LONDON MARKET MIDDAY: Miners drive FTSE 100 higher; pound hits USD1.41

(Alliance News) - Miners led the FTSE 100 higher on Monday, with London's blue-chip index outperforming European peers despite a rising pound, while the mid-cap FTSE 250 index lagged despite a 16% share surge for baker Greggs.

The FTSE 100 index was up 12.63 points, or 0.2%, at 7,142.34 on Monday. The FTSE 250 index was down 20.99 points, or 0.1%, at 22,754.29. The AIM All-Share index was down 0.1% at 1,260.88.

The Cboe UK 100 index was up 0.3% at 711.86. The Cboe 250 was up 0.2% at 20,482.84, and the Cboe Small Companies up 0.7% at 15,141.34.

In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were down 0.2% and 0.3% respectively.

Miners were helping the FTSE 100 outperform European counterparts.

"Commodities are powering higher on Monday, supported not only by the weaker US dollar but also by reopening optimism and hope of large-scale infrastructure spending in both US and China," explained Oanda analyst Sophie Griffiths.

Rio Tinto was the top performer in the FTSE 100, up 3.3%, while Antofagasta rose 2.8% and BHP 2.7%.

RBC upgraded gold and silver miner Fresnillo to Sector Perform from Underperform. The stock also got a lift as gold prices rose at the start of the week, the precious metal quoted at USD1,838.61 from USD1,834.71 on Friday.

The dollar remained soft after Friday's shockingly disappointing US jobs report, helping gold prices.

Sterling was quoted at USD1.4101 on Monday, higher than USD1.3995 at the London equities close on Friday and trading around its best levels since late February. The pound outperformed after the Scottish National Party fell one seat short of an overall majority in the Scottish Parliament elections - though the final result still leaves Holyrood with a pro-independence majority.

The euro traded at USD1.2169 on Monday, up on USD1.2156 late Friday as data from Sentix showed eurozone investor confidence hit its best level in over three years in May.

The overall index bounced to 21.0 points in May from 13.1 in April. A reading for May of 14.0 points was expected, according to FXStreet, with the actual figure not just beating this but also marking the best result since March 2018.

However, the Japanese yen edged back. Against the yen, the dollar was quoted at JPY108.74, rising from JPY108.52.

Brent oil was trading at USD68.73 a barrel, up on USD68.20 late Friday. The US government declared a regional emergency on Sunday as the largest fuel pipeline system in the US remained largely shut down, two days after a major ransomware attack was detected.

The Colonial Pipeline Co ships gasoline and jet fuel from the Gulf Coast of Texas to the populous East Coast through 5,500 miles of pipeline, serving 50 million consumers. The company said it was the victim of a cybersecurity attack involving ransomware – attacks that encrypt computer systems and seek to extract payments from operators.

Back in London, Berkeley Group rose 2.8% after JPMorgan raised the housebuilder to Overweight from Neutral.

In the red was International Consolidated Airlines, down 1.6% on disappointment over the UK's government's travel re-opening plans.

On Friday evening, the UK government revealed Portugal, Gibraltar and Israel are among just 12 destinations on England's new green list for travel.

Transport Secretary Grant Shapps said the removal of the ban on international leisure travel was "necessarily cautious" as he announced the destinations that holidaymakers will be able to visit from May 17 without having to self-isolate on their return to England.

But while Portugal, Gibraltar and Israel are planning to welcome UK tourists, the green list also features several remote British Overseas Territories and destinations where visits are heavily restricted, such as Australia, New Zealand, Singapore, Brunei and the Faroe Islands.

easyJet shares fell 3.0% and Wizz Air was down 3.8%.

"Airlines are having to ramp up flights to the likes of Portugal, while hoping that the list will increase as we progress through the summer," said Joshua Mahony, senior market analyst at IG.

At the top of FTSE 250 was baker Greggs, shares rising 16% with sales on a roll as the UK re-emerges from lockdown.

The baker said like-for-like sales in the 18 weeks to May 8 were down 14% on the same period in 2019. In the ten weeks to March 13, sales were down 23% on two years ago, but this narrowed to a decline of just 3.9% in the eight weeks to May 8. Since non-essential retail shops were allowed to reopen in England on April 12, two-year like-for-like sales have been positive, Greggs said.

While there is still uncertainty over trading conditions, Greggs believes that 2021 profit is likely to be "materially higher" than previous expectations and could be around 2019 levels in the absence of further restrictions.

Greggs did caution that it remains hard to predict how sales will develop, with the further relaxation of restrictions likely leading to increased competition from cafes and restaurants.

Victrex shares rose 9.1% as it declared an interim dividend even as half-year profit fell.

Revenue for the half-year edged down 0.4% to GBP150.9 million, reflecting a weaker sales mix. On a constant currency basis, revenue rose by 2% year-on-year. Pretax profit declined 7% to GBP46.6 million.

Despite the profit fall, Victrex declared an interim dividend of 13.42 pence versus none paid a year prior. The interim dividend for the 2020 financial year was deferred and subsequently cancelled as part of cash conservation measures. The payout just declared is at the same level as the interim dividend for 2019.

Safestore rose 8.1%. The self-storage space provider lifted earnings guidance as it reported an increase in quarterly sales and a growing property pipeline.

Revenue in the financial second quarter ended April 30 was up 11% year-on-year to GBP43.7 million from GBP39.4 million, the company said in a trading update. Adjusted diluted earnings per share for the year ending October 31 is now expected to be between 37 pence and 38p. The company had previously said it would be at the top end of analysts' forecast range of 31.2p to 34.6p.

Stocks in New York are called for a mixed open on Monday, with the Dow Jones called up 0.3% and the S&P 500 seen slightly higher but the Nasdaq Composite on course for a 0.3% slide.

By Lucy Heming; lucyheming@alliancenews.com

Copyright 2021 Alliance News Limited. All Rights Reserved.