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London open: Stocks nudge up ahead of services data; Aveva rockets on merger
London stocks nudged a little higher in early trade on Tuesday as investors set aside worries about North Korea and looked to the release of the latest services data.
At 0825 BST, the FTSE 100 was up 0.1% to 7,416.00, while the pound was down 0.1% versus the euro at 1.0865 and flat against the dollar at 1.2931 as investors awaited the services data at 0930 BST.
Spreadex analyst Connor Campbell said: “So far August’s PMIs have been a bit of mixed bag; last Friday’s manufacturing reading was far better than expected, only for yesterday’s construction figure to fall to a one year low. The services PMI is the most important of the three, and given that analysts are expecting it to slip from 53.8 to 53.5 month-on-month you can forgive the pound its early reticence.”
Heavily-weighted mining stocks put in the best performance after figures released earlier showed China’s services sector expanded at a faster pace last month. The Caixin China services purchasing managers’ index rose to 52.7 from 51.5 in July, marking the highest reading in the last three months.
Anglo American, BHP Billiton, Antofagasta and Glencore were all in the black.
Elsewhere, M&A news helped to provide some cheer, with Aveva up a whopping 24% after it agreed a merger with the software arm of France’s Schneider Electric where the UK company’s existing shareholders will own 40% of the business.
FTSE 250 housebuilder Redrow rallied after it posted a 26% jump in full-year pre-tax profit as it hiked its dividend by 70% and upgraded its guidance. FTSE 100 peer Barratt Developments followed suit, trading up 0.8%.
DS Smith gained ground as it reported an “encouraging” start to the financial year, with trading in line with expectations.
On the downside, infrastructure and support services company Stobart Group retreated. Although it reported good progress in the first half, it said delays in the commissioning of certain third party biomass stations in the energy business impacted short-term volumes and that it was taking longer than originally planned to introduce additional airlines to operate from London Southend Airport.
Oilfield services group Petrofac was in the red despite announcing the award of a €340m contract with a subsidiary of Russia’s Gazprom.
In broker action, insurer Admiral was under the cosh after Berenberg downgraded the stock to ‘sell’, while Paddy Power was hit by a downgrade to ‘equalweight’ at Morgan Stanley. However, Hunting was lifted by an upgrade to ‘buy’ at Canaccord Genuity.
