Hot Features
Premium
Register to chat with like-minded investors on our interactive forums.
London open: Stocks rise on positive Asian cues; LLoyds bucks trend
London stocks rose in early trade on Monday, taking their cue from a positive session in Asia as investors eyed the release of UK economic growth data.
At 0830 BST, the FTSE 100 was up 0.5% at 7,317.01.
Neil Wilson, chief market analyst at Markets.com, said stimulus was keeping the party going in equity markets but questioned how long this would last.
“The softer US jobs number in Friday only underlines the Fed will cut rates next week, whilst China announced fresh stimulus late Friday with cuts to banks’ reserve requirement ratio, or RRR, which is lifting Asia today. On Friday Jay Powell reiterated that the Fed will do whatever it can to sustain the expansion,” he said.
In currency markets, meanwhile, the pound was down 0.3% against the dollar and the euro at 1.2249 and 1.1112, respectively, amid reports that Prime Minister Boris Johnson could ignore the no-deal Brexit bill and ahead of the release of gross domestic product data for July.
Spreadex analyst Connor Campbell said: “Having spent a good portion of last week rallying in the face of Boris Johnson’s political problems, the weekend’s developments haven’t been greeted with as much glee by the pound.”
He noted the resignation of Work and Pensions Secretary Amber Rudd over the weekend and the potential for more resignations.
“Monday should also be the day that sees the Benn ‘no-deal’ bill – which would likely require the government to ask for a Brexit extension – receive royal assent, snuck in just before Parliament is prorogued. In theory, then, there are a fair amount of positives for the pound to work with.”
Campbell said the drop in the pound “might be because Boris Johnson could well ignore any attempts to avert a no-deal Brexit by refusing to ask Brussels for a delay, something that would likely cause a legal challenge by the growing forces that oppose him”.
“Such uncertainty is, of course, the pound’s kryptonite, hence explaining its early losses,” he added.
The GDP figures – due at 0930 BST – are expected to show a rise to 0.1% from 0.0% previously. They will be released alongside manufacturing and production data for July.
In equity markets, Morrisons was the standout gainer following a Telegraph report suggesting that the supermarket chain could be the next takeover target.
Pub operator Mitchells & Butlers was trading higher after an upgrade to ‘overweight’ at Morgan Stanley, while McCarthy & Stone was boosted by an upgrade to ‘buy’ at HSBC.
On the downside, Lloyds Bank was the worst performer on the FTSE 100 as it said it was suspending the rest of its 2019 share buyback after a higher-than-expected spike in payment protection claims ahead of the August deadline led to an increased provision for potential payouts. The company said it would now make provisions in the range of £1.2bn to £1.8bn in the third quarter in addition to the £650m made at the half year.
Associated British Foods was in the red as it backed its full-year guidance but cautioned that profit margins at Primark are expected to drop next year.
British Airways parent IAG flew lower as BA cancelled nearly all of its flights due to a two-day strike.
In other broker news, Ultra Electronics was lifted to ‘equal-weight’ at Barclays, while Berkeley was upgraded to ‘buy’ at HSBC. Entertainment One was cut to ‘hold’ at Berenberg and Wizz Air was downgraded to ‘neutral’ at Davy.
