London midday: Stocks rise as traders mull Yellen speech, await non-farm payrolls

UK stocks gained on Tuesday as investors continued to mull Federal Reserve chair Janet Yellen’s speech at Jackson Hole and looked ahead to the US non-farm payrolls report.

Yellen last Friday said the timing of the next interest rate hike will depend on the strength of economic data in coming weeks.

Echoing her sentiment, Fed vice chair Stanley Fischer told CNBC last Friday that while the US economy has strengthened and the labour market has improved, the decision on whether to raise interest rates hinges on data, including the next jobs report.

The US non-farm payrolls report is due for release on this Friday.

“Consequently should employment figures turn out very strong again this Friday the likelihood of an interest rate increase as early as September will go up markedly,” said Markus Huber, trader at City of London Markets.

Closer to home, data from the Bank of England showed mortgage approvals in July fell to the lowest level since January 2015. Mortgage approvals dropped to 60,912 last month from 64,152 in June, missing analysts' expectations of 62,000.

Net consumer credit rose £1.18bn in July, compared to £1.85bn growth in June and forecasts for a £1.7bn increase.

“Looking ahead, the MPC’s easing measures in August have it cheaper for firms to raise funds from bond markets and will help to prevent interest rates on new bank loans from rising,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

“But with huge uncertainty regarding the trade and regulatory environment for businesses post-Brexit unlikely to disappear soon, slightly cheaper borrowing costs will do little to prop up business investment over the coming quarters.”

Meanwhile, the European Commission said its economic sentiment indicator for the eurozone fell to 103.5 in August from 104.5 in July, worse than estimates of 104.1.

The UK’s economic confidence index rose to 104.0 in August from 102.6 in July, but remained well below the levels seen in the months leading up to the June 23 EU referendum.

Still to come, the S&P/Case-Shiller US home price index at 1400 BST and US consumer confidence data at 1500 BST.

On the company front, Associated British Foods rallied after RBC Capital Markets upgraded the stock to ‘outperform’ from ‘sector perform’ and lifted the price target to 3,400p from 2,800p.

On the downside, Sports Direct shares slid after RBC cut its rating to ‘underperform’ from ‘sector perform’ with an unchanged target price of 280p.

The bank also downgraded Debenhams to ‘sector perform’ from ‘outperform’ with an unchanged target price of 65p. Shares in the retailer were lower.

Distribution and outsourcing group Bunzl advanced after it reported a rise in first-half profit as revenue grew and the company lifted its interim dividend following a number of acquisitions.

Mining stocks were under the cosh as gold and silver prices dropped with Antofagasta, Rio Tinto and Fresnillo among the biggest fallers.

“The devaluation of gold, silver, copper and iron ore in the wake of Friday’s dollar rally is expected to provide a drag for days to come, with only crude prices remaining surprisingly resilient amid something of a bloodbath for commodity stocks,” said Joshua Mahony, market analyst at IG.

Oil prices, on the other hand, rose on the back of a weaker dollar with Brent crude rising 0.50% to $49.51 per barrel and West Texas Intermediate increasing 0.69% to $47.31 per barrel at 1204 BST.

Market Movers

FTSE 100 (UKX) 6,839.96 0.03%
FTSE 250 (MCX) 17,877.86 -0.30%
techMARK (TASX) 3,467.98 -0.11%

FTSE 100 - Risers

Associated British Foods (ABF) 3,017.00p 2.27%
CRH (CRH) 2,593.00p 2.09%
Ashtead Group (AHT) 1,281.00p 2.07%
HSBC Holdings (HSBA) 557.90p 2.01%
3i Group (III) 624.00p 1.79%
Standard Chartered (STAN) 633.00p 1.62%
Bunzl (BNZL) 2,454.00p 1.40%
Barclays (BARC) 168.25p 1.36%
Lloyds Banking Group (LLOY) 58.79p 1.34%
Hammerson (HMSO) 579.50p 1.22%

FTSE 100 - Fallers

Antofagasta (ANTO) 513.50p -5.17%
Randgold Resources Ltd. (RRS) 7,375.00p -3.91%
Rio Tinto (RIO) 2,374.00p -3.79%
Fresnillo (FRES) 1,726.00p -3.58%
Glencore (GLEN) 178.85p -3.32%
Anglo American (AAL) 833.00p -2.97%
BHP Billiton (BLT) 1,048.50p -2.92%
Paddy Power Betfair (PPB) 9,390.00p -2.54%
Taylor Wimpey (TW.) 160.80p -2.07%
Persimmon (PSN) 1,852.00p -1.65%

FTSE 250 - Risers

Wizz Air Holdings (WIZZ) 1,577.00p 2.74%
Softcat (SCT) 335.60p 2.47%
IP Group (IPO) 194.20p 2.32%
NMC Health (NMC) 1,355.00p 2.19%
Big Yellow Group (BYG) 740.00p 2.00%
Cranswick (CWK) 2,455.00p 1.95%
Worldwide Healthcare Trust (WWH) 2,058.00p 1.88%
Electra Private Equity (ELTA) 3,855.00p 1.69%
Balfour Beatty (BBY) 284.10p 1.46%
Bankers Inv Trust (BNKR) 668.00p 1.37%

FTSE 250 - Fallers

Acacia Mining (ACA) 495.10p -7.37%
Hochschild Mining (HOC) 257.50p -7.24%
Centamin (DI) (CEY) 158.70p -5.82%
Vectura Group (VEC) 130.00p -5.45%
Restaurant Group (RTN) 403.30p -4.43%
Kaz Minerals (KAZ) 175.30p -4.21%
Entertainment One Limited (ETO) 213.10p -3.57%
Evraz (EVR) 133.20p -3.55%
WH Smith (SMWH) 1,514.00p -3.44%
CLS Holdings (CLI) 1,533.00p -3.28%