London midday: Stocks maintain gains amid stimulus hopes; pound drops

The FTSE 100 was up 0.9% at 7,183.64, while the pound was down 0.3% against the dollar at 1.2119 and 0.3% lower versus the euro at 1.0919 following reports over the weekend about the consequences of a no-deal Brexit.

Spreadex analyst Connor Campbell said: "With the Sunday papers full of ominous warnings about the immediate negative impact of a no-deal Brexit - as detailed by leaked details of a report on Operation Yellowhammer - and lacking further concrete evidence of a cross-party rebellion, the pound was unable to build on last week’s rebound."

Prime Minister Boris Johnson is due to meet with German Chancellor Angela Merkel and French President Emmanuel Macron later this week ahead of the G7 summit at the weekend, amid expectations he will ask for a new Brexit deal.

More broadly, sentiment was boosted by hopes of central bank stimulus.

CMC Markets analyst David Madden pointed to speculation that Germany will announce a stimulus package and that China is looking into reforming its lending system.

"Olaf Scholz, Germany’s finance minister, hinted the German government could earmark $50bn for a stimulus package, and that has helped lift sentiment. Germany is the largest economy in Europe, and admittedly, a $50bn stimulus package isn’t huge for an economy of that size, but the very fact the country is contemplating such a move says a lot, and it has acted as a green light to the bulls," he said.

"Over the weekend, the People’s Bank of China announced it will introduce reforms to ‘help lower real lending rates’. China’s economy has been cooling, and Beijing are keen to reduce lending costs for companies and the belief is that firms will be encouraged to borrow more and in turn spend more as a result. The wider concerns about the state of US-China trade relations, unrest in Hong Kong, and the prospect of a no-deal Brexit are still in lingering, but in the near-term, the hopes of stimulus from Germany and reforms in China are boosting stocks."

On the trade front, investors were digesting a Reuters report that the US Commerce Department may soon renew the temporary general license granted to China's Huawei by 90 days. However, US President Trump said on Sunday that he does not want to do business with Huawei.

"Huawei is a company we may not do business with at all," Trump told reporters.

"We’re looking really not to do business with Huawei...it’s very difficult to determine what’s coming in, what’s not coming in, it’s still Huawei."

On home shores, the latest data from property website Rightmove showed that house sales in August were boosted by a pre-Brexit buying spree.

House sales rose 6.1% on the year this month, marking the highest number of sales agreed at this time of year since the same period in 2015 and helping to make up for the slower start to the year. Increases were seen in all regions, with the North East, East of England and Yorkshire & the Humber leading the way with rises of more than 10%.

Rightmove director Miles Shipside said: "Whilst another approaching Brexit deadline is now nothing new for prospective buyers, this one may seem more definite, and therefore one to beat, with the Government regarding this one as ‘do or die’. While the end of October Brexit outcome remains uncertain, more buyers are now going for the certainty of doing a deal, with some having perhaps hesitated earlier in the year."

In equity markets, miners Antofagasta and Glencore were trading up amid higher copper prices.

Sainsbury's was the standout gainer. The Sunday Telegraph reported that the supermarket chain has kicked off a search for a successor to chief executive officer Mike Coupe, with three internal candidates said to be tipped for the top job. However, Sainsbury's downplayed the report, telling the Times on Sunday that it was not talking to internal candidates about succession planning.

CYBG was boosted by an upgrade to 'buy' from 'neutral' at UBS, while Ocado gained ground after JPMorgan nudged up its price target on the stock.

Elsewhere, Georgia's TBC Bank rallied after saying it was buying a 65% stake in domestic e-commerce company My-ge for GEL 19.45m (£5.47m) in cash, valuing the company at £29.93m.

Safestore gained as it said it was forming a joint venture with Carlyle European Real Estate Fund, to acquire M3 Self Storage, which operates six prime storage locations in Amsterdam and Haarlem in the Netherlands.

Market Movers

FTSE 100 (UKX) 7,183.64 0.93%
FTSE 250 (MCX) 18,966.42 0.77%
techMARK (TASX) 3,816.56 0.57%

FTSE 100 - Risers

Sainsbury (J) (SBRY) 190.30p 4.27%
Ocado Group (OCDO) 1,199.00p 4.17%
TUI AG Reg Shs (DI) (TUI) 768.80p 2.95%
Smith (DS) (SMDS) 321.60p 2.49%
Glencore (GLEN) 229.70p 2.36%
Scottish Mortgage Inv Trust (SMT) 531.11p 2.23%
Antofagasta (ANTO) 808.20p 2.15%
Just Eat (JE.) 789.40p 1.91%
Carnival (CCL) 3,591.00p 1.90%
Ferguson (FERG) 6,076.00p 1.84%

FTSE 100 - Fallers

NMC Health (NMC) 1,816.00p -1.89%
Fresnillo (FRES) 655.40p -1.24%
Flutter Entertainment (FLTR) 6,472.00p -0.58%
Vodafone Group (VOD) 150.40p -0.29%
Sage Group (SGE) 697.00p -0.29%
Centrica (CNA) 65.26p -0.28%
St James's Place (STJ) 937.80p -0.23%
Pearson (PSON) 813.80p -0.07%
Burberry Group (BRBY) 2,101.00p -0.05%
Croda International (CRDA) 4,678.00p -0.04%

FTSE 250 - Risers

Future (FUTR) 1,058.00p 5.38%
Metro Bank (MTRO) 288.80p 5.02%
Ferrexpo (FXPO) 219.60p 4.03%
Clarkson (CKN) 2,525.00p 3.70%
Sports Direct International (SPD) 238.19p 3.65%
Premier Oil (PMO) 69.44p 3.52%
NewRiver REIT (NRR) 152.60p 3.39%
Safestore Holdings (SAFE) 643.00p 3.38%
Grafton Group Units (GFTU) 692.50p 3.28%
Ted Baker (TED) 931.00p 3.27%

FTSE 250 - Fallers

Hochschild Mining (HOC) 198.30p -5.48%
Bakkavor Group (BAKK) 99.00p -3.51%
Amigo Holdings (AMGO) 140.80p -3.16%
Centamin (DI) (CEY) 134.33p -3.15%
Kaz Minerals (KAZ) 421.35p -3.03%
PPHE Hotel Group Ltd (PPH) 1,750.00p -2.78%
Woodford Patient Capital Trust (WPCT) 43.08p -2.41%
Sophos Group (SOPH) 386.80p -2.20%
Syncona Limited NPV (SYNC) 230.40p -1.96%
Oxford Instruments (OXIG) 1,292.00p -1.52%