London midday: Stocks push higher as Shell shines, sterling slips
London stocks had extended gains by midday on Monday as the pound ticked lower following disappointing manufacturing data, helped along by a strong performance from oil giant Shell.
The FTSE 100 was up 0.3% at 7,039.41 as the pound slipped 0.1% against the dollar and the euro to 1.3066 and 1.1406, respectively, after data showed that the UK construction sector slowed to a 10-month low in January as Brexit uncertainly saw nervous clients put projects on hold.
The IHS Markit/CIPS UK Construction PMI for January came in at 50.6, down from December’s figure of 52.8 and below analyst expectations; most had been looking for a more marginal reduction, to around 52.6. Growth of new business in the sector slipped to an eight-month low.
Tim Moore, economics associate director at IHS Markit, said: "UK construction growth shifted down a gear at the start of 2019, with weaker conditions across all three main categories of activity."
Residential building, the strongest performing segment, recorded the slowest expansion since March 2018. Civil engineering showed a marginal increase, but there was a decline in commercial construction projects, the first for ten months.
IHS Markit said anecdotal evidence "suggested Brexit-related anxiety and associate concerns about the domestic economic outlook continued to weight on client demand".
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Uncertainty about Brexit has snuffed out the recovery in the construction sector. The total activity level dropped to its lowest level since the March 2018 snow storms and is now below the 52 level, which in practice has separated rising from falling construction output in the past.
"More than in other sectors, the outlook for the construction sector is quite binary, based on the Brexit path chosen by politicians." He argued that a no-deal Brexit could see the sector "slide into another recession" but if a deal was signed off, the sector would likely "enjoy strong growth soon".
Royal Dutch Shell was the standout gainer on the FTSE 100 as Brent crude hit a two-month high close to $64 a barrel due to OPEC-led supply cuts and sanctions against Venezuela's petroleum industry. Sector peers were in the green too.
Indivior advanced as it agreed to sell the Chinese rights to a tablet version of its opioid addiction treatment for $122.5m and also said it had entered into an agreement with Alvogen Pine Brook to temporarily prevent it entering the sublingual film market in the US.
Cybersecurity provider Avast rose after saying it had sold its non-core remote monitoring and management product Managed Workplace to Barracuda Networks for an undisclosed sum.
Ryanair flew lower as the budget airline said it swung to a €20m loss in the last three months of 2018 from a €105.6m profit in the same period a year ago due to weaker-than-expected fares and higher oil prices. EasyJet also retreated.
Iron ore pellet producer Ferrexpo slumped after it said 2018 earnings would come in at €500m, down from €551m the previous year and announced that it was investigating payments made to a connected Ukraine charitable foundation called Blooming Land.
GVC Holdings, William Hill and Paddy Power Betfair were all a little higher after an initiation at 'buy' by Jefferies, while Morrisons and Tui were upgraded to 'neutral' and 'buy' at Citi, respectively.
Royal Mail was lifted to 'buy' at HSBC, but BHP Group was knocked lower by a downgrade to 'underweight' at JPMorgan Caxenove, which said it has inferior balance sheet capacity compared to Rio over the medium term. FTSE 250 steelmaker Kaz Miners was also in the red as it was cut to 'hold' at HSBC.
Market Movers
FTSE 100 (UKX) 7,039.41 0.27%
FTSE 250 (MCX) 18,816.02 0.02%
techMARK (TASX) 3,393.06 0.31%
FTSE 100 - Risers
Royal Dutch Shell 'B' (RDSB) 2,437.50p 2.22%
Sage Group (SGE) 640.40p 2.17%
Rentokil Initial (RTO) 346.00p 1.65%
Morrison (Wm) Supermarkets (MRW) 238.70p 1.64%
Halma (HLMA) 1,444.00p 1.55%
Royal Dutch Shell 'A' (RDSA) 2,418.50p 1.45%
Unilever (ULVR) 4,120.50p 1.37%
Intertek Group (ITRK) 4,943.00p 1.33%
Diageo (DGE) 2,940.00p 1.33%
Compass Group (CPG) 1,653.00p 1.29%
FTSE 100 - Fallers
Auto Trader Group (AUTO) 446.30p -2.11%
Smurfit Kappa Group (SKG) 2,172.00p -1.81%
Melrose Industries (MRO) 172.05p -1.60%
WPP (WPP) 864.20p -1.46%
Glencore (GLEN) 302.33p -1.26%
easyJet (EZJ) 1,256.50p -1.22%
Severn Trent (SVT) 1,977.63p -1.07%
BHP Group (BHP) 1,702.40p -1.05%
United Utilities Group (UU.) 827.60p -1.03%
Vodafone Group (VOD) 137.44p -1.01%
FTSE 250 - Risers
Amigo Holdings (AMGO) 254.35p 4.65%
Cairn Energy (CNE) 196.80p 2.82%
Dechra Pharmaceuticals (DPH) 2,410.00p 2.82%
Hill & Smith Holdings (HILS) 1,138.00p 2.71%
Greencore Group (GNC) 190.00p 2.65%
Premier Oil (PMO) 73.95p 2.64%
Coats Group (COA) 89.70p 2.40%
Intu Properties (INTU) 119.65p 2.26%
UDG Healthcare Public Limited Company (UDG) 603.00p 2.12%
Jupiter European Opportunities Trust (JEO) 712.38p 1.91%
FTSE 250 - Fallers
Ferrexpo (FXPO) 237.00p -9.58%
Dixons Carphone (DC.) 133.95p -3.94%
Kaz Minerals (KAZ) 600.60p -2.97%
Bank of Georgia Group (BGEO) 1,551.40p -2.65%
Renishaw (RSW) 4,342.00p -2.56%
TalkTalk Telecom Group (TALK) 103.60p -2.54%
Domino's Pizza Group (DOM) 256.00p -2.18%
Mediclinic International (MDC) 309.70p -2.02%
IP Group (IPO) 107.00p -2.01%
Assura (AGR) 57.55p -1.96%