FTSE 100 closes in on 7,400, driven by resource stocks

  • FTSE 100 up 75 points
  • Dow Jones up 139 points

  • Oil price rises, dragging BP and Shell higher

US stocks opened firmer, with the Dow Jones 139 points (0.5%) heavier at 27,486 and the S&P 500 14 points (0.5%) firmer at 3,081.

Back in Blighty, the Footsie – up 75 points at 7,377 – crept close to the 7,400 level and a triple-point gain before retreating a tad, after the pound shifted into reverse on forex markets.

The UK currency was down three-tenths of a cent against the US dollar at US$1.2909.

On the commodities markets, oil was on the climb, with the spot price of Brent crude up 64 cents (1.0%) at US$62.33.

Index heavyweights BP PLC (LON:BP.) and Royal Dutch Shell (LON:RDSB) followed the spot price higher, rising 2.8% and 2.2% respectively.

2.15pm: Leading shares take a breather over lunch

The Footsie traded sideways over the lunchtime session ahead of what is tipped to be a firm start to trading in the US.

Londons index of large-cap shares was up 79 points (1.1%) at 7,382.

In the US, spread betting quotes point to the Dow Jones opening at around 27,480 (up 133 points) and the S&P at about 3,082 (up 15 points).

“Comments by Wilbur Ross, US Commerce secretary that he was optimistic of progress and that talks were in good shape and that there was no natural reason why a deal couldnt be signed has helped drive momentum,” said CMCs Michael Hewson.

12.15pm: Footsie has a storming morning

With US benchmarks expected to open higher, Londons blue-chips have extended gains.

The FTSE 100 was up 75 points (1.0%) at 7,378, helped by a deterioration in the value of sterling against the US dollar.

The mid-cap FTSE 250 is also on the up but trailing in its bigger brothers wake, with an 81 point (0.4%) increase to 20,240.

Gambling stocks are slowing down the mid-cap indexs progress.

Ladbrokes owner GVC Holdings PLC (LON:GVC) has appointed Barry Gibson, a seasoned betting firm director and current chair of Homeserve PLC (LON:HOME) as its new non-executive chairman, replacing Lee Feldman who has held the role for 11 years.

GVC shares were down 8.6% at 820p while sector peers William Hill PLC (LON:WMH) and Rank PLC (LON:RNK) were off 6.8% and 4.7% respectively.

Homeserve PLC (LON:HSV), meanwhile, fell 2.7% to 1,179p, reflecting increasing concerns among the investment community over directors who are sitting on too many boards.

Shares in Ryanair Holdings PLC (LON:RYA) gained altitude after the no-frills airline reported unchanged half-year profits.

Ryanair Holdings – Investment driving the bottom line –

— Davy Research (@DavyResearch) November 4, 2019

Despite warning that losses from its Laudamotion acquisition will be higher than originally expected and that customer traffic is likely to slow in the second half, albeit with flight fares improving, the shares rose 7.8% to 13.46p.

Sector peer easyJet PLC (LON:EZJ) rose 3.5% in sympathy.

10.30am: Mothercare plunges after announcing UK stores are to go into administration

Mining companies were driving the Footsies progress following encouraging comments from US commerce secretary Wilbur Ross about breaking the US/China trade war negotiations impasse.

London's index of leading shares was up 52 points (0.7%) at 7,354, shrugging off unimpressive data relating to the construction industry.

“The UK construction sector continues to shrink, with uncertainty likely to remain until the election is over. US-China trade talks will dominate sentiment, helping push stocks higher for now,” suggested Joshua Mahony at IG.

The Christmas trading period often seems to trigger the demise of well-known high street retailers and this year the chopper has come down earlier than usual, with Mothercare PLC (LON:MTC) announcing plans to puts its 79 UK stores into administration.

READ Mothercare buckles under retail pressure, putting UK stores into administration

“The decline of the UK high street continues to play out, with Mothercare the latest firm to face closure after posting a £36.3 million loss last year,” IG's Mahony observed.

“Once again it is the prominence of internet competitors that has played a key role in taking down this high street staple, highlighting the difficulty in doing business on a brick-and-mortar model. With many firms relying on the festive period to ensure profitability, the big question is whether the continued expectation of discounted shopping will drive more firms to the wall at a time that has typically been a bounty for the high street,” he pondered.

Shares in Mothercare were down 29% at 8p.

Another bad day for UK retail.

Stressful day for all employees waking up to this sad news. Lets hope something can be rescued out of the administration and good luck and best wishes to all those impacted by this news #mothercare

— Paul Knapman (@paul_knapman) November 4, 2019

Among blue-chips, insurance broker Hiscox PLC (LON:HSX) was the biggest faller, shedding 2.2% at 1,443p, after it said it had set aside US$165mln to cover the impact of Typhoon Faxai, Typhoon Hagibis and Hurricane Dorian.

9.45am: Another "distressing" decline in construction activity

The IHS Markit/CIPS UK Construction Total Activity Index for October came in at 44.2, well below the 50.0 “no-change” threshold.

On the plus side, the reading was up from Septembers reading of 43.3 but it was not far off the 10-year low of 43.1 seen in June.

Construction companies noted that client demand remained subdued in response to domestic political uncertainty and the economic backdrop, IHS Markit said. In some cases, survey respondents noted that unusually wet weather in October had acted as an additional headwind to construction output.

“UK construction companies experienced a downturn in business performance during October as political uncertainty and subdued economic conditions again combined to hold back sales. New orders have fallen in each month since April, which is the most prolonged period of decline recorded for more than six years,” observed Tim Moore, an economics associate director at IHS Markit.

“Civil engineering was the worst-performing area of activity in October, with business activity dropping at the fastest pace in ten years. Construction companies also voiced concerns about the uncertain outlook for large-scale infrastructure projects upon which growth is expected to rest in the coming years.

"House building has also lost momentum this autumn amid a broader slowdown in market conditions, with the latest survey data signalling the sharpest drop in residential work since June 2016,” he added.

Duncan Brock, the group director at the Chartered Institute of Procurement & Supply (CIPS), described the construction sectors continued decline as “distressing”.

"To say these figures are disappointing is a big understatement. Given that the next political hurdle is Decembers General Election, all eyes will be on the new administration and clear direction, because at the moment there is little insight into what could possibly pull the sector out of its ditch," Brock said.

Presumably, thats the ditch the prime minister threw himself into at midnight on 31 October as the old Brexit deadline passed …

The FTSE 100 was up 45 points (0.6%) at 7,348, having been loitering around 7,344 before the construction data release.

8.45am: Positive start to the week

As predicted, the FTSE 100 got off to a positive start, bolstered by renewed optimism over trade.

Taking its cue from Asias generally buoyant markets, the UK index of blue-chip shares advanced 30 points to 7,332.19.

Forex traders, meanwhile, held their collective nerve with pound trading at just under US$1.30 on the back of a slew of weekend polls that gave Boris Johnson a commanding lead ahead of next months election.

As lobbying for votes has begun, so an air of calm has descended with a no-deal exit from Europe off the table – for the foreseeable future – and the Tory rhetoric mellowing, analysts said.

Saudi Aramco float

The mornings big talking point was the flotation of Saudi Aramco, the countrys oil producer.

Reuters has done some digging which reveals analysts are split over the valuation of the business by a margin of more than US$1tn with investment banks placing a US$1.2tn-US$2.5tn price tag on Aramco.

Sources suggest 1-2% of the companyRead More – Source