International Airlines Share News (IAG)

LONDON (Alliance News) - Share prices in London were mixed Monday at midday, as a summer hike to US interest rates appeared unlikely following Friday's disappointing nonfarm payrolls data, but blue-chip housebuilders and the pound were suffering after new polls gave the Leave campaign the lead ahead of the Brexit referendum on June 23.

"Volatility has certainly been heightened of late," said IG analyst Joshua Mahony. "However, as markets settle down to a more normal rhythm, it is clear that the factors affecting investor sentiment remain the same: the EU referendum and the Federal Reserve."

Over the weekend, a YouGov poll for ITV's Good Morning Britain found support for the UK leaving the European Union at 45%, compared to 41% for remaining. Meanwhile, the latest Opinium survey for The Observer found that 43% of respondents will vote to stay in the EU, against 41% who will vote to leave. That compares to a 44% to 40% lead for Remain when the survey was previously carried out two weeks earlier.

Another poll released on Monday by ICM showed a 48% support for the Leave campaign, while 43% of respondents said they will vote for Remain.

The large-cap FTSE 100 index was up 0.9%, or 56.19 points, at 6,265.82, while the AIM All-Share was up 0.4% at 745.13. But the mid-cap FTSE 250 was down 0.1% at 17,058.45 points, as the companies listed in that index are considered more UK-focused, thus more exposed to the economic effects of Brexit.

The pound also reacted to the polls, with sterling falling to a three-week low of USD1.4353 Monday morning, having stood at USD1.4529 at the London equities close on Friday. However, the pound recovered a little to stand at USD1.4398 by midday.

Blue-chip housebuilders were firmly in the red, with Berkeley Group Holdings down 1.6% and Barratt Developments down 1.5%. "There's still a shortage of housing, which should limit the damage, but a Brexit and its impact on immigration could exacerbate problems finding skilled labour," said CMC Markets analyst Jasper Lawler.

Meanwhile, Wolseley was down 1.6%, after the plumbing and heating products supplier was downgraded to Neutral from Overweight by JPMorgan.

Also among decliners in the FTSE 100 were International Consolidated Airlines Group and easyJet, down 1.5% and 1.2%, respectively. The air carriers were suffering from a higher oil price, which was benefiting from a weaker dollar after the jobs figures. Brent oil was at USD50.09 a barrel at midday, higher than USD49.51 at the close on Friday.

easyJet reported growth in the number of passengers it carried in May, but its load factor slipped year-on-year. The budget airline said it carried 6.9 million passengers in May, a 5.7% increase on the 6.5 million it carried in the same month a year earlier. Load factor, however, slipped by 0.1 percentage point to 91.5% from 91.6%. easyJet noted that there were 173 cancellations during the month as a result of air traffic control strikes in France and bad weather conditions.

Conversely, higher commodities prices were supporting resource stocks in London, with the FTSE 350 Mining Sector index up 5.8%, by far the best performing sector. Royal Dutch Shell 'A' shares and BP were adding 1.9% and 1.8%, respectively.

The greenback dropped after poor nonfarm payrolls figures were published on Friday, pushing back expectations of a US interest rate increase by the Fed. Investors will focus on a speech by Fed Chair Janet Yellen at 1730 BST, after the London equities market is closed.

IG's Joshua Mahony expects a "significantly different tone" from Yellen. "The Federal Open Market Committee has reiterated their data dependence, which according to this latest batch of employment data, would not necessarily support a rate hike. Should Yellen admit that a summer hike is now relatively unlikely, we could see the dollar take a hit once more today."

The FOMC is scheduled to meet on June 14-15 and on July 26-27. The first meeting of the FOMC after the summer is scheduled for September 20-21.

Still in the economic calendar Monday, the US labor market conditions index is due at 1500 BST.

US stocks were called for a flat to higher open, with the Dow 30 and the Nasdaq 100 both pointed up 0.1% and the S&P 500 seen flat.

In Europe, the CAC 40 index in Paris was down 0.1%, while the DAX 30 in Frankfurt was up 0.1%.

Eurozone investor confidence improved by more than expected in June, survey results by Sentix showed. The investor confidence index rose to 9.9 in June from 6.2 in May. It was forecast to rise to 7.0. The score reached its highest level since last December.

In Asia, the Nikkei 225 index in Tokyo ended down 0.4% and the Shanghai Composite closed down 0.2%. The Hang Seng index in Hong Kong added 0.4%.

By Daniel Ruiz; danielruiz@alliancenews.com

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