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London mid-caps climb above Brexit levels for the first time in a month

Published: 13:06 20 Jul 2016 EDT

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It took a month, but finally London’s midcaps have climbed above their Brexit levels for the first time as shares closed higher on Wednesday while top AIM stocks hit their highest levels of the year.

The FTSE 250 index of predominantly UK-centric mid-cap stocks expected to lose out to a weaker pound, managed to scale 17,087 for the first time since Britain’s European Union referendum on June 23 which shocked markets with a vote to leave the single market.

The FTSE 250 was up 0.7% at 17,018. The close was only marginally below the pre-Brexit close of 17,333.

Meanwhile, the blue-chip FTSE 100 index, which managed to recover in just six days of the Brexit vote because most of its constituents are stocks with overseas assets, operations and receipts who will benefit from a lower sterling, closed the session up 0.5% at 6,728 – its highest level since August 10, 2015.

Buoying both the bourse and sterling was news that the UK’s unemployment rate fell to 4.9% in May – the first positive economic news for Britain since the Brexit vote.

If mid-caps felt they had recomposed themselves, it was nothing compared with smaller stocks. The FTSE AIM 100 Index managed to surpass June 23 Brexit levels a week ago and on Wednesday the index was up 1.1% at 3,519 - at its highest since December 31, 2015.

Meanwhile, the FTSE AIM All-Share Index was up 0.85% at 736 – its highest in five weeks, meaning pre-dating Brexit.

London’s gainers totalled 38%, lsoers 23% and unchanged were 39%.

The top gainer was Hydrodec (LON:HYR), up 27% to 4.35p after the company’s trading update announced first-half revenue would grow strongly on “significant” progress.

The biggest faller was Xtract Resources PLC (LON:XTR) which dropped by 36% to 0.0625p after the company said the purchasers of the Manica gold project in Mozambique will now pay $2.5.5mln.  The sale was revised and shares sold at a discount.


Midsession

The top flight pared some of its gains on Wednesday as the pound recovered slightly following upbeat UK job news.

The FTSE 100 Index lost hold of earlier gains of around 30 points to stand 10.16 points ahead at 6707.53.

Sterling picked up a little after data showing the UK unemployment rate fell to 4.9% in May, yet weekly earnings growth missed estimates.

UK salaries increased 2.2% year-on-year, versus 2.3% a month before. Traders cautioned that the data was before the June 23 referendum vote.

The pound rose 0.5% against the dollar to US$1.3176 on the news.

Josh Mahony at spread-betting firm IG said: "A fall in unemployment and claimant count, coupled with a rise in average earnings means that in the absence of the June referendum result, the Bank of England (BoE) would have been happily shifting towards a rate hike given yesterday’s jump in inflation.

"Instead we find ourselves in a position where the economic data appears to be picking up just as the BoE looks set to pull the trigger, with today’s job market strength expected to be fleeting."

Shares in airline groups EasyJet PLC (LON:EZJ) and BA owner IAG (LON:IAG) fell a penny to 1115p and 6.5p to 417p respectively amid idle market rumours that they could be interested in some routes flown by German budget rival Air Berlin.

The speculation followed a report in German financial daily Handelsblatt that Lufthansa's budget arm Eurowings was considering acquiring some of the loss-making carrier's routes.

Among small-cap indices, the FTSE AIM 100 was 24.78 points up at 3506.88 and the FTSE AIM All-Share gained 4.1 points to 734.57.

IronRidge Resources Ltd (LON:IRR) hardened 28.4% to 6.9p after the miner found more gold at the May Queen Prospect in Australia.

Cleantech industrial oil re-refiner Hydrodec Group plc (LON:HYR) boosted sales volumes in the six months to June 30, lifting its shares by 25.5% to 4.3p.

Semi-conductor industry supplier IQE plc (LON:IQE) ticked up 14.1% to 20.25p on news of significant increases in half-year revenue and profit.

Air purification technology provider MayAir Group plc (LON:MAYA) rose 14.1% to 44.5p as it won US$10.6mln of contracts.

But Xtract Resources PLC (LON:XTR) subsided 33.3% to 0.06p after placing 1.5bn of new shares to fund essential refurbishment work at its Chepica gold mine in Chile.

Oxford Pharmascience Group Plc (LON:OXP) was down 29.7% at 3.25p as the medicine redeveloper said a platform licence deal was less likely in the near-term.

Drug stocks led the top-flight higher, with Shire Plc (LON:SHP) up 1.09% at 4926p, while financial stocks were also doing well.

HSBC Holdings plc (LON:HSBA) advanced 1.6% to 495.1p and Worldpay Group PLC (LON:WPG) lifted 1.17% to 293.3p.

Admiral Group PLC (LON:ADM) was 2.1% brighter at 2088p after motor insurance firms gained access to penalty databases as well as seeing a sharp rise in premiums.

But miner Anglo American (LON:AAL) lost 8.9% to 741.4p after reporting disappointing diamond and copper output as it continued restructuring operations amid volatile commodity prices.


Preview at 7.10am

The Footsie looked set for a solid start despite a mixed performance overnight in the US and Asia.

Spread bet firms see the FTSE 100 adding up to 25 points when dealings get underway after yesterday’s flat performance that saw the blue chip index close at 6,697.

US markets were also flat with the Dow Jones Industrial Average up 26 at 18,559 and Nasdaq and the S&P 500 little changed.

Asia was mixed with good gains in Hong Kong but small losses in Tokyo and Shanghai.

Miners have been keeping Footsie buoyant recently on the earnings lift they will get from a weaker pound and today saw news from two heavyweights.

BHP Billiton (LON:BLT) and silver giant Fresnillo (LON:FRES) both issued trading updates.

Silver is enjoying a rally in prices at the moment, which makes the production stats all the more pertinent.

Fresnillo’s production of 13mln oz of silver was well ahead of predictions of 11.3 mln oz.

Gold production at 218,000 oz, up 20% on a year ago, was also ahead of forecasts.

Meanwhile, global specialty pharma group Clinigen (LON:CLIN) also posted an update on trading.

Revenue and gross profit increased by 87% and 90% respectively versus last year, aided by the acquisition of distribution group Idis in April and Link Healthcare in October respectively.

Trading statements -

Revolution Bars Group Plc (LON:RBG), Anglo American PLC (LON: AAL), Severn Trent PLC (LON: SVT); Fresnillo PLC (LON:FRES) and Clinigen Group (LON:CLIN).

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