7th Sep 2020 12:01
(Alliance News) -Â London stocks surged at the start of the week, with no sign that US markets sitting out Monday's session for a holiday was sapping enthusiasm in the UK and Europe.
Helping the blue-chip FTSE 100 add nearly 100 points by midday were housebuilders, rising on upbeat UK house price data, and a pound weakened by Brexit deal worries.
The FTSE 100 index was up 93.89 points, or 1.6%, at 5,892.97 midday Monday. The mid-cap FTSE 250 index was up 293.03 points, or 1.7%, at 17,647.31. The AIM All-Share index was up 1.1% at 957.38.
The Cboe UK 100 index was up 1.7% at 586.72. The Cboe 250 was up 1.8% at 15,075.25, and the Cboe Small Companies up 0.7% at 9,475.63.
In mainland Europe, the CAC 40 in Paris and DAX 30 in Frankfurt were up 1.2% and 1.3% respectively on Monday afternoon.
"European markets have kicked off the weak in style, with precious metal miners Fresnillo and Polymetal helping to leading the [FTSE 100] higher. With the US and Canada set to enjoy an extended weekend thanks to Labor Day celebrations, we are expecting low volumes as a result," said Joshua Mahony, senior market analyst at IG.
Also helping the FTSE 100 climb higher was a weaker pound, undermined by Brexit deal worries.
Sterling was quoted at USD1.3157 Monday midday, down on USD1.3230 at the London equities close on Friday.
The Brexit terms that the UK agreed to before formally exiting the EU "must be respected", chief EU negotiator Michel Barnier said Monday, after reports that London might seek legislation to override key parts of the deal.
"Everything that has been signed must be respected," Barnier told France Inter radio, in response to a Financial Times report claiming UK Prime Minister Boris Johnson wanted to revise agreements on Northern Ireland and state aid.
Barnier said he would discuss the report with his UK counterpart David Frost during an eighth round of negotiations on a future trade deal this week.
Johnson said Sunday that a trade deal with the EU must be reached by October 15, in order for it to be in force by the end of this year.
"If we can't agree by then, then I do not see that there will be a free trade agreement between us," he said in a statement released by his office.
The UK formally left the 27-member bloc on January 31, but remains bound by EU rules while it tries to thrash out new terms of its relationship.
IG's Mahony said: "Should Johnson seek to go back on those promises made to the EU last October, traders will be very aware that the chances of an all-encompassing trade deal look less and less likely."
The euro traded at USD1.1820 on Monday, higher than USD1.1809 late Friday. Against the yen, the dollar was quoted at JPY106.23, down from JPY106.36.
In London, housebuilders were in the green after encouraging UK house price data from Halifax.
Halifax data showed that on an annual basis, UK house prices were 5.2% higher in August versus the same month a year earlier, picking up pace from the 3.8% annual growth seen in July. Halifax noted August's year-on-year price rise was the strongest since late 2016.
On a monthly basis, prices were 1.6% higher in August, which is flat on July's monthly growth rate - matching the highest ever monthly increase.
"House prices continued to beat expectations in August," Halifax Managing Director Russell Galley said.
The average price of a house in the UK was GBP245,747 in August versus GBP241,604 in July. Galley said this is the first time the average house price has exceeded GBP245,000.
In the FTSE 100, Barratt Developments was up 4.2%, Taylor Wimpey up 3.0% and Persimmon up 2.8%.
Among mid-caps, Crest Nicholson was up 7.2%. Adding to the boost from the Halifax data was a rating upgrade from Deutsche Bank, which raised the stock to Buy from Hold.
Blue-chip gold miners Polymetal International and Fresnillo were up 3.5% and 3.3% respectively, tracking the price of the precious metal higher.
Gold was quoted at USD1,930.30 an ounce early Monday, higher than USD1,919.60 late Friday. Brent oil was trading at USD42.09 a barrel, lower than USD42.74.
Also higher in the FTSE 100 was Associated British Foods, up 1.9% as it hailed better-than-expected trading in its final quarter.
"Trading in the fourth quarter in both our food businesses and Primark exceeded our expectations," the company said.
Grocery benefited from a continued rise in retail sales volumes in key markets of the US, Europe and Australia, AB Foods explained. Increased demand for yeast and bakery ingredients, particularly across the Americas and China, delivered higher sales for the Ingredients business, while the Sugar unit, as expected, will deliver a "much improved" profit year-on-year.
"All Primark stores reopened during May, June and July and trading during the fourth-quarter has been strong. In the latest four-week UK market data for sales in all channels, Primark achieved our highest ever value and volume shares for this time of year," AB Foods added.
Adjusted operating profit for Primark, excluding exceptional charges, is now expected to be "at least at the top end" of the GBP300 million to GBP350 million range previously advised for the financial year ending September 12, down by two thirds from GBP913 million the year before.
In the FTSE 250, FirstGroup rallied 19% after the Daily Telegraph reported at the weekend that a group of private equity firms could be lining up bids for the transport firm's US operations.
The Telegraph said on Saturday that Canary Wharf owner Brookfield, Apollo Global Management and KKR are among a slew of potential suitors for FirstStudent and FirstTransit. The report said FirstGroup's financial advisers had restarted a sales process in recent weeks, and this has attracted significant private equity interest.
FirstTransit operates in more than 300 locations across the US and Canada and FirstStudent is the largest provider of student transportation in North America.
Future PLC surged 15% after the magazine publisher guided its annual results to be materially ahead of market expectations.
Since its last update in July, the company said it has continued to benefit from the trend toward digital media. In August, organic unique online visitors in the UK and US were up 25% and 40%, respectively, compared to the prior year.
Combined with a better than expected performance of TI Media in the second half, full-year adjusted operating profit is now expected to be materially ahead of current market expectations, Future highlighted.
The current consensus range for adjusted operating profit for the year ending September 30 is between GBP78.2 million to GBP83.2 million. A year ago, adjusted operating profit was GBP52.2 million.
By Lucy Heming;Â [email protected]
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