LONDON MARKET MIDDAY: Tobacco Supports FTSE; Pound Awaits YouGov Poll

(Alliance News) - The FTSE 100 continued to push higher on Wednesday, helped by gains for tobacco majors following a confident update from British American Tobacco.

The pound was higher as traders await a closely-watched poll from YouGov, hoping it will shed some light on the outcome of December's general election in the UK.

The FTSE 100 index was up 28.04 points, or 0.4%, at 7,431.18 Wednesday midday. The FTSE 250 was up 58.93 points, or 0.3%, at 20,923.85, and the AIM All-Share was up 0.1% at 916.57.

The Cboe UK 100 index was up 0.3% at 12,597.36. The Cboe UK 250 was 0.4% higher at 18,806.24, and the Cboe UK Small Companies was also up 0.4%, at 11,357.00.

In European equities, the CAC 40 index in Paris was flat and the DAX 30 in Frankfurt 0.3% higher in early afternoon trade.

In a US-heavy economic calendar on Wednesday ahead of the Thanksgiving holiday, personal consumption expenditures, alongside an estimate of third-quarter gross domestic product, are due at 1330 GMT. Consensus, according to FXStreet, sees the latest estimate of third-quarter US GDP unchanged at 1.9% growth year-on-year.

Elsewhere, a closely-watched UK election poll is Wednesday night.

"Tonight at 10PM we will get what is seen by many as the best indication so far as to the prospects of the respective parties with the release of the YouGov MRP model which correctly predicted a hung parliament in 2017," said David Cheetham at XTB.

He continued: "There are obviously flaws with this model, not least that it was conducted well before the election was called, but in all likelihood the markets will treat this as the best guess yet and therefore we expect an increase in volatility for GBP pairs when the results are released."

The pound was quoted at USD1.2879 Wednesday midday, higher compared to USD1.2845 late Tuesday.

The YouGov poll comes after Labour has accused the Conservatives of negotiating a secret trade deal with the US to open up the NHS to American pharmaceutical companies.

Leader Jeremy Corbyn said the UK opposition party had obtained uncensored government documents showing talks were at a "very advanced stage". He said the 451 pages covered six rounds of negotiations – taking place in Washington and London – starting in July 2107 to "just a few months ago".

In other currencies, the euro was quoted at USD1.1009 at midday, broadly flat on USD1.1015 late Tuesday. The yen was soft with the dollar quoted at JPY109.13, versus JPY109.05 late Tuesday.

"Diminished trade worries and improved global industrial signals have underpinned the USD that has seen multiple sessions of gains. Despite a stronger greenback, commodities also rebounded in the beginning of this week," said Danske Bank.

Danske Bank continued: "Notably, the price of Brent crude broke above the USD64 [a barrel] level, but base metal prices also rallied."

However, Brent had fallen back to trade at USD63.44 Wednesday midday versus USD63.77 at the last London equities close.

Gold was quoted at USD1,459.07 Wednesday midday, flat on USD1,460.48 late Tuesday as the safe haven asset tread water amid the risk-on mood.

In the US on Wednesday, stocks are pointed to a higher open in the last full session on Wall Street this week before Thanksgiving holiday disruption. The Dow Jones is called up 0.1%, the S&P 500 up 0.2% and the Nasdaq seen 0.1% higher.

In London, British American Tobacco traded higher as it posted a confident trading update.

BAT said it expects to report a rise in adjusted operating profit for 2019 in the upper half of its 5% to 7% guidance range. Constant currency revenue for the year, meanwhile, is also expected to grow in the upper half of its guidance range, which is between 3% and 5%.

In New Categories, the Vuse and Vype vapour products have grown market share, though full-year constant currency revenue growth for the division as a whole is expected at the lower end of the company's 30% to 50% range, BAT said, reflecting a slowdown in the US vapour market.

Massachusetts became the first American state to issue an outright ban on all e-cigarette devices in September amid a spate of deaths and injuries linked to vaping across the country, with the prohibition to last for four months.

"The stock is down 44% from the all-time high recorded in 2017, so perhaps a lot of the negative news surrounding vaping is already factored in," commented David Madden at CMC Markets.

Tobacco peer Imperial Brands was up 2.6% in a positive read-across from BAT's statement.

At the bottom of the blue-chip index was Compass Group, down 2.6% as it extended the previous session's falls. The stock shed 7.5% on Tuesday after issuing a cautious outlook for Europe.

Rolls-Royce Holdings, meanwhile, slipped 1.5% after Morgan Stanley cut the jet engine maker to Equal Weight from Overweight.

In the FTSE 250, Future shares tumbled 8.4% on a stake sale.

Members of Future's management team, and some former employees, sold 3.1 million shares in the magazine publisher, Numis Securities said. The shares represent, in total, around 3.2% of Future's issued share capital.

The shares were priced at 1,400 pence, with the stock having closed at 1,572p on Tuesday.

Chief Executive Zillah Byng-Thorne and Chief Financial Officer Penny Ladkin-Brand sold about 1.0 million shares and 550,000 shares respectively, "in part to satisfy certain tax obligations and other costs associated with the vesting of the options". The other sellers, comprising 17 individuals employed or previously employed by Future, sold about 1.5 million shares in aggregate.

Pub firm Mitchells & Butlers was down 2.4% after Berenberg downgraded its rating on the stock to Hold from Buy.

By Lucy Heming; lucyheming@alliancenews.com

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