FTSE clings to four-week high after Wall Street’s new records

UK shares were flat in morning trading on Tuesday but clung to the previous session’s four-week highs, alongside their European peers, after bourses in Asia took heart from fresh new record closes on Wall Street.

While Germany was closed for holiday, the blue chip FTSE 100 (FTSE) index was up 0.04 percent at 7,441.82 points by 0840 GMT, slightly underperforming a broadly positive European market.

Heating and plumbing product supplier’s Ferguson (L:FERG) was the top gainer on both the UK index and the STOXX 600 (STOXX) with a 2.8 rise after it reported a rise in trading profit and announced a share buy back plan.

With a strengthened dollar, miners added the most points to the index with Anglo American (L:AAL), Rio Tinto (L:RIO) and Glencore (L:GLEN) up between 1 and 2.3 percent.

Financial shares also lifted the FTSE 100 with HSBC (L:HSBA), Standard Chartered (L:STAN) and Barclays (L:BARC) rising between 0.3 and 1.3 percent.

EasyJet was up 1 percent after JP Morgan rose its target price for the stock and rival Ryanair (I:RYA) said it saw September traffic grow by 10 percent.

Both airlines and Lufthansa (DE:LHAG) were among last session’s top gainers after Monarch Airlines went bust.

British baker Greggs (L:GRG) added 0.7 percent after like-for-like sales rose 5 percent in the 13 weeks to the end of September, keeping it on track to meet expectations for the year despite higher ingredient costs.

Outside the index, semiconductor maker Electrocomponents (L:ECM) touched a 16-year high after a strong trading update.

Advertising giant WPP (L:WPP) posted the worst performance with a 2 percent fall after Morgan Stanley (NYSE:MS) sold 22.5 million shares in an accelerated bookbuild offering. WPP shares are down nearly 25 percent since the beginning of the year.

Bae Systems (L:BAES) was also among the top losers, retreating 1.4 percent following a downgrade by Berenberg.

“This follows a management sales briefing, reassessment of the likelihood and timing of key export wins, and our expectation of no organic revenue growth and modest earnings progression in the next two years,” the broker said.

British soft drinks group Britvic Plc (L:BVIC), which said it would close its Norwich manufacturing site, was down 0.6 percent.

Housebuilders help Britain’s FTSE spring into October

The UK’s top share index rose to a four-week high on Monday as homebuilders rallied thanks to an extension of a government housing scheme, while airlines and miners also gained.

The blue chip FTSE 100 (FTSE) index ended up 0.9 percent at 7,438.84 points, slightly outperforming a broadly positive European market, helped by a fall in sterling.

Housebuilders Persimmon (L:PSN), Barratt Developments (L:BDEV) and Taylor Wimpey (L:TW) were among the biggest gainers, jumping 2 percent to 4.2 percent after UK Prime Minister Theresa May pledged 10 billion pounds ($13.4 billion) of extra funding to help people buy new homes.

Persimmon also hit a record high.

“That’s a clear positive, and I think (the extension) should actually benefit, more so, the more diversified builders,” Ken Odeluga, market analyst at City Index, said.

“To the extent that we could get something which resembles anything like a soft Brexit, this would forestall much of the feared impact on the sector,” Odeluga added.

Housing-related stocks were hit particularly hard by uncertainty following the Brexit vote in 2016, as the sector is closely linked to the state of the UK economy. Many of those stocks have since recouped those losses.

Elsewhere budget airline easyJet (L:EZJ) jumped 5.2 percent after peer Monarch Airlines went bust.

This spurred a rally across European carriers on the prospect of scooping up bookings from customers switching airlines. Shares in British Airways operator IAG (L:ICAG) also rose 2.4 percent.

“(Monarch’s failure) means fewer seats to fill sector-wide … This should mean Ryanair and EasyJet can comfortably improve load factors, even if the reputation of the former has suffered of late,” Neil Wilson, senior market analyst at ETX Capital, said in a note.

“This should be positive for margins despite pricing pressures.”

A rise among mining stocks also helped the index, with shares in Rio Tinto (L:RIO), Glencore (L:GLEN) and Anglo American (L:AAL) all rising more than 1 percent thanks to a buoyant copper price. [MET/L]

However, outside of the blue chips, shares in NEX Group (L:NXGN) dropped 5.6 percent after the financial broker flagged increased spending at its post-trade and information services operations, which would dent that division’s profitabilit

FTSE lags Europe in September

FTSE signed off September with a monthly loss on Friday, underperforming continental peers in a month that saw sterling shoot to its highest level since the Brexit vote.

The FTSE 100 (FTSE) index ended Friday’s session 0.7 percent higher at 7,372.76 points, however, as GDP data showing that UK growth slowed to a four-year low in the second quarter put pressure on sterling on the day.

While the disappointing GDP data stoked doubts as to whether the Bank of England would raise rates at its next meeting in November, recent hawkish rhetoric from the central bank has supported the pound.

This has hampered British blue chips, many of which source their revenues overseas. The FTSE posted a loss of nearly 1 percent for September.

Sterling slumped in the immediate aftermath of the June 2016 Brexit vote to leave the European Union, which gave dollar-earners an accounting-related boost.

“The rebound in sterling has acted as a bit of a drag on the UK benchmark”, Michael Hewson, chief market analyst at CMC Markets UK, said, noting the symmetry with the pound, which is on track for its best month against the dollar since 2013.

Analysts have also pointed out that investor sentiment regarding the UK market has soured. Societe Generale (PA:SOGN), for instance, has cut its UK position in its multi-asset portfolio to zero.

On the day, financials, consumer stocks and miners contributed the most to gains.

Glencore (L:GLEN), Rio Tinto (L:RIO), BHP Billiton (L:BLT) and Anglo American (L:AAL) were up between 0.7 and 2.6 percent.

Oil majors were in positive territory as oil prices boosted the sector, with Royal Dutch Shell (L:RDSa) and BP (L:BP) both up 0.3 percent.

Both Brent and U.S. crude are set to chalk up another weekly gain as investors bet that efforts to cut a global glut are working and that the demand outlook is improving. [O/R]

ITV (L:ITV) was the biggest individual gainer, rising more than 3.5 percent after Barclays (LON:BARC) raised its rating on the stock to “overweight” and said advertising was improving in the UK.

Insurer Beazley (L:BEZG) jumped 4.3 percent after it reckoned its losses from hurricanes Harvey, Irma and Maria and a series of earthquakes in Mexico would reduce its 2017 earnings by about $150 million, less than analysts had earlier expected.

Among smaller stocks, British construction and support services group Carillion (L:CLLN) plunged 20 percent after it warned it expected full-year results to be lower than market forecasts, as it booked a further provision relating to services contracts.