FTSE 100 up 22 at 7,308
Pearson tops the Footsie leader-board after upgrade from Exane BNP Paribas
US stocks expected to open firmer
The top-shares index was consolidating the morning’s gains over the lunchtime session, ahead of an expected firm start on Wall Street.
The FTSE 100 index was up 22 at 7,308, led by publishing group (), up 4.3% at 609p after Exane BNP Paribas upgraded the stock.
Exane’s new rating for Pearson is ‘outperform’, having previously been ‘under-perform’; the price target rises to 700p from 600p.
There was a bit of cheer for wholesalers and retailers in the latest Distributive Trades survey from the Confederation of British Industry.
“A major piece of good news as the September CBI distributive trades survey showed the balance of retailers reporting year-on-year (y/y) growth in sales volumes jumped to a two-year high of +42% after slumping to a 13-month low of -10% in August from +22% in July,” reported Howard Archer, chief economic advisor to the EY ITEM Club.
“It is possible that the very strong September reading may have been partially a correction of the poor August survey. That survey was at odds with hard data from the ONS which showed that retail sales volumes rose a very decent 1.0% m/m in August after a gain of 0.6% in July. This was the strongest m/m increase since April (which was buoyed by the later Easter and very good weather). It lifted the y/y increase to 2.4% in August from 1.4% in July,” Dr Archer added.
“There were indications that retail sales got a lift in August from more people staying at home during the summer holidays, as well as from tourists being encouraged to spend by the weakened pound.” .
Across the pond, spread betting quotes pointed to indices opening on the front foot.
The S&P 500 was seen opening at 2,502, up from last night’s close of 2,97. The Dow Jones was expected to open at around 22,324, up 40 points or so.
11.30am: and show signs of life
The Footsie seems intent on hovering around the 7,300 level like a naughty schoolboy, hoping to sneak in through the side door of a cinema.
The FTSE 100 index was up 13 at 7,299, having risen as high as 7,324 this morning and fallen as low as 7,285.
Banks continue to do most of the heavy lifting, with Group PLC () up 1.6% at 266p after US brokerage Jefferies said it could “no longer sit on the fence on RBS” and upgraded the stock to ‘buy’ in a research note on the UK banks. Its new price target is 306p.
Meanwhile, Jefferies has increased its price target for PLC () to 91p from 87p but cut its valuation of PLC () to 216p from 232p.
In the “reports of my death have been greatly exaggerated” department, hard-hit contract engineering firm PLC () and slumping construction and facilities management outfit PLC () received some love today.
surged 8.64p to 55.14p as business daily City AM reckons a Middle East construction firm is lining up a bid.
“The upward move in the share price today, pales in comparison to the plunge the share price took in July when it issued a profit warning and the departure of its CEO,” noted David Madden.
“The troubled construction company may welcome the takeover approach as it is struggling with high debts, but some shareholders might feel they are being targeted near the all-time low,” he opined.
READ Carillion shares leap ahead of interims on talk Middle Eastern construction firm preparing a bid
, itself no stranger to profit warnings, rose 4.7% to 116.2p on the back of winning a place on the Homes and Communities Agency’s £8bn Delivery Partner Panel (DPP) 3 Framework.
The four-year framework is divided into regional lots, and – a new entrant into the DPP framework – has been appointed to all five.
The framework aims to speed up the construction of residential and mixed-use developments on public sector land as part of the UK government’s plan to increase housing provision through private sector involvement.
9.45am: Banks lead the top-shares index higher
It has been another quiet day for the Footsie so far, with attention largely on foreign exchange markets after the latest speech from Janet Yellen.
The chair of the US central bank seemed in a hurry to get cracking with the interest rate rises everyone is expecting.
“Yellen even went as far as saying that it would be ‘imprudent’ to wait for inflation to hit the long-held 2% target before raising interest rates,” noted Connor Campbell at .
“Those comments significantly increase the chance of a hike before the year is over, with most analysts picking December, not November, as the most likely date,” Campbell added.
Rising interest rates benefit the banks, hence lenders featured prominently among the Footsie’s big risers.
(), up 2.8%, was top of the tree; PLC, Holdings PLC, PLC and PLC all made gains of more than 1%, contributing to the 16 point rise to 7,302 on the FTSE 100.
All the big banks had to doff their hat, however, to recent entrant to the retail deposit taking scene, (), which shot up 11% to 26.25p after it said results for the year to the end of September would be ahead of expectations.
The company said PCF Bank, which only started taking retail deposits in late July, had already taken in about £51mln of savers’ money to date.
The old adage of “buy on the rumour, sell on the fact” came to mind this morning as () fell 0.29 to 1.39p.
The shares have more than doubled over the last week, even after today’s fall, which came after the company revealed it is making “encouraging progress” towards a funding deal for its oil field appraisal and development project off the coast of Nigeria.
9.05am: Banks drag the Footsie higher after Yellen’s hints about rate hikes
The FTSE 100 opened its account in positive territory as it rose 22 points to 7,307.48 with bank stocks leading the way.
Standard Chartered () topped the index of blue-chip shares in the wake of comments by Fed chair Janet Yellen that appeared to hint at an imminent rise in US interest rates.
() was not far behind after broker Jefferies upgraded its recommendation on stock in the owner of NatWest to ‘buy’.
All eyes will be on the retail sector later this morning following the release of UK August sales data by the Confederation of British Industry. Volumes are predicted to have bounced back last month after contracting in July.
Across in the US, we have a monthly durable goods numbers while the International Monetary Fund will provide a more analytical assessment of its World Economic Outlook at 2pm.
Proactive news headlines:
(LON:COPL, CVE:XOP) told investors it is making “encouraging progress” towards a funding deal for its oil field appraisal and development project offshore Nigeria. The AIM-quoted oiler said it is confident that it will drill an appraisal well in late 2017 or early 2018 as targeted.
Greka Drilling Limited () has revealed what it described as a “well-balanced” trading performance in its half yearly results. The drill contractor reported a 38% increase in first half revenue, up to US$3.6mln in the six months to 30 June, from US$2.6mln in the same period of last year, as it completed 12 wells in the half versus 10 in the comparative period.
Landore Resources Ltd () struck a confident tone in its half yearly results statement as it looked to further exploration potential around its BAM East gold project, in eastern Canada. The explorer highlighted the rapid delineation of BAM East in the 12 month period following the discovery and its highly successful summer drilling programme, saying that the findings bode well for the possibility of finding and delineating similar open pit gold deposits.
() announced that it has received notification from privately-owned investment company Peter Gyllenhammar AB, confirming that it has a stake of over 3% in the firm, which is currently engaged in a battle with some shareholders over its reverse takeover plans.
Power PLC () said it has agreed in principle a Memorandum of Understanding with two Chinese State-owned enterprises for the full development and funding of its flagship Thar project in the south-eastern Sindh Province of Pakistan.
() said today it has issued £1.55mln in convertible loan notes to a new, unnamed high net worth investor, directors and management of the company, and Sanderson Capital Partners Limited. The Tanzania focused mineral exploration and development company said the subscription raises £500,000 of new capital, and also satisfies £260,000 of awards in lieu of the company’s Management Incentive Scheme. It is also in settlement of new terms agreed covering £790,000 of the discounted debt sale facility currently in place between Sanderson and the company.
Tanzania-focused gold mine developer PLC () remains well ahead of schedule in its development of the Imweru project.
() opened sharply higher after the firm announced a maiden half-year profit.
Drug development company () has signed its first commercialisation deal for its haemostat products PeproStat and ReadyFlow. The deal is with Boryung Pharm, one of the largest pharmaceutical companies in South Korea.
Specialist bank () said results for the current financial year should be ahead of market expectations.
PLC (), a specialist in turning waste into synthesis gas, has told investors it accomplished a “tremendous amount” in the first half of the year.
Vehicle tracking technology firm () is to bring in Daniel Mendis as its chief financial officer to replace the outgoing David Bridge. Mendis, who has been head of finance at ’s () AB Agri division for almost four years, will join on 1 January 2018.
The boss of () has hailed the “transformational” first half of the year as the gold explorer moves towards the development of its Tulu Kapi gold project in Ethiopia.
() said the six months ended June has been a period of immense progress for the company and its lead drug Lupuzor, for the aut-immune disease lupus. Lupuzor is currently undergoing a Phase III clinical trial involving 200 patients in the US, Europe and Mauritius – with 26% of the group having completed the 12 month course of treatment and everybody having passed the six-month milestone.
PLC () has announced a series of commercial deals for its Skinny Tan products, including one targeting the premium health and beauty segment. Upmarket department stores chain Fenwick will take the bronzing and sculpting range in selected outlets.
Hummingbird Resources PLC’s () interim results chart a busy and productive period for the mine developer ahead of its maiden gold pour at the end of this year. The Yanfolila project in Mali is currently under construction. It is fully funded to production and is on schedule and on budget, the firm said.
() will develop its inhaled interferon beta drug SNG001 as a potential treatment for COPD after a review of data indicated it can boost the lungs’ antiviral capabilities. A short trial is being planned this winter to test the COPD potential.
Harvest Minerals Limited () has applied to have its KPfértil fertiliser registered as a remineraliser with the Brazilian Ministry of Agriculture, Livestock and Supply (MAPA). The application is expected to be approved by the end of the year with sales of KPfértil to grow rapidly following certification and in time for the next buying season, said Harvest.
() wants to speed up the timeline at its Tulkubash mine in the Kyrgyz Republic following an improvement in the backdrop for miners in the country.
6.45am: FTSE 100 set for listless start
The FTSE 100 was set to continue yesterday’s directionless trading, after US central bank chair Janet Yellen hinted an interest rate hike is imminent.
Much of yesterday saw the Footsie trading sideways, though a late swoon saw it shed 16 points to close at 7,286, and it looked like more of the same might be in store today, with the FTSE 100 expected to open little changed, according to spread betting quotes.
US stocks closed mixed, following Yellen’s comment that the Federal Reserve should be wary of moving too slowly on interest rate adjustments.
While the S&P 500 closed marginally higher at 2,497, the 30-share Dow Jones dipped 12 points to 22,284.
Heading towards the close of trading, the Nikkei 225 in Tokyo was down 74 at 20,256 but in Hong Kong the Hang Seng was up 113 at 27,626.
On the domestic front,, no Footsie stocks are expected to report results today, leaving the field clear for the second liners.
Shares in chocolatier PLC () have melted in the second half of the year, despite the company revealing in July that revenue in the 53 weeks to 2 July was slightly ahead of expectations.
The top line was 12% higher than a year earlier, albeit with the benefit of an extra week, which implied a number £2mln higher than Liberum Capital Markets had forecast.
Having already announced revenue numbers, focus on Wednesday is likely to be on current trading, particularly in the new shop+café format, and the reception given to new products such as the hot chocolate and the cocoa-infused ice cream offering.
After a strong quarterly update back in June, PLC () is expected to report a similarly robust performance today.
Pretty Little Thing – its acquisition made earlier in the year – is expected to drive total sales growth, which estimates should come in 95% higher than this time last year at £248mln.
Given the premium which BOO shares trade at, guidance is always king though. Investors will be keeping an eye out for second quarter sales as well as any changes to full-year guidance.
Deutsche expects sales at PLT to have grown by around 164% in the second quarter, while the Boohoo brand is expected to have registered sales growth of 37%.
Around the markets
Sterling: US$1.3430, down 0,03 cents
10-year gilt: yielding 1.369%
Gold: US$1,297.70 an ounce, down US$4
Brent crude: US$58.66 a barrel, up 22 cents
Significant announcements expected today
Finals: PLC (), PLC ()
Interims: PLC (), PLC (), PLC (), Destiny Pharma PC (), PLC (), (LON:NVE), (), Group PLC (), RedT Energy PLC (), Summit Germany Limited (LON:SMTG), PLC ()
Trading update: PLC ()
Economic data: Nationwide house prices; final reading UK Q3 GDP; CBI distributive trades report; US durable goods orders; US pending home sales
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