8th Aug 2016 15:59
LONDON (Alliance News) - Share prices in London ended higher Monday, as positive sentiment from Friday's surprisingly good US jobs report carried over the weekend, while renewed expectations of a freeze in oil production by OPEC supported crude prices.
The blue-chip FTSE 100 stock index closed up 0.2%, or 15.66 points, at 6,809.13, having touched a high of 6,829.47 points shortly after the open Monday, its highest level since late-June 2015. The index has risen by 18% since sell-off on the day after the Brexit referendum.
The mid-cap FTSE 250 index rose 0.5%, or 92.39 points, to 17,557.74, and the AIM All-Share index added 0.5%, or 4.14 points, to close at 772.56.
In mainland Europe, the CAC 40 index in Paris rose 0.1%, and the DAX 30 in Frankfurt ended up 0.6%.
The gains among UK and European equities on Monday added to those on Friday, after the positive US jobs figures. The Labor Department said nonfarm payroll employment rose by 255,000 jobs in July, after adding 292,000 jobs in June. Expectations were for a increase of 185,000 jobs.
The dollar strengthened against the euro and the pound following the US payrolls, with both sterling and the single currency on Monday unable to take back the ground lost on Friday. At the European equities close on Monday, the pound was quoted at USD1.3043 against USD1.3070 at the same time on Friday.
The euro stood at USD1.1075 late Monday, compared to USD1.1079 on Friday.
Gold also failed to recover on Monday from the decline seen on Friday after the US job report. The precious metal stood at USD1,362.17 an ounce prior to the US data, but touched a low of USD1.329.70 an ounce early Monday. At the European equities close, gold was quoted at USD1,335.71 an ounce compared to USD1,338.55 an ounce on Friday.
"The rallying equity markets and firm US dollar is proving to be a toxic mix for the buck-denominated and perceived safe-haven gold," said FOREX.com analyst Fawad Razaqzada.
The analyst said "things could turn ugly for gold in the days and weeks to come", as the precious metal has reached an "exhaustion point around a long-term key resistance area. So, in theory, then, gold may start to head lower now."
Despite having traded lower early on Monday, FTSE 100-listed gold miners finished the day in the green, with Fresnillo up 1.6% and Randgold Resources up 0.8%.
Contrary to gold, Brent oil price rose significantly, quoted at USD45.28 a barrel at the equities close, compared to USD43.58 a barrel on Friday, amid renewed rumours of an output freeze.
CMC Markets analyst Jasper Lawler said that, as Iran's output nears historical levels, an agreement to freeze production will become more in its economic interest, and increase the chance it will put its other differences with Saudi Arabia aside. Lawler noted Iran's output has expanded much quicker than expected, making an agreement amongst larger producers at OPEC meeting in November "a distinct possibility".
In New York, stocks were slightly lower at the European equities close, with the Dow 30 and S&P 500 indices both down 0.1% and the Nasdaq Composite down 0.3%. Still in the US corporate calendar, media firm News Corp publishes full-year results after the Wall Street close.
Among individual London stocks, due to a quiet start to the week in terms of corporate news, broker rating changes were responsible for the main movers.
Barclays shares rose 3.4% at 156.75p, after Exane BNP raised to stock to Outperform from Neutral and lifted its price target to 205.00 pence from 165.00p. Other banks also ended higher, with Royal Bank of Scotland Group up 2.2% and Lloyds Banking Group up 2.2%.
Mining stocks also supported the positive finish of the FTSE 100, with BHP Billiton up 3.2% and Antofagasta up 2.8%. IG analyst Chris Beauchamp said miners benefited from further gains in the price of copper.
In the FTSE 250, hedge fund Elliott International has taken a 5% stake in Meggitt, crossing the 5% threshold last Wednesday, the mid-cap UK engineering firm said in a stock-exchange filing. Elliott now has a stake of 5.2% in the FTSE 250 engineer. Elliott International is the UK operation of Elliott Management, a US-based activist investor.
Meggitt shares ended up 7.9%, with Berenberg and JPMorgan issuing a downgrade and an upgrade, respectively, on the stock. Berenberg cut its recommendation to Hold from Buy, while JPMorgan lifted its stance to Neutral from Underweight.
Metal flow engineering firm Vesuvius ended up 4.9%, after Investec lifted its recommendation on the stock to Hold from Sell, while outsourcer Serco Group rose 3.0%, after being upgraded to Hold from Reduce by Numis.
UBS initiated housebuilder Crest Nicholson Holdings with a Buy stance, as the Swiss bank believes the group is "a stand-out in the sector" and its shares offer an "attractive" dividend yield. The stock ended up 1.5%.
However, UBS started retirement housebuilder McCarthy & Stone with a Sell recommendation, as it believes the shares are trading at an unjustified premium to the sector. Shares in McCarthy ended down 2.6%, the worst mid-cap performer.
In the economic calendar Tuesday, Chinese inflation numbers are at 0230 BST, while trade data from Germany are at 0700 BST. UK industrial and manufacturing production and trade balance are at 0930 BST. In the US, nonfarm productivity is at 1330 BST, while the API weekly crude oil stocks are at 2130 BST.
The UK corporate calendar is headlined by FTSE 100 insurers Standard Life and Legal & General Group, which publish half-year results. Worldpay Group, Savills, Spirax-Sarco Engineering, SIG and Regus Group also release half-year results. Hargreaves Services reports full-year results.
By Daniel Ruiz; [email protected]
Copyright 2016 Alliance News Limited. All Rights Reserved.
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