FTSE 100 movers: Rio Tinto rallies on upgrade; WPP slumps
London’s FTSE 100 index was up 1.4% to 6,871.69 in afternoon trade, with sentiment underpinned by reports of a possible bailout for Italy’s Banca Monte dei Paschi.
Miner Rio Tinto was the top riser after Credit Suisse upgraded the stock to ‘outperform’ from ‘neutral’ and lifted the price target to 3,600p from 2,750p as it switched its preference from BHP Billiton.
It pointed to vanishing iron ore surpluses as steel production rises and supply growth declines, an attractive valuation and balance sheet strength enabling additional shareholder returns.
GKN also got a broker note boost as Bank of America Merrill Lynch upgraded its stance on the stock to ‘buy’ from ‘neutral’ and upped the price target to 365p from 350p.
“As we move into 2017, we believe GKN provides one of the strongest earnings growth profiles in the sector, through both organic improvement and restructuring,” Merrill said, adding that the valuation has been weighed on by deteriorating sentiment in aerospace & autos end markets.
HSBC was higher as improved sentiment towards banks – on news that Italy could ask for a €15bn European Stability Mechanism loan to help its struggling banks – helped to offset a fine by the EU Commission for participation in a cartel in euro interest rate derivatives.
On the downside, WPP lost ground following reports the US Justice Department is investigating claims advertising agencies are rigging the bidding process for contracts on producing commercials in order to persuade clients to use their in-house production units over independent companies.
Unilever was also under the cosh as JPMorgan Cazenove downgraded it to ‘neutral’ from ‘overweight’ on a weaker top line as it took a look at the European food/household and personal care stocks.
Shire also got hit by a broker note as UBS cut the stock to ‘neutral’ from ‘buy’ and pushed the target price down to 5,000p from 5,600p.
“We think a tougher environment for expensive orphan drugs will constrain performance,” it said.
Bunzl also retreated on broker comments, as Goldman Sachs cut its price target to 2,200p from 2,400p, maintaining its ‘neutral’ rating.
The bank said it sees two key topics for the group going into 2017: the weaker pound affecting its UK margin as it needs to pass through higher import prices and the de-rating of bond proxy stocks.
Risers
Rio Tinto (RIO) 3,174.50p 5.06%
GKN (GKN) 316.50p 3.87%
Standard Chartered (STAN) 681.00p 3.65%
International Consolidated Airlines Group SA (CDI) (IAG) 427.90p 3.13%
St James's Place (STJ) 973.00p 3.13%
Old Mutual (OML) 193.60p 3.03%
HSBC Holdings (HSBA) 672.50p 2.83%
Prudential (PRU) 1,628.00p 2.75%
Royal Bank of Scotland Group (RBS) 214.60p 2.63%
Glencore (GLEN) 293.50p 2.62%
Fallers
WPP (WPP) 1,643.00p -3.01%
Shire Plc (SHP) 4,500.50p -1.33%
Pearson (PSON) 783.00p -1.26%
Bunzl (BNZL) 2,004.00p -1.09%
Fresnillo (FRES) 1,133.00p -0.96%
Unilever (ULVR) 3,108.50p -0.85%
Croda International (CRDA) 3,146.00p -0.66%
Worldpay Group (WPG) 257.20p -0.62%
Sky (SKY) 765.50p -0.46%
Smith & Nephew (SN.) 1,113.00p -0.45%