FTSE 100 rises 58 points
Defensive stocks out of favour as investors go “risk-on”
Yield on 10-year gilt recovers to 0.5%
Taking their lead from Asian markets, European benchmarks have opened higher, including the battered and bruised FTSE 100.
London’s index of large-cap shares was up 58 points (0.8%) on the day at 7,175 but still down more than 400 points this month.
“The FTSE 100 pushed to 7175, threatening to take out 7,200 again and surmount the 200-day moving average again. Meanwhile the DAX was up at 11,680, short of the key 11,740 level. These are dip-buying kind of moves but we are yet to see the start of a new upwards trend for equities,” observed Neil Wilson ad markets.com.
US equities suffered a third straight weekly fall, despite Friday’s rally. The direction of travel has shifted even if we are seeing bounces like today. US futures are heading higher.
The former is down 1.5% at 653.7p, reflecting a 0.8% fall in the price of gold to US$1,511.20 and a 1.2% slide in the price of silver to US$16.92 an ounce, as investors abandon haven investments; a “risk on” mood is also behind the lack of enthusiasm for Centrica.
Grocery plays Ocado Group PLC (LON:OCDO) and J Sainsbury PLC (LON:SBRY) are the best blue-chip performers, up 3.7% and 2.9% respectively; it must be the prospect of us all rushing out to buy tins of spam, bottles of Camp coffee and quarter-pound jars of aspirin ahead of the “do or die” Brexit deadline.
The Sunday Times has obtained a copy of the government’s classified ‘Yellowhammer’ report on the chaos expected after a no-deal Brexit. Find out how Whitehall is preparing for food and medicine shortages, transport disruption and civil unrest in our comprehensive coverage. pic.twitter.com/UwDmCUtsbt
— The Sunday Times (@thesundaytimes) August 17, 2019
8.40am: FTSE 100 joins the global trend
The FTSE 100 got off to a strong start, rising 56 points to 7,172.89, as London’s trading community opted to ignore the negatives and accentuate the positives.
This, remember, was after fears of recession sent the markets on a roller coaster ride last week.
Those worries, it appears, have been soothed somewhat by hopes that the major world economies step in with economic stimulus packages to mitigate the worst of any downturn. China and Germany appear to be leading the way in this regard.
But, while Asia’s main markets kicked off the week strongly, trade war worries and economic fears are still likely create volatility, analysts warned.
Closer to home, weekend reports outlining the potential impacts of a no-deal Brexit appear to have already been priced into the market as the pound remained above US$1.21.
On the Footsie, Glencore (LON:GLEN), up 2.6%, led the mining revival.
Among the small-caps, the med-tech firm IXICO (LON:IXI) shot up 20% after it said its results would be materially ahead of expectations.
6.30am: FTSE 100 set for solid start
The FTSE 100 looks set to get off to a solidly positive start, taking its cue from Asia’s main markets.
The Nikkei, Hang Seng and Shanghai Composite all advanced, although the mood music was mixed.
President Trump, fresh from vacation at his New Jersey Golf club, played down the risk of recession; yet at the same time he was happy to ramp up the trade rhetoric.
Cocktail for further uncertainty
And while mass protests in Hong Kong passed off peacefully, the mood there remains febrile. Add to that the Italian political stand-off, Iran and Brexit, and you have a cocktail for continued uncertainty, analysts said.
“One thing does appear certain in amongst all of this, government bonds with a positive yield are likely to remain in demand, which means US treasuries and UK gilts are likely to continue to go higher,” said Michael Hewson, analyst at CMC Markets.
Remember, the yield inversion last week – where the interest rates on 10- and 30-year government debt fell below the return paid on short-dated treasuries – sent the market into a recessionary spiral.
Back here in the UK, scheduled corporate news looks to have slowed to a dribble with the FTSE 100 excitement this week coming from builder Persimmon (LON:PSN), BHP (LON:BHP) and Antofagasta (LON:ANTO).
Around the markets: pound worth US$1.2157 (up 0.02%); gold US$1,519.60, down US$4 an ounce; Brent crude US$59.28, up 64 cents a barrel
Monday’s main corporate news
Interims: BATM Advanced PLC (LON:BVC)
Economic data: Eurozone CPI
- Investors position for fresh wave of economic stimulus – billions flood into government debt on signs of global slowdown
- LSE needs to beat Bloomberg at its own game – boss David Schwimmer is betting on Refinitiv and financial data revolution to unseat incumbent
- FTSE 100 CEO pay falls to lowest level in five years
- British Steel buyer flags job cuts in push to raise output
- WeWork landlords ‘exposed to $40bn’ in rent commitments
- Blackout fears over National Grid cables from the Continent
- RBS hides data breach from customers
- Minibond firm ‘sound’ despite missing payments to investors
- Buyers return to housing market after prices slide
- Global slowdown applies brake to dividends
- The specialist metals engineer Doncasters is in line to be broken up and sold for parts by its hedge fund lenders
- Standard Chartered faces £10mln Treasury fine
- Sainsbury’s kicks off search for Mike Coupe’s replacement
- Berkeley Homes’ climbdown on exec pay fails to quell shareholder anger
- BBC using strong-arm tactics over iPlayer, say independent producers – small TV companies claim BBC trying to get them to lease shows for longer for same fee
- Small energy companies risk going bust in financial shock