London midday: StanChart, energy stocks lead gains ahead of Budget statement

Stocks were putting in decent gains on Wednesday ahead of the UK Budget and Federal Reserve policy meeting, with the FTSE 100 nearing the 6,900 level.

Standard Chartered

944.80p

15:45 15/11/24

0.66%

6.20p

Markets were mostly shrugging off slightly worse-than-expected labour-market data in morning trade, as the jobless rate in Britain unexpectedly held stay.

The Footsie, up 0.65% at 6,882.05 by midday, hasn't closed above 6,900 since 6 March.

The market reaction to Chancellor George Osborne's Budget statement, due at 12:30 GMT, is expected to be only small, though it will give a chance to see where the Conservatives are placed ahead of the general election in May.

Nevertheless, investors will be watching oil stocks on speculation that tax breaks for North Sea producers may be announced, while housebuilders will likely be looking out for potential stimulus measures in the housing market.

As for the Federal Open Market Committee meeting (18:00), no change is expected in the policy stance though forward guidance will be in focus given ongoing speculation that policymakers will drop the term 'patient' when referring to the first rate hike.

In economic data, the UK unemployment rated remains stuck at 5.7% over the three months to January, disappointing analysts looking for a drop to 5.6%. Meanwhile, annual earnings growth slowed to just 1.8% from 2.1% the preceding three months, missing the +2.2% consensus forecast.

Minutes of the latest Bank of England meeting released on Wednesday morning also revealed that policymakers voted unanimously to keep rates unchanged amid a strengthening sterling and low inflation.

"Much will clearly depend on how much earnings pick up over the coming months, and the softer than expected data for January do raise question marks over this," said economist Howard Archer from IHS Global Insight, who expects the Bank Rate to rise from 0.5% to 0.75% in February 2016.

StanChart jumps on upgrades

Shares in Standard Chartered were surging on Wednesday after analysts at Barclays and Bernstein raised their ratings, highlighting the recent appointment of former JPMorgan banker as its new boss. Barclays lifted their stance on StanChart from 'equal weight' to 'overweight', while Bernstein upgraded by two notches from 'underperform' to 'outperform'.

In contrast, Barclays said it sees "another three years of hard labour" at HSBC as it lowered its recommendation on the shares from 'overweight' to 'equal weight', though that didn't stop the stock from rising in morning trade.

After a slow start, energy stocks such as Shell, BP and BG Group pushed into positive territory, extending strong gains made on Tuesday on speculation about tax breaks in the North Sea. BG Group also announced first oil from its part-owned Knarr field in the North Sea offshore Norway.

RSA was continuing to rise amid speculation that it could be looking to sell its Latin America operation. Berenberg analysts said Wednesday the deal "could be a game changer" for the insurance group and could fetch a higher price than the £500m rumoured.

Housebuilders were making decent gains, such as Taylor Wimpey, Barratt Developments and Persimmon. "Housebuilding shares could also get a boost if we get investment initiatives to build more properties, given the pressure on housing," according to analyst Michael Hewson from CMC Markets.

Smiths Group fell after first-half underlying profits at the engineering company stumbled 3% on the hurdles of foreign currency and the lower oil price.

Mining stocks were also retreating after solid gains on Tuesday, with Fresnillo, Antofagasta and Rio Tinto in the red. Antofagasta in particular was feeling the effects of a downgrade by Beaufort Securities to 'hold'.

Market Movers
techMARK 3,228.44 +0.34%
FTSE 100 6,882.05 +0.65%
FTSE 250 17,279.49 +0.45%

FTSE 100 - Risers
Standard Chartered (STAN) 1,029.50p +6.68%
CRH (CRH) 1,763.00p +4.50%
Ashtead Group (AHT) 1,119.00p +2.01%
Royal Dutch Shell 'B' (RDSB) 2,104.50p +1.74%
Royal Dutch Shell 'A' (RDSA) 2,009.00p +1.72%
Rolls-Royce Holdings (RR.) 981.50p +1.55%
SSE (SSE) 1,522.00p +1.40%
BP (BP.) 431.85p +1.40%
Hammerson (HMSO) 670.00p +1.28%
Vodafone Group (VOD) 224.20p +1.20%

FTSE 100 - Fallers
Fresnillo (FRES) 641.50p -2.66%
Rio Tinto (RIO) 2,833.00p -1.41%
Burberry Group (BRBY) 1,849.00p -1.12%
Royal Mail (RMG) 427.70p -0.93%
SABMiller (SAB) 3,666.00p -0.81%
Weir Group (WEIR) 1,767.00p -0.73%
Morrison (Wm) Supermarkets (MRW) 199.90p -0.70%
Antofagasta (ANTO) 682.50p -0.66%
Centrica (CNA) 249.70p -0.60%
TUI AG Reg Shs (DI) (TUI) 1,192.00p -0.42%

FTSE 250 - Risers
Soco International (SIA) 148.10p +5.79%
Allied Minds (ALM) 664.00p +4.90%
Zoopla Property Group (WI) (ZPLA) 172.00p +3.93%
RPS Group (RPS) 237.80p +2.94%
Euromoney Institutional Investor (ERM) 1,052.00p +2.83%
RPC Group (RPC) 582.50p +2.64%
Morgan Advanced Materials (MGAM) 340.50p +2.53%
Savills (SVS) 760.50p +2.49%
Greencore Group (GNC) 328.90p +2.33%
Dunelm Group (DNLM) 844.50p +2.30%

FTSE 250 - Fallers
Vedanta Resources (VED) 404.30p -8.65%
Just Eat (JE.) 347.30p -4.85%
Thomas Cook Group (TCG) 144.70p -3.92%
Afren (AFR) 3.11p -3.15%
esure Group (ESUR) 219.90p -2.83%
Bank of Georgia Holdings (BGEO) 1,804.00p -1.90%
Carillion (CLLN) 332.20p -1.77%
Premier Oil (PMO) 139.00p -1.35%
Cairn Energy (CNE) 151.90p -1.30%
Centamin (DI) (CEY) 52.00p -1.14%