LONDON MARKETS: U.K. Stocks Climb To 10-week High, As Metals Prices Soar
April 19 2018 - 4:39AM
Dow Jones News
By Sara Sjolin, MarketWatch
Pound drops as U.K. retail sales disappoint
U.K. stocks rose for a third straight session on Thursday,
boosted by continued gains for miners on the back of a rally in
nickel and aluminum prices.
A declining pound after a disappointing reading on U.K. retail
sales also helped buoy the London benchmark.
What are markets doing?
The FTSE 100 index rose 0.2% to 7,333.26, building on a 1.3%
rally from Wednesday. In that session, the London benchmark scored
its best close since Feb. 5
(http://www.marketwatch.com/story/miners-lead-ftse-100-higher-after-rio-tinto-update-inflation-data-in-focus-2018-04-18)
as the pound tumbled after data showed an unexpected drop in
inflation.
On Thursday, the pound continued its selloff, trading at $1.4183
compared with $1.4205 late Wednesday in New York.
A weaker pound tends to prop up the British blue-chip index, as
its multinational companies generate most of their sales in foreign
currencies.
What is driving the markets?
A continued rally in oil and metals helped lift the FTSE 100,
which is heavily skewed toward the commodity sector.
Nickel prices were trading at their highest since 2014,
according to media reports. They were getting a lift from concerns
that Russian nickel producer Norilsk Nickel
(http://www.marketwatch.com/story/nickel-prices-rally-to-a-3-year-high-on-growing-concerns-over-us-sanctions-on-russia-2018-04-18)
will be included in U.S. sanctions on Moscow.
Sanctions on major Russian aluminum producer United Co. Rusal
(0486.HK) are seen as having helped lift aluminum prices to their
highest level in more than six years. The metal was continuing its
rally on Thursday.
Oil prices were also rising sharply. Futures added 0.8% and were
trading at the highest level since 2014
(http://www.marketwatch.com/story/oil-hovers-at-3-12-year-high-as-investors-look-ahead-to-opec-meeting-2018-04-19),
boosted by U.S. supply data out on Wednesday. Oil traders were
looking ahead to the outcome of the joint Organization of the
Petroleum Exporting Countries and non-OPEC ministerial monitoring
committee meeting, expected to be held on Friday.
The pound moved lower after data showed retail sales dropped
1.2% in the U.K. in March, month-on-month. Analysts had forecast a
0.4% decline, according to FactSet. The reading comes on the heels
of disappointing wage and inflation data published earlier in the
week, which were seen as easing pressure on the Bank of England to
hike rates more than once this year.
What are strategists saying?
"After a near-two-week pause following a rally from the March
low, the FTSE 100 has finally broken out of a frustratingly tight
130-point range to hit a 10-week high. With renewed momentum, and
right in the middle of historically the second-best month of the
year for stock markets, 7,400 is a realistic possibility," said Lee
Wild, head of equity strategy at Interactive Investor, in a
note.
"A modest unraveling of sterling's latest advance against the
dollar is a clear boon for U.K.-listed overseas earners, and a
strong start to U.S. results season is steering focus back from
politics to market fundamentals. That's positive for stocks while
data points to rapid growth both in earnings and the global
economy," he added.
Which stocks are in focus?
Shares of Rentokil Initial PLC (RTO.LN) posted one of the
biggest gains in the FTSE 100, up 2.6%. The advance came after the
pest control company said ongoing revenue -- which excludes the
effects of disposed or closed businesses -- rose 11%
(http://www.marketwatch.com/story/rentokil-revenue-down-on-hurricane-cold-weather-2018-04-19)
in the first quarter.
In the mining space, shares of Russia-focused Evraz PLC (EVR.LN)
gained 2%, while Anglo American PLC (AAL.LN) climbed 0.9% and
Glencore PLC (GLEN.LN) put on 0.8%.
Among oil giants, BP PLC (BP.LN) (BP.LN) added 0.3%, and Royal
Dutch Shell (RDSA.LN) (RDSA.LN) tacked on 0.5%.
Unilever PLC shares (ULVR.LN) (ULVR.LN) were down 1.9% after the
maker of Dove soap and other consumer products said first-quarter
revenue fell 5.2%
(http://www.marketwatch.com/story/unilever-to-launch-6-billion-share-buyback-2018-04-19)
on adverse currency movements and the impact of disposals. The
company also said it's starting a share buyback program of up to 6
billion euros ($7.43 billion).
Weir Group PLC shares (WEIR.LN) rose 6.3% on the FTSE 250 . The
engineering company said it's purchasing U.S.-based ESCO Corp. in a
$1.05 billion deal
(http://www.marketwatch.com/story/weir-to-buy-esco-in-105-billion-deal-2018-04-19)
that Weir says will strengthen its mineral and oil-and-gas
offerings.
Outside the main indexes, Debenhams PLC (DEB.LN) lost 4% after
the department-store chain reported an 85% drop in first-half
pretax profit
(http://www.marketwatch.com/story/debenhams-pretax-profit-plunges-85-2018-04-19).
The company said its Chief Financial Officer Matt Smith will leave
the company to become finance director at Selfridges & Co.
(END) Dow Jones Newswires
April 19, 2018 05:24 ET (09:24 GMT)
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