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London midday: Stocks rally as retail sales top expectations, miners bounce back

Thu, 16th Aug 2018 11:16

(Sharecast News) - London stocks had extended gains by midday on Thursday, boosted by news of high level trade talks between the US and China, better-than-expected UK retail sales data and a recovery in the mining sector.

The FTSE 100 was up 0.6% to 7,545.05, while the pound was flat against the dollar at 1.2700, having briefly popped higher after the retail sales release, and 0.2% lower versus the euro at 1.1171.

The mood was lifted after China's Ministry of Commerce said a Chinese delegation led by vice commerce minister Wang Shouwen will travel to the US for talks in late August. The talks, which are at the invitation of the US, will be held with US Under Secretary of Treasury for International Affairs, David Malpass.

Qatar's pledge late on Wednesday to invest $15bn in Turkey's bank and financial markets was also continuing to underpin sentiment, along with the release of solid retail sales data.

According to figures released by the Office for National Statistics earlier, retail sales grew 0.7% on the month in July compared to a 0.5% drop in June, beating expectations for a 0.2% increase as the online segment lent a hand.

On the year, meanwhile, sales grew 3.5%, up from 1.1% growth in July 2017 and beating expectations for a 3% increase.

In the three months to July, retail sales rose 2.1% from the previous three-month period, marking the strongest performance since February 2015.

Online spending was up 15.3% on the year and now makes up 18.2% of all retail sales, which is a new record high. Meanwhile, online spending at department stores rose 35% on the year, and also reached a record proportion of all sales at 18.2%.

Rhian Murphy, senior statistician at the ONS, said: "Many consumers stayed away from some high street stores in July, but online sales were very strong, supported by several retailers launching promotions. Food sales remained robust as people continued to enjoy the World Cup and the sunshine."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the pick-up in sales was largely due to temporary online discounting and warned that July's momentum in overall sales growth was unlikely to be maintained.

Miners lent support, with Rio Tinto, BHP Billiton, Glencore and Antofagasta all in the green, bouncing back from heavy losses in the previous session on the back of falling metals prices and a stronger dollar.

On the Beach rallied as it announced the acquisition of Classic Collection Holidays for 20m and said it continues to expect adjusted pre-tax profit for the year to be in line with management's expectations.

Copper miner Kaz Minerals surged as it reported a rise in first-half profit, while Marshalls racked up healthy gains as it said interim profits rose 12% despite the 'Beast from the East' hitting sales by 9m.

Auto Trader edged up after entering into an agreement to create a joint venture with Cox Automotive UK, to provide a leading digital marketplace for wholesale vehicles in the UK.

Going the other way, B&Q owner Kingfisher fell as it said sales in the second quarter were boosted by the warm weather but the DIY retailer's margins were weaker than hoped due to further troubles in France.

Moneysupermarket, GoCompare and Admiral - which owns - were all on the back foot following reports that Amazon is considering the creation of an insurance comparison website for the UK.

Russ Mould, investment director at AJ Bell, said: "Expanding into financial services may seem a strange move for a retailer, yet it makes sense when you consider Amazon's incredible reach and engagement with such a wide range of consumers.

"Home, travel and car insurance are already highly competitive markets from both an underwriting perspective and the number of price comparison sites. That won't bother Amazon as its muscle power and wide reach could give it a fighting chance of making a big success from facilitating the sale of third party insurance policies."

Oil services firm John Wood Group was in the red after announcing the sale of its 50% stake in the Voreas wind farm joint venture in Italy for $27m in cash, while gambling company Rank slumped as it posted a 41% drop in full-year pre-tax profit.

On the broker note front, AstraZeneca and Petrofac were both downgraded to 'hold' at Jefferies, while Informa was cut to 'equalweight' at Morgan Stanley.

Esure was upgraded to 'neutral' by UBS while Hikma Pharmaceuticals was lifted to 'add' from 'hold' at Peel Hunt.

Anglo American, Ashtead, Aviva, Evraz, HSBC, Legal & General, Lloyds, Pearson, Reckitt, Schroders, Segro, Standard Life Aberdeen, CountourGlobal, Domino's, Ibstock, Lancashire Holdings, Merlin Entertainments, and Millennium & Copthorne were among the companies whose stock went ex-dividend.

Market Movers

FTSE 100 (UKX) 7,545.05 0.63%

FTSE 250 (MCX) 20,484.46 0.81%

techMARK (TASX) 3,544.07 0.45%

FTSE 100 - Risers

Marks & Spencer Group (MKS) 302.00p 2.34%

Smurfit Kappa Group (SKG) 3,196.00p 2.24%

Melrose Industries (MRO) 217.90p 2.16%

WPP (WPP) 1,271.00p 2.09%

Royal Mail (RMG) 464.00p 2.07%

International Consolidated Airlines Group SA (CDI) (IAG) 691.00p 1.92%

TUI AG Reg Shs (DI) (TUI) 1,484.00p 1.89%

Scottish Mortgage Inv Trust (SMT) 547.45p 1.83%

CRH (CRH) 2,529.00p 1.81%

Glencore (GLEN) 303.70p 1.74%

FTSE 100 - Fallers

Evraz (EVR) 466.90p -4.50%

Kingfisher (KGF) 276.30p -4.20%

Informa (INF) 769.80p -1.94%

Admiral Group (ADM) 2,029.00p -1.60%

Legal & General Group (LGEN) 255.97p -0.71%

Reckitt Benckiser Group (RB.) 6,744.00p -0.60%

Standard Life Aberdeen (SLA) 315.30p -0.60%

United Utilities Group (UU.) 746.10p -0.44%

Lloyds Banking Group (LLOY) 60.23p -0.40%

Aviva (AV.) 485.10p -0.29%

FTSE 250 - Risers

On The Beach Group (OTB) 465.00p 13.00%

Marshalls (MSLH) 467.08p 10.58%

Premier Oil (PMO) 117.10p 7.83%

Hochschild Mining (HOC) 171.45p 5.57%

Bank of Georgia Group (BGEO) 1,762.00p 5.51%

Drax Group (DRX) 382.00p 4.37%

Kaz Minerals (KAZ) 568.60p 3.87%

Syncona Limited NPV (SYNC) 280.32p 3.44%

IP Group (IPO) 128.00p 3.23%

Hikma Pharmaceuticals (HIK) 1,801.00p 3.21%

FTSE 250 - Fallers

RHI Magnesita N.V. (DI) (RHIM) 4,702.00p -5.16% Group (MONY) 289.51p -3.24%

Rank Group (RNK) 171.60p -2.50%

Safestore Holdings (SAFE) 530.00p -2.48%

Hilton Food Group (HFG) 932.00p -2.31%

The Renewables Infrastructure Group Limited (TRIG) 109.52p -1.69%

TalkTalk Telecom Group (TALK) 117.30p -1.68%

Indivior (INDV) 281.20p -1.58%

BCA Marketplace (BCA) 229.00p -1.29%

Centamin (DI) (CEY) 104.15p -1.28%

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