ADVFN Morning London Market Report: Monday 11 February 2019

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London open: Stocks rise as pound dips ahead of UK data slew


London stocks rose in early trade on Monday, helped along by a weaker pound as investors eyed a slew of key UK data releases, trade relations between the US and China and any Brexit-related developments.

At 0835 GMT, the FTSE 100 was up 0.6% at 7,115.34 as sterling fell 0.3% against the dollar to 1.2912 and 0.2% versus the euro to 1.1411 ahead of the release of gross domestic product, manufacturing and industrial production figures and the trade balance, all at 0930 GMT.

As far as Brexit is concerned, the parliamentary vote on Prime Minister May’s deal that had been due to take place on Valentine’s Day now looks set to be delayed until the end of the month as she seeks more time to discuss Labour’s Brexit proposal and hold more talks with Brussels.

Konstantinos Anthis, head of research at ADSS, said: “The fact that sterling has held above the 1.29 support indicates that investors are still hoping for a positive resolution but at this stage this seems a far-fetched idea. However, a potential delay in Article 50’s deadline is still possible – and quite likely given the lack of progress – and this is why market participants are still holding on their longs.

“Should May ask for a delay, this will prolong uncertainty but it will also make room for some kind of middle ground to be found and the pound will benefit with 1.31 being the short-term target.”

On the macro front, GDP for the fourth quarter is expected to come in at 0.3%, down from 0.6% in the third quarter, while industrial production is expected to have recovered to 0.3% growth on the month in December from a 0.4% decline the month before.

Meanwhile, Sino-US relations remained in focus as discussions between the two nations are due to continue this week, with US Treasury Secretary Steve Mnuchin and US Trade Representative Robert Lighthizer off to Beijing for the next stage of talks.

Miners helped to underpin the gains, with Rio Tinto, BHP and Glencore all up as iron ore futures shot higher amid worries about supply from Brazil following a fatal dam accident at a Vale mine.

Polymetal International nudged up after saying it expects to improve the quantity of gold it extracts from its mines and its environmental credentials as directors gave the green light to immediately begin construction of a second pressure oxidation plant in Russia.

Just Eat rose as it emerged that shareholder Cat Rock Capital Management has sent an open letter to the food delivery group urging it to merge with a “well-run industry peer” following the departure of chief executive Peter Plumb. In the letter, Cat Rock expressed “deep concern” over the company’s recent appointment of executives, saying they lack online food delivery experience.

Acacia Mining gained as the gold miner said it swung to a profit in 2018, while Tritax Big Box REIT ticked higher after saying that its open offer to raise £250m was oversubscribed as investors piled in to support the company’s purchase of an 87% stake in db Symmetry.

Tobacco company Imperial Brands was trading up following a report that chairman Mark Williamson will confirm soon that he is resigning in the coming months.

Smith & Nephew was the worst performer on the FTSE 100 following a report late on Friday that it is in discussions to buy US medical equipment company NuVasive for more than $3bn.

In broker notes, RBS was downgraded to ‘equalweight’ from ‘overweight’ at Morgan Stanley but Lloyds was lifted to ‘overweight’ from ‘equalweight’.

Metro Bank was boosted by an upgrade to ‘hold’ from ‘sell’ at Berenberg. Petrofac was downgraded to ‘neutral’ from ‘overweight’ by JPMorgan.

Playtech dropped on the back of a downgrade to ‘underperform’ at Bank of America Merrill Lynch and TalkTalk was knocked lower by a downgrade to ‘reduce’ from ‘hold’ at HSBC.

Liberum downgraded Barratt Developments and Bovis Homes to ‘hold’ as it took a look at UK housebuilders.

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