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London open: Stocks rebound, Barclays rallies on results
London stocks rose in early trade on Wednesday, recovering from heavy losses in the previous session after indices on Wall Street pared losses into the close.
At 0825 BST, the FTSE was up 0.4% to 6,979.86, having fallen 1.24% the day before. The pound was down 0.2% against the dollar at 1.2959 and 0.1% lower versus the euro at 1.1308.
London Capital Group analyst Jasper Lawler said: “After a frightful sell-off in the previous session, equities are on the rebound today. We expect the big swings in the market to continue. Wall Street slumped across the board in early trade but bargain hunters made an appearance later in the session. That picked indices off the lows into the close.
“Flows into safe havens also eased with the US dollar moving higher versus the yen overnight, a sign that this shake out could be over. Sentiment is clearly very fragile at the moment meaning that this is unlikely to be the last erratic session.”
As far as sterling is concerned, Lawler said the fact that it continues to trade below $1.30 indicates a high level of nervousness, but a weak pound benefits the Footsie’s high proportion of internationally focused businesses.
Prime Minister Theresa May is due to face her backbench critics later on Wednesday as she appears before the so-called 1922 Committee in an attempt to win them over.
It could be a big day for the pound because of this, said Michael Hewson at CMC Markets, with the background of dark mutterings about the PM’s future. “While it would appear that she may well have headed off a leadership challenge in the short term there remains widespread unhappiness with her Chequers plan amongst rank and file and she is likely to come under further pressure to modify her position to a more unifying one.”
In corporate news, Antofagasta was the standout gainer as it said third-quarter copper production was up 15% quarter-on-quarter and narrowed full-year copper production guidance to 705-725,000 tonnes, with production in 2019 to increase to 750-790,000 tonnes.
Barclays rallied after the bank’s third-quarter income and profits beat City estimates, helped by the corporate and investment banking arm outperforming peers in markets again.
Budget airline easyJet and British Airways owner IAG were both flying higher as Deutsche Bank upgraded the sector to ‘overweight’ from ‘underweight’.
On the downside, Fresnillo fell as the precious metals miner’s third-quarter silver production missed estimates, but gold output was a beat.
Southend airport owner Stobart retreated after saying its interim losses widened to £17.5m from £11.9m the year before.
Metro Bank was in the red after it posted a jump in third-quarter profit as it saw record lending growth, but margins at the challenger bank shrank.
Quilter slipped after saying third-quarter net client cash flow came in at £1.1bn, excluding Quilter Life Assurance, compared to £1.9bn in the same period a year ago.
Equiniti was a touch weaker despite saying it had won pension administration contracts for the UK Atomic Energy Authority and for the Combined Nuclear Pension Plan.
In broker note action, HSBC was cut to ‘underperform’ at RBC Capital Markets, while Cineworld was downgraded to ‘equalweight’ at Barclays and Ferguson was cut to ‘neutral’ by Credit Suisse.
Fast fashion brand Quiz was downgraded to ‘hold’ by Stifel.
