and energy shares on the rise but investors cautious amid escalating tensions between the US and Iran.

Just before midday, the FTSE 100 was up 0.1% at 7,431.22, while the pound was down 0.2% against the dollar at 1.2671 and 0.4% lower versus the euro at 1.1200.

In the US overnight, the S&P 500 hit a record closing high of 2,954.18 and recorded a new record intra-day peak on hopes that the Federal Reserve will cut interest rates soon.

But the mood in London was less buoyant, as investors mulled a New York Times report late on Thursday that US President Trump had approved military strikes on several Iranian targets but then pulled back from launching the attacks.

Although not great for sentiment, the news helped to boost oil prices, which in turn lifted the likes of BP and Royal Dutch Shell.

Meanwhile, precious metals miner Fresnillo and gold miners Acacia and Hochschild shone after gold prices breached the $1,400 an ounce level for the first time since 2013.

David Cheetham, chief market analyst at XTB, said: "It’s been a big week of gains for bullion, with the clear dovish shift from the Fed sending both US bond yields and the buck lower and contributing to the 4% rise seen in the price of gold since Monday.

"A slowing global economy, imminent US rate cuts and rising geopolitical tensions provide a near perfect storm for Gold bugs and while this trio of factors remain in place the rally seen in recent weeks will remain well supported."

Elsewhere, Ocado jumped to the top of the FTSE 100 as Citi upped its price target on the stock to 1,450p from 1,300p and reiterated its 'buy' rating, lifting its bull case scenario to around 2,400p to include the potential for 30% online grocery penetration.

On the downside, Rolls-Royce fell as JPMorgan reiterated its 'underweight' rating on shares of the aerospace and defence group after the Paris Air Show. Among other things, the bank said consensus earnings per share for 2020 and 2021 looks around 20% too high, while the wide body market is "clearly softening".

Carnival was back in the red, having tanked late in the day on Thursday after the cruise operator downgraded its full-year earnings per share guidance, citing the US ban on cruises to Cuba.

Dixons Carphone declined for the second day in a row after posting a drop in full-year profit on Thursday and warning of further falls in the current trading year.

Shares in Domino's Pizza slumped after the company denied speculation that Andrew Rennie, the chief executive for Europe, was set to take over from UK & Ireland boss David Wild. Domino's stock had risen sharply on Thursday after Sky News said the company was in advanced talks to replace Wild with Rennie. But Domino's said in a statement on the ASX on Friday that there is "no substance" to the speculation, and that Rennie has confirmed he is "committed to his current role".

Investors were also mulling the latest data released by the Office for National Statistics, which showed that public sector net borrowing came in at £5.1bn in May - higher than expected and £1bn more than a year earlier.

Economists had on average forecast a budget deficit of £4.1bn for May. The result meant that for the first two months of the current financial year the government's budget deficit was 18% higher than a year earlier at £11.9bn.

The figures suggest an incoming prime minister and chancellor may have little room for fiscal largesse on the government's own terms. Current chancellor Philip Hammond has warned against promises of tax cuts and extra spending promised by candidates in the Conservative leadership contest.

Market Movers

FTSE 100 (UKX) 7,431.22 0.09%
FTSE 250 (MCX) 19,353.80 -0.16%
techMARK (TASX) 3,616.83 -0.52%

FTSE 100 - Risers

Ocado Group (OCDO) 1,148.22p 4.15%
Berkeley Group Holdings (The) (BKG) 3,594.00p 1.93%
TUI AG Reg Shs (DI) (TUI) 751.00p 1.93%
Fresnillo (FRES) 884.60p 1.82%
Next (NXT) 5,654.00p 1.80%
BP (BP.) 558.30p 1.64%
Royal Dutch Shell 'B' (RDSB) 2,620.00p 1.33%
Royal Dutch Shell 'A' (RDSA) 2,606.50p 1.32%
St James's Place (STJ) 1,100.50p 1.24%
Ashtead Group (AHT) 2,167.00p 1.21%

FTSE 100 - Fallers

Rolls-Royce Holdings (RR.) 894.00p -2.08%
GlaxoSmithKline (GSK) 1,577.99p -1.81%
Flutter Entertainment (FLTR) 5,942.00p -1.56%
Hikma Pharmaceuticals (HIK) 1,726.50p -1.46%
Carnival (CCL) 3,503.00p -1.30%
Centrica (CNA) 87.00p -1.23%
AstraZeneca (AZN) 6,418.00p -1.05%
Reckitt Benckiser Group (RB.) 6,246.00p -1.01%
Hiscox Limited (DI) (HSX) 1,699.00p -0.99%
Rightmove (RMV) 565.60p -0.84%

FTSE 250 - Risers

Acacia Mining (ACA) 186.13p 5.82%
Saga (SAGA) 37.26p 4.96%
Metro Bank (MTRO) 534.84p 4.26%
RHI Magnesita N.V. (DI) (RHIM) 4,690.00p 3.30%
Cairn Energy (CNE) 168.60p 2.62%
TI Fluid Systems (TIFS) 201.00p 2.45%
Spirent Communications (SPT) 150.40p 2.04%
Polymetal International (POLY) 944.80p 2.01%
Hochschild Mining (HOC) 187.49p 2.01%
888 Holdings (888) 159.30p 1.98%

FTSE 250 - Fallers

Dixons Carphone (DC.) 109.60p -7.27%
Kier Group (KIE) 118.90p -5.86%
Bakkavor Group (BAKK) 124.40p -4.01%
Games Workshop Group (GAW) 4,754.00p -3.69%
Travis Perkins (TPK) 1,298.50p -3.39%
Domino's Pizza Group (DOM) 271.50p -2.97%
Sirius Minerals (SXX) 13.50p -2.74%
Indivior (INDV) 43.75p -2.73%
Cineworld Group (CINE) 251.60p -2.67%
Vivo Energy (VVO) 135.40p -2.59%