London stocks finished the week with a second step higher, as financials and miners rose again to offset caution hitting the housebuilding and retail sectors.
By midday on Friday, the FTSE 100 was up by 12 points or almost 0.2% at 7,151.69. Asian markets were mixed and so was the overnight Wall Street session.

Sterling was fairly flat, at 1.1331 against the euro and up 0.1% on the dollar at 1.3952.

While there was tension in London over the fallout from the poisoning of a Russian defector and Brexit negotiations, the always eventful Trump White House was not weighing on market sentiment.

“Concern over the diplomatic spat with Russia does not seem to be ruffling too many feathers in markets,” said Jasper Lawler at London Capital Group. “Russia announced on Friday that it would expel British diplomats and respond in kind to new US sanctions. Vladimir Putin looks destined to win this weekend's election. Another six years of Putin should help maintain the status quo for energy markets via Russia's joint supply cuts with OPEC.”

With little macro data around, the main nugget of note was the final eurozone inflation reading for February, which unexpectedly came in at a 14 month low of 1.1%.

“Eurozone inflation trickling along at nearly half of the ECB's target implies a very gradual removal of the punchbowl,” said Lawler. “That's a clear positive for risky assets.”

He said the easing of trade war tensions and further evidence of low inflation generated some optimism for European shares, with the euro sinking for a third day to a two-week low and the perceived reduced risk of a trade war helped industrial companies outperform.

Bank shares led the gains after the Bank of England's Financial Policy Committee said lenders would not need to boost capital reserves, which mostly seemed to relieve Royal Bank of Scotland and Barclays. The BoE said it will set the same stress tests in 2018 as in 2017, partly to ensure lenders had sufficient spare resources to respond to Brexit and to restructure and ring-fence their UK banks to comply with new rules.

“Lower reserves means more funds for more lending or for putting directly in the pocket of shareholders via dividends or buybacks,” said Lawler.

Corporate news from NEX Group, the company formerly known as Icap, was also helping the financial sector as it soared 30% and raised the potential for other financial sector deals as it received a preliminary approach from US exchange CME Group regarding a potential acquisition. “Discussions are at an early stage and there can be no certainty that an offer for NEX will be made, nor as to the terms of any offer, if made,” it said.

Analysts at Liberum expect a “substantial” premium for NEX that, as a strategically important asset which is an integral part of the global financial infrastructure, might fetch a price of over 1,000p. Numis on the other hand has revised its target price for the shares to 800p.

Miners were also on the rise, helped by copper prices coming off their lows, with Glencore leading the FTSE 100 risers followed by Antofagasta, with others not holding onto their early gains as the session progressed.

Royal Dutch Shell and BP were higher as oil prices gain, with Brent crude up 1.4% above $66. Shell also agreed a deal overnight to sell its shares in Shell entities in New Zealand for US$578m.

National Grid was higher after getting approval for new three-year rate plan and $2.5bn capex for its Niagara Mohawk utility.

Besting them all was EasyJet, with the budget airline taking off as investors filed into their seats to receive next week's final dividend, while traders grabbed on for a technical rie. Analyst Mike van Dulken at Accendo Markets said traders had been jumping on a “bullish flag pattern towards February highs”.

Housebuilder Berkeley Group led the fallers and dragged down much of the sector with it. The London and South East-focused builder reported a resilient level of home sales over the past four months but gave a rather aggressive defence of why it cannot raise its build rate. The FTSE 100 housebuilder, seemingly reacting to a government investigation into builders 'sitting on land', blamed “market constraints” on it being “unable” to increase production, which sent ripples of uncertainty though to peers including Taylor Wimpey, Barratt and Persimmon.

Tesco was lower, with van Dulken citing profit-taking after a rise the day before on the back of a JPMorgan upgrade, and mentioning chat also about Citi being a “big seller”.

Facilities management company Mitie fell 7% after it said it expected full operating profits to be slightly below 2016 after modest growth in sales, as expected. The company said revenue growth should be in the range of 2%-2.5% at around £2.2bn and that it expects to make higher savings by 2020.

JD Wetherspoon fell after announcing like-for-like sales up 6.1%, pre-tax profits up 20.6% and a flat interim dividend. The pub group anticipates higher second half costs and slower like-for like sales growth, but stronger sales in the year so far means the full outlook is unchanged.

William Hill and Ladbrokes Coral, it was reported in the Financial Times, are being investigated by the FCA for creating a false market in their shares by making public findings of review about possible curbs to fixed odds betting terminals. The pair were said to have promoted a doomsday scenario for betting shops if the government presses ahead with curbs on FOBT machines.

Old Mutual was lower as its break-up continued with an agreement to sell its Latin American businesses for an undisclosed sum. Proceeds from the sale will be retained for general corporate purposes by Old Mutual Emerging Markets, which is now focused on sub-Saharan Africa.

Cobham was down less than a penny after completing the divestment of AvComm and Wireless Test & Measurement businesses for $455m, while Dominos Pizza was down despite getting started on a discretionary £32m buyback, the balance of an existing £50m programme.

Market Movers

FTSE 100 (UKX) 7,164.14 0.34%
FTSE 250 (MCX) 19,782.66 -0.23%
techMARK (TASX) 3,336.30 0.11%

FTSE 100 – Risers

easyJet (EZJ) 1,658.00p 2.03%
BP (BP.) 473.75p 1.98%
Glencore (GLEN) 385.50p 1.67%
NMC Health (NMC) 3,452.00p 1.53%
Pearson (PSON) 775.80p 1.52%
Shire Plc (SHP) 3,205.50p 1.47%
National Grid (NG.) 781.00p 1.43%
AstraZeneca (AZN) 4,867.00p 1.42%
Informa (INF) 729.60p 1.39%
BT Group (BT.A) 227.85p 1.29%

FTSE 100 – Fallers

Berkeley Group Holdings (The) (BKG) 3,713.00p -5.35%
Evraz (EVR) 424.00p -3.31%
Kingfisher (KGF) 343.30p -2.00%
Tesco (TSCO) 209.80p -1.96%
Micro Focus International (MCRO) 1,884.50p -1.93%
Barratt Developments (BDEV) 527.20p -1.72%
Next (NXT) 4,748.00p -1.68%
Old Mutual (OML) 249.00p -1.58%
Marks & Spencer Group (MKS) 275.90p -1.57%
Prudential (PRU) 1,913.50p -1.54%

FTSE 250 – Risers

Nex Group (NXG) 874.00p 30.35%
Hochschild Mining (HOC) 202.40p 5.69%
Dignity (DTY) 990.50p 4.76%
Greencore Group (GNC) 134.40p 4.43%
Tullow Oil (TLW) 186.95p 3.57%
Riverstone Energy Limited (RSE) 1,228.00p 3.54%
TI Fluid Systems (TIFS) 258.00p 3.20%
TBC Bank Group (TBCG) 1,856.00p 3.11%
Cairn Energy (CNE) 205.00p 3.02%
Computacenter (CCC) 1,158.00p 2.66%

FTSE 250 – Fallers

Wetherspoon (J.D.) (JDW) 1,214.00p -6.25%
Crest Nicholson Holdings (CRST) 445.40p -4.91%
Just Group (JUST) 130.30p -4.75%
Galliford Try (GFRD) 962.50p -4.42%
Polymetal International (POLY) 751.80p -3.76%
Hiscox Limited (DI) (HSX) 1,474.00p -3.34%
Kier Group (KIE) 1,004.00p -3.28%
Brown (N.) Group (BWNG) 183.90p -3.16%
Assura (AGR) 59.60p -3.09%
Investec (INVP) 599.00p -3.04%


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