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London open: Stocks edge up as miners rally, NMC earnings impress
London stocks edged higher at the open on Monday, supported by a strong showing in the mining sector, as investors continued to keep an eye on geopolitical developments, with Sino-US talks due later this week.
At 0830 BST, the FTSE 100 was up 0.2% to 7,577.08. Meanwhile, the pound was down 0.1% against the dollar 1.2742 and up 0.1% versus the euro at 1.1155, with Brexit minister Dominic Raab heading to Brussels on Tuesday for more Brexit talks with the EU’s chief negotiator Michel Barnier.
However, the most-watched event this week is likely to be the start of US-China trade talks on Tuesday and Wednesday.
London Capital Group analyst Jasper Lawler said: “Should we start to see signs of progress in trade negotiations between the two powers, risk appetite will improve. However, headlines to the contrary are likely to see renewed demand for the dollar and flows out of currencies such as the aussie dollar, the pound and the euro.”
Turkey was also likely to remain at the forefront of investors’ minds. “Whilst confidence has lifted towards Turkey and the crisis appears to have temporarily settled, it is by no means out of the woods yet,” said Lawler. “Turkish markets are closed this week, which means volumes will be particularly low, therefore big swigs could be expected potentially unnerving traders once again.”
Miners lent support, with BHP Billiton, Glencore, Rio Tinto and Anglo American all higher as copper and iron futures rose.
NMC Health rallied as it plumped earnings 30% in the first half of the year as the Gulf private healthcare operator treated more patents and acquired a cosmetic surgery business and a chronic care specialist.
Paddy Power Betfair advanced as it completed the first tranche of a £200m share buyback programme and began a second £300m tranche.
Polymetal gained ground after saying that about 2000 tonnes of gold concentrate had been shipped by rail on Saturday from Kyzyl to an off-taker in China, with concentrate shipments to the Amursk POX hub expected to start next month.
LondonMetric ticked up after announcing the acquisition of two urban logistics warehouses for £23.5m, reflecting a blended net initial yield of 4.9%, rising to 5.6% after five years, with an average lease length of 13 years.
Georgia-focused bank TBC Bank was up as it posted a 38.9% jump in underlying net profit for the second quarter of 2018 to reach 119.9m Georgian lira, alongside a sharp improvement in its cost-to-income ratio to 35.6%.
Premier Oil nudged higher after saying that the development of its Tolmount Main gas field has been sanctioned by the joint venture and infrastructure partners.
On the downside, housebuilders were on the back foot, with Persimmon, Taylor Wimpey and Berkeley all lower as the latest figures from Rightmove released earlier showed that UK house prices dropped 2.3% in August from July, as new sellers launched a ‘late summer sale’ to try and find a buyer more quickly.
Miles Shipside, Rightmove director and housing market analyst, said: “Sellers who come to market in the peak holiday month often have a pressing need to sell and price down accordingly, and are offering ‘summer sale’ prices to entice holiday-distracted buyers.”
G4S was in the red as the Ministry of Justice was forced to take control of the running of HMP Birmingham after officials decided the private contractor couldn’t cope with the out-of-control prison.
Wood Group slipped even as it secured a six-year contract Shell to provide asset management services to its Malampaya deepwater gas-to-power project in the Philippines.
Outside the FTSE 350, luxury handbag maker Mulberry, which operates 21 House of Fraser concessions, tumbled 30% after warning that the department store chain’s collapse into administration will dent profits by around £3m, while “challenging” trading conditions mean full-year profit will be “materially reduced”.
On the broker note front, RBS was upgraded to ‘buy’ at Citi, while Kaz Minerals was lifted to ‘hold’ at Liberum. CVS Group was upgraded to ‘outperform’ at RBC Capital Markets and Hill & Smith was boosted to ‘buy’ at Investec.
Sage was cut to ‘sell’ at Deutsche Bank and Kingfisher was downgraded to ‘neutral’ at Davy.
