London midday: Stocks stay in the red despite encouraging manufacturing data
London stocks were holding onto losses by midday despite an upturn in oil prices and an encouraging reading on the UK manufacturing sector, as Prime Minister Theresa May prepared for a key EU summit in Brussels.
The FTSE 100 was down 0.4% to 7,419.26 just after noon on Friday, while the pound was up 0.1% against the euro at 1.1352 and flat versus the dollar at 1.2670.
Sterling had been given a boost the previous day when the Bank of England's chief economist, Andy Haldane, said he might vote for a rate hike in the second half of the year given that a late policy action could require a steeper rate increase path in the future.
Oil prices on Thursday recovered from the prior session's losses when they had fallen to their lowest level in 10 months. Brent crude was 0.9% firmer at $45.22 per barrel and West Texas Intermediate was up 0.7% to $42.81.
Oanda analyst Craig Erlam said: "After falling into bear market territory - having fallen more than 20% from a recent peak - oil appears to have found some support on Thursday, buoyed by Wednesday’s inventory data from EIA which reported a 2.451 million reduction in stocks. The number was roughly in line with that reported by API the day before but traders still appear a little unconvinced by these and tend to wait for the EIA release. While this has offered some near-term support, there’s little reason at the moment to believe that oil isn’t headed for further losses."
Prime Minister May is set to address European leaders at the EU summit in Brussels later in the day to fill them in on her apparently more generous plans for the rights of EU citizens in the UK. "Both sides are at odds on the details of how it will be achieved and how this is handled could offer some clues into how the rest of the talks will go," Erlam said.
Meanwhile, talks between the Conservatives and Northern Ireland's Democratic Unionist Party were ongoing as the two sides look to strike a deal to prop up the Tory government. The DUP has dismissed reports that it is looking for a £2bn investment in Northern Ireland, which includes extra funding for the NHS and infrastructure. Damian Green, the First Secretary of State, told BBC Radio 5Live that "it's possible we won't be able to agree" on a formal deal whereby the DUP backs the Tories.
On the macroeconomic front, the latest CBI industrial trends survey showed UK manufacturing is bouncing back, as the headline total orders balance came in much higher than forecast. June’s headline total orders balance rose to +16 from +9 in May, its highest reading since 1988 and well above the measure’s previous post-crisis high of +11.
Elsewhere, the latest figures from the Council of Mortgage Lenders revealed that UK mortgage lending remained resilient in May, but forecasts for a revival in buy-to-let lending have proved wrong. The CML estimated gross mortgage lending hit £20.1bn in May, up 12% increase on April and 12% on May last year.
In corporate news, Ultra Electronics slipped after saying the US government orders continued to be held back by the delayed national budget but that its full year expectations remained unchanged.
Standard Life fell but Aberdeen Asset Management nudged up after their £3.8bn proposed merger was cleared by the Competition and Markets Authority.
United Utilities and Experian retreated as their stock went ex-dividend.
Go-Ahead reversed earlier losses to tick up after it said passenger revenue and journeys dropped 4% in the last year on Govia Thameslink Railway. Go-Ahead, FirstGroup and Stagecoach were all in focus as it emerged they have all been shortlisted for the South Eastern rail franchise.
Precious metals miners Fresnillo, Randgold Resources and Hochschild racked up healthy gains as gold prices advanced.
Pharmaceutical group Shire was on the front foot after it said the European Medicines Agency has validated the marketing authorisation application for Veyvondi for the treatment on von Willebrand disease.
Imagination Technologies was the standout gainer, however, rocketing 16% as it announced it has formally put itself up for sale and is in talks about a potential takeover after receiving interest from "a number of parties" in recent weeks, which analysts suggested could include Intel, Qualcomm and even Apple.
Rotork rallied after Morgan Stanley upped its stance on the stock to 'overweight' from 'underweight' and lifted the price target to 292p from 250p.
Market Movers
FTSE 100 (UKX) 7,419.26 -0.38%
FTSE 250 (MCX) 19,639.07 -0.22%
techMARK (TASX) 3,619.46 0.17%
FTSE 100 - Risers
Provident Financial (PFG) 2,433.00p 3.05%
Shire Plc (SHP) 4,558.00p 2.20%
Fresnillo (FRES) 1,570.00p 1.42%
GlaxoSmithKline (GSK) 1,700.00p 1.01%
Randgold Resources Ltd. (RRS) 7,060.00p 0.93%
Paddy Power Betfair (PPB) 8,770.00p 0.80%
Imperial Brands (IMB) 3,570.50p 0.66%
Convatec Group (CTEC) 329.70p 0.61%
Burberry Group (BRBY) 1,770.00p 0.51%
Scottish Mortgage Inv Trust (SMT) 417.00p 0.48%
FTSE 100 - Fallers
United Utilities Group (UU.) 899.50p -4.10%
Carnival (CCL) 5,165.00p -1.53%
Barclays (BARC) 197.15p -1.50%
Experian (EXPN) 1,609.00p -1.41%
BAE Systems (BA.) 667.00p -1.40%
Mondi (MNDI) 2,076.00p -1.38%
Diageo (DGE) 2,344.50p -1.26%
Land Securities Group (LAND) 1,022.00p -1.26%
TUI AG Reg Shs (DI) (TUI) 1,137.00p -1.22%
Royal Mail (RMG) 433.40p -1.21%
FTSE 250 - Risers
Hochschild Mining (HOC) 282.10p 4.60%
AA (AA.) 220.90p 4.49%
Evraz (EVR) 183.10p 4.33%
Rotork (ROR) 242.70p 3.81%
SIG (SHI) 150.00p 3.16%
Indivior (INDV) 333.20p 2.08%
Sophos Group (SOPH) 455.70p 1.97%
Syncona Limited NPV (SYNC) 160.00p 1.85%
Lancashire Holdings Limited (LRE) 717.00p 1.77%
Acacia Mining (ACA) 304.00p 1.74%
FTSE 250 - Fallers
Aldermore Group (ALD) 216.40p -4.16%
Ascential (ASCL) 307.70p -4.14%
PayPoint (PAY) 945.00p -3.67%
Paragon Group Of Companies (PAG) 428.00p -3.23%
JD Sports Fashion (JD.) 402.90p -3.08%
Petra Diamonds Ltd.(DI) (PDL) 114.20p -2.81%
Virgin Money Holdings (UK) (VM.) 260.40p -2.73%
Thomas Cook Group (TCG) 89.80p -2.71%
Kaz Minerals (KAZ) 469.20p -2.17%
Sirius Minerals (SXX) 33.08p -1.99%