LONDON MARKET MIDDAY: ITV, Miners Support Gains As Brexit Talks Resume

LONDON (Alliance News) - Stocks in London were higher on Monday at midday, with miners leading ...

Alliance News 17 July, 2017 | 12:13PM
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LONDON (Alliance News) - Stocks in London were higher on Monday at midday, with miners leading the FTSE 100 gainers following healthy consumer inflation data from China, while ITV was leading the blue-chip gainers after poaching easyJet's chief executive.

Also grabbing market attention was the second round of Brexit negotiations. Brexit Secretary David Davis meets the European Commission's chief negotiator Michel Barnier in Brussels, Belgium, with the attempt to reassure EU negotiators over Britain's plan on the future rights of European nationals living in the UK amid deep scepticism on the bloc's side.

The FTSE 100 index of large caps was up 0.6%, or 44.00 points at 7,422.39. The FTSE 250 index was up 0.5% at 19,500.58 points, and the AIM All-Share index was up 0.3% at 956.74.

The BATS UK 100 index was up 0.8% at 12,592.52, and the BATS 250 was up 0.6% at 17,724.26. The BATS Small Companies was up 0.1% at 11,940.17.

easyJet said Chief Executive Officer Carolyn McCall has stepped down from her role at the budget airline to become chief executive of broadcaster ITV. The Guardian newspaper had reported last week that McCall was the top candidate for the position.

ITV shares were up 2.9%, while fellow blue-chip easyJet was up 0.9% after recovering from earlier losses.

easyJet said McCall is expected to leave the firm around the end of the year and the search for her successor has already commenced. ITV also released at statement confirming the report, noting that McCall will take on her new role at the company on January 8.

The FTSE 350 Mining sector was up 1.4%, led by Anglo American, up 2.3%, and Glencore, up 2.1%. Miners were benefiting from China's National Bureau of Statistics data showing that the country's economy surged 6.9% in the first half of the year, fuelled by consumer spending and trade.

The economy grew by 6.9% in the second quarter, the same pace as in the first quarter. Analysts had predicted a slight slowdown in the second quarter, to growth of 6.8%. The Chinese government has set an economic growth target this year of about 6.5% "or higher if possible," the lowest economic growth target in 25 years.

Ashtead Group was up 2.4%, among the best blue-chip performers, on the read across of a merger between two rivals on Friday. US-based Neff Corp was acquired by rival H&E Equipment Services, also based in the US.

"We expect the rental industry to continue to consolidate, but Ashtead remain more focused on organic growth. However, they have historically benefited from consolidation via share gains during disruption and pricing, in our view," said UBS analyst Rory McKenzie.

Nevertheless, the Swiss bank retained a Sell recommendation on Ashtead, saying that the current share price "overestimates market growth, underestimates investment requirements, and is complacent on pricing given the investments from competition into capacity".

AstraZeneca shares were up 2.1%. The drugmaker's Chief Executive Pascal Soriot will remain in his post, the Financial Times reported late Friday, following reports last week of his departure to become head of Israel's Teva Pharmaceutical Industries.

In the FTSE 250, Carillion was the best mid-cap performer, up 23%, on course to snap a five-day decline that has seen its share price fall by 70%, following last Monday's dramatic announcement that its chief executive had departed as it launched an "all options" strategic review after booking a huge provision on contracts.

On Monday, Carillion, infrastructure group Balfour Beatty and engineering firm Kier Group all revealed they have won contracts for the construction of high speed rail line HS2.

HS2 is a 190-kilometre high speed line linking London with Birmingham and the West Coast Main Line near Lichfield and is planned to open in 2026. Shares in Balfour Beatty were up 2.2% and Kier shares were up 0.8%.

Weir Group was up 7.7%, after the pumps and valves maker said it now expects "strong" constant currency revenue and profit growth for the full year, following a recovery in the North American oil and gas markets.

Mitie Group was another gainer, up 3.1%, after the facilities management and outsourcing firm received a double upgrade from Investec to Buy from Sell. The broker suggested that the market is yet to appreciate the full extent of the potential turnaround at Mitie under its new leadership.

TalkTalk Telecom Group was the worst mid-cap performer, down 2.4%. The home phone and broadband provider was downgraded to Underperform from Neutral by Macquarie.

Still in the UK corporate calendar, miner Rio Tinto releases a second-quarter operations review at 2330 BST.

Negotiators from the European Commission and the UK Britain were meeting in Brussels. Both sides need to find agreement on citizens' rights; the border with Northern Ireland; and Britain's financial obligations arising from its membership, before they can proceed to negotiating a future trade relationship.

"We need to examine and compare our respective positions in order to make good progress," Michel Barnier, the EU's chief negotiator said ahead of the meeting.

Teams from both sides will start meeting this afternoon, and are set to conclude the talks on Thursday.

The pound climbed overnight above the USD1.31 line for the first time since September, having benefited on Friday from a weak dollar following soft US consumer inflation and retail sales data.

Sterling was quoted at USD1.3061 on Monday at midday, barely changed from USD1.3089 late Friday.

The euro was quoted at USD1.1400 at midday compared to USD1.1420 at the European equities close on Friday.

Final data from Eurostat showed eurozone consumer inflation eased slightly to 1.3% year-on-year in June from 1.4% in May. The rate came in line with the flash estimate published on June 30. This was the weakest rate seen so far this year. The European Central Bank targets inflation "below, but close to 2%".

On a monthly basis, consumer inflation remained flat in June, reversing from a 0.1% decline seen in May. Core inflation that excludes energy, food, alcohol and tobacco, increased to 1.1% year-on-year in June, in line with preliminary estimate, from 0.9% in May.

The CAC 40 index in Paris and the DAX 30 in Frankfurt were up 0.1% and down 0.2%, respectively.

Wall Street was called for a flat open on Monday, with the Dow Jones Industrial Average seen marginally lower, having closed at a record high on Friday. The S&P 500 index and the Nasdaq Composite were also seen broadly unchanged.

In the US economic calendar, the NY Empire State manufacturing index is at 1330 BST.

By Daniel Ruiz; danielruiz@alliancenews.com

Copyright 2017 Alliance News Limited. All Rights Reserved.

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Securities Mentioned in Article
Security Name Price Change (%) Morningstar Rating
Kier Group PLC 1,282.00 GBX -0.54 -
Carillion PLC 59.95 GBX -6.62 -
Weir Group PLC 1,899.00 GBX -0.58 -
TalkTalk Telecom Group PLC 185.60 GBX 0.76 -
Glencore PLC 313.55 GBX -1.62
ITV PLC 177.20 GBX -0.95 -
Ashtead Group PLC 1,688.00 GBX -1.29 -
easyJet PLC 1,312.00 GBX -1.65 -
MITIE Group PLC 268.90 GBX -1.68 -
AstraZeneca PLC 5,152.00 GBX 0.57
Balfour Beatty PLC 266.90 GBX -2.70 -
Anglo American PLC 1,091.50 GBX -0.82
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