London shares seesawed and ended firmer on Monday thanks to gains by oil prices.
Barclays and other banks were buoyed in the wake of last week’s balance sheet-damaging UK rate cut when analysts at Exane BNP Paribas upgraded the stock to 'outperform' from 'neutral' as it took a look at UK banks.
Exane pointed out that having been cautious on the stock for two years, it "made the mistake" of upgrading the recommendation shortly before the UK's vote to leave the European Union, downgrading it back to 'neutral' again afterwards as it awaited more certainty on the economic outlook.
Exane said Barclays' core first-half pre-tax profit was 10% ahead of consensus thanks to better pre-provision profit.
Also on the positive side for the market, Brent crude prices ended higher at 2.6% to $45.41.
But it was also a subdued day after analysts at JP Morgan forecast Britain’s third-quarter gross domestic product going into reverse to the tune of 0.5% before snapping back 0.5% higher in the fourth quarter.
The global economy, however, is seen as not only shaking off the effects of the Brexit vote, but positively thriving, according to the broker. The global economy is expected to grow 2.5% in Q3 versus an earlier forecast of 2.1%.
If the FTSE blue-chip index was slightly ambivalent about direction there was none of that from the mid-caps. The FTSE 250 soldiered higher to close up 0.5% at 17,557. This was its best level since mid-August 2015 and evidence that, for now, those UK-centric companies had shaken off the post-Brexit blues of a weaker sterling which had benefited their larger FTSE 100 cousins.
The FTSE AIM 100 Index ended up 0.5% at 3,703 and the FTSE AIM All-Share Index also up 0.5% at 772.
At least the gains in London were broad-based. No less than 35% of stocks rose, 28% lost and 37% were unchanged.
FTSE 100 was around flat at the midday point having lost earlier gains.
The UK benchmark added 0.03% to stand at 6,795, while in Europe major indices were also higher. The CAC 40 is up 0.44% and the German DAX was stronger, adding 0.95%, or over 98 points.
Miners were strong along with Barclays (LON:BARC), which added 3.16% to 156.80p, while BHP Billiton (LON:BLT) gained 3.6% to 1,051p. Top laggard on Footsie was Hikma Pharma (LON:HKM), which was down 4.51% to 2,287p as it continues to suffer from last week's update, which sent shares lower.
The firm told investors it expected group revenue to be around £1.6billion for the year. Broker Citi reduced its rating to 'neutral' from 'buy' on the shares.
Shares in Lloyds (LON:LLOY) were up almost 2% to 54.16p as there was news swirling round that the UK government may shelve its discount sale of shares to investors due to the uncertainty caused by the Brexit vote.
The retail share sale was announced by former Chancellor George Osborne in October last year.
Data showed that post the Brexit vote, consumer spending in the UK picked up in July, shelling out on clothes and meals out.
Spending increased 1.6% year-on-year, the biggest rise in three months.
In small caps, junior shale explorer Igas Energy (LON:IGAS) raced up almost 30% to 18.50p as it was boosted by government plans to potentially compensate residents affected by fracking.
Also higher was proximity marketing firm Proxama (LON:PROX), which added over 9% to 0.60p and AFC Energy (LON:AFC) as it inked a joint development agreement (JDA) with an Italian firm called Industrie De Nora designed to “accelerate the commercialisation” of former’s fuel cell technology.
On the losing front, Aureus Mining (LON:AUE) lost 15.15% to 3.50p as its second quarter update revealed there were still issues with its newly optimised processing plant at New Liberty in Liberia.
FTSE 100 is up over 35 at 6,821 at the time of writing having closed last week at close of 6,793. In small caps, the trend was also north with FTSE AIM 100 adding 0.19% to 3,690 and the FTSE AIM All share adding 0.24% to 779.230.
It was a good week for the markets last week after concerns that there would be some profit taking in August after a positive July,
Michael Hewson, at CMC Markets, said: "...initially that did turn out to be the case, however we saw a sharp turnaround at the end of the week as US markets saw new record highs on the S&P500, the FTSE250 wiped out all its post Brexit losses, and hit its best levels this year, while the FTSE100 posted 13 month highs."
Boosting sentiment was a very strong US jobs number and a marginal cut by the BoE to the interest rates.Barclays gained 3.72% to 157.65p after RBS sank further into the red last week and it emerged the, Lloyds (LON:LLOY) stake sell off could be ditched amid uncertainty after the Brexit vote.
Closely followed drugs firm Shire (LON:SHP) posetd interims, which showed product sales up 36% to US$3.9bn for the six months to June 30, but shares lost 1.26% to 5,080p.
In small caps, Aureus Mining (LON:AUE) was a noteable laggard, down 21% to 3.25p after a quarterly update revealed there were still issues with its newly optimised processing plant at New Liberty in Liberia.
AFC Energy plc (LON:AFC) added over 11% to 21.50p. On Friday, it inked a joint development agreement (JDA) with an Italian firm called Industrie De Nora designed to “accelerate the commercialisation” of former’s fuel cell technology.
The pair plan to widen the collaboration to develop new products based around AFC’s technology subject to the “satisfactory progress” of the initial collaboration.
The well was drilled to a depth of 2,665 metres and encountered 28 metres of net gas pay.
Testing measured a stabilised gas flow rate, after stimulation, of 17mln cubic feet per day which as Sound Energy highlights is significantly above the company’s expectations.
Machine-to-machine (M2M) communications leader Telit Communications Plc (LON:TCM) is expecting a stronger second half after the first half of 2015 was blighted by unexpected delays. Shares gained 3.75% to 269.75p, however.
Despite the US delays, the company still managed to drive revenues in the first half of 2016 6.3% higher to US$166.1mln compared to US$156.3mln in the same period of 2015, driven by strong take-up of its Internet of Things (IoT) services.
London’s blue-chip index is set to open little changed, spurning the chance to make further ground after Friday’s solid performance on Wall Street.
A strong set of jobs numbers pushed US stocks higher on Friday, while Asian markets this morning are also on the rise.
Despite those promising omens, the FTSE 100 is currently expected to open no more than a couple of points up from Friday’s close of 6,793.
In Tokyo, the Nikkei 22 was enjoying a sparkling day on the back of Friday’s US jobs data, with the index 2.3% firmer at 16,627 towards the close of trading.
In Hong Kong, the Hang Seng index was 1.3% higher at 22,425.
On the corporate front in the UK, a quiet day to the week is in prospect.
Profit before tax collapsed, however, to US$16.6mln from US$119.9mln, while a US$249mln loss from discontinued operations contributed to a net loss of US$162.1mln versus a profit of US$159.6mln the year before.
- Oil: Brent crude for October delivery – US$44.43 a barrel, up 15 cents (0.3); West Texas Intermediate for September delivery – US$41.96, up 16 cents (0.4%).
- Gold: December futures contract – US$1,341.60, down US$2.70 (0.2%)
- Foreign exchange: Sterling – US$1.3076, up US$0.0006 (0.04%)
Market rumour: Government mulls deferring planned sale of Lloyds shares to Joe Public
UK’s top bosses received 10% pay rise in 2015 as average salary hit £5.5mln, the Guardian reports.
One in four firms started in Britain since 2010 have been founded by foreigners, according to the Daily Mail.
The Independent reveals that the government spends six times more per person on transport in London than in the North.