London open: Sterling strength and retreat in oil weigh on shares

London equities have started slightly lower despite the record highs notched up overnight on the Dow Jones Industrial and Chinese equities having moved back into a 'bull' market early on Friday morning.

As of 0843 GMT the Footsie was lower by 0.29% to 6,808.02, weighed down by strength in Sterling and falling oil prices.

In parallel, the Shanghai Stock Exchange´s Composite Index finished up by 0.78% to 3,196.04. However, after the close of trading in China, official data revealed that local currency loans in Asia´s largest economy grew by a less-than-expected 651.3bn yuan in October, helping perhaps to highlight the risks to the outlook for that economy, and the recent commodity price rally, which was being flagged by some analysts.

Acting as a backdrop, the yield on the benchmark 10-year Gilt was continuing to climb, rising by three basis points to 1.37%, having hit an intra-session high of 1.42% near the start of trading as investors move to factor-in the potential for greater fiscal stimulus in the States.

That was its highest level since 1 June according to Bloomberg data and was goosing cable higher.

"While we think the optimism behind the powerful momentum in bond markets is fragile, it is hard to see the stampede coming to an abrupt halt," analysts at Unicredit Research said in a note sent to clients.

To take note of, the prospect of higher rates around the world and a strengthening US dollar was also taking the lustre out of precious metals and oil. Comex-traded copper futures on the other hand were tacking on 5.15% to $2.6825 a pound - and on track for its best weekly close since 1980 according to Reuters.

Significantly, late on Thursday The Wall Street Journal reported that the Trump team was looking at Texas Republican Representative Jeb Hensarling, the chairman of the House Financial Services Committee, as their candidate for Treasury secretary.

No less important, EU trade ministers were set meet in the Belgian capital to discuss anti-dumping rules and the Transatlantic Trade and Investment Partnership (TTIP) following Donald Trump’s election, Unicredit pointed out, with some observers of the belief that any deal - if still possible - might be delayed by at least a couple of years.

CMC Markets’ Jasper Lawler said: “With a thin economic calendar on what is Remembrance Day for a number of countries, and as the post-election excitement dies down at the end of the week, volatility should begin to normalise. On Friday, European markets look set for a positive open.

“The huge turnaround in sentiment, characterised by a record high for the Dow Jones Industrial Average is showing signs of creaking. Europe was unable to sustain the euphoria on Thursday with a mostly lower finish. The FTSE 100 stumbled, falling over 1%. The huge gains in the British pound coupled with some weakness in the price of oil proved enough unwind the positive sentiment towards UK stocks.”

Against that backdrop, investors were looking out to a speech from Fed vice chairman Stanley Fischer later in the day and the result of Standard&Poor´s review of Italy´s credit ratings - ahead of its December referendum on constitutional reform.

Corporate news was pretty thin on the ground.

Global mobile satellite communications provider Inmarsat announced on Friday it will provide its new ‘GX for Aviation’ in-flight broadband solution to Austrian Airlines' continental aircraft fleet under a “landmark” new contract.

The FTSE 250 company said more than 30 Austrian Airlines aircraft from the Airbus A320 family will be equipped with GX for Aviation, which its board said is the world's first in-flight connectivity solution with reliable high-speed global coverage provided through a single operator.

It said the new service will allow the airline's passengers to browse the internet, stream videos, check social media and more, with service levels on par with broadband connectivity available on the ground.

SIG’s third quarter revenue rose, but like-for-like sales fell as the building products distributor was affected by a slowing activity around the EU referendum, while its chief executive announced he was stepping down.

For the quarter ended 31 October, revenues increased 10.6% compared to last year, as the FTSE 250 company benefited 8.9% from foreign exchange rates and 3.9% from acquisitions, which offset a fall of 1.4% due to fewer working days.

Royal Dutch Shell planned to continue investing heavily in Brazil over the next five years, with the aim of doubling its deep-water production by the early 2020s.

In remarks to The Wall Street Journal, the firm´s executive vice president for deep-water, Wael Sawan, said Shell would invest $10bn more, on top of the $30bn already deployed in South America´s largest economy.

Market Movers

FTSE 100 (UKX) 6,806.39 -0.32%
FTSE 250 (MCX) 17,588.08 -0.40%
techMARK (TASX) 3,332.34 -0.60%

FTSE 100 - Risers

Antofagasta (ANTO) 742.00p 3.78%
United Utilities Group (UU.) 889.00p 2.72%
Pearson (PSON) 767.00p 2.33%
Severn Trent (SVT) 2,176.00p 2.16%
3i Group (III) 616.00p 1.90%
National Grid (NG.) 961.40p 1.85%
British American Tobacco (BATS) 4,336.50p 1.83%
Standard Life (SL.) 368.20p 1.66%
Centrica (CNA) 207.70p 1.32%
Smith & Nephew (SN.) 1,088.00p 1.21%

FTSE 100 - Fallers

Hikma Pharmaceuticals (HIK) 1,631.00p -3.72%
Standard Chartered (STAN) 634.60p -3.70%
Fresnillo (FRES) 1,518.00p -3.68%
Randgold Resources Ltd. (RRS) 6,180.00p -3.21%
Mondi (MNDI) 1,544.00p -2.95%
Polymetal International (POLY) 856.00p -2.73%
Shire Plc (SHP) 4,945.00p -2.71%
Old Mutual (OML) 187.00p -2.50%
Mediclinic International (MDC) 759.00p -2.19%
AstraZeneca (AZN) 4,324.50p -1.82%

FTSE 250 - Risers

Kaz Minerals (KAZ) 366.70p 4.18%
Aldermore Group (ALD) 200.30p 2.72%
Inmarsat (ISAT) 739.00p 2.21%
CLS Holdings (CLI) 1,627.00p 2.01%
Pennon Group (PNN) 803.00p 1.97%
Cranswick (CWK) 2,184.00p 1.58%
Galliford Try (GFRD) 1,289.00p 1.42%
Redrow (RDW) 418.10p 1.36%
Clarkson (CKN) 2,269.00p 1.20%
Daejan Holdings (DJAN) 5,485.00p 1.20%

FTSE 250 - Fallers

SIG (SHI) 90.65p -21.72%
Ashmore Group (ASHM) 296.30p -9.72%
Aberdeen Asset Management (ADN) 296.50p -4.42%
Hochschild Mining (HOC) 250.80p -4.35%
Tullow Oil (TLW) 251.40p -4.30%
Investec (INVP) 483.30p -3.73%
Amec Foster Wheeler (AMFW) 434.40p -3.62%
Petra Diamonds Ltd.(DI) (PDL) 152.40p -2.62%
Centamin (DI) (CEY) 148.30p -2.43%
CYBG (CYBG) 295.00p -2.38%