The UK equity market managed to stay in positive territory with both the benchmark FTSE 100 and FTSE 250 trading higher at lunchtime.
This was despite the release of mixed data. On the one hand, diesel prices have reached a record high at the pumps. A litre of diesel is currently 30p more expensive than it was at the beginning of the year. This is clearly a potential headwind for markets as rising fuel costs reduce the amount of money consumers have to spend, and fuels inflationary pressures.
On a more positive note, the IHS Markit purchasing managers’ index increased to 57.8 from 57.1 in September. This marks the first rise in the index for the last five months.
At lunchtime, the FTSE 100 had moved ahead by 0.3% to 7,263.55, while the FTSE 250 nudged 0.37% higher to 22,191.83.
With the majority of economic data being released towards the middle and back end of the week, (including interest rate calls from both the US Fed and Bank of England), trading volumes are expected to reasonably light.
The morning’s biggest talking point was Barclays (BARC), where the departure of the bank’s chief executive Jes Staley was announced following an investigation by the City watchdog over his links to Jeffrey Epstein. Staley has said he will contest the preliminary findings of the inquiry carried out by the Financial Conduct Authority and the Prudential Regulation Authority. Shares drifted by 1.27% to 199.6p
BT (BT.A), a favourite of rank-and-file private investors, led the blue-chip rally with a near 4% gain to 144.1p on reports that boss Philip Jansen is set to announce that the company’s £1 billion cost savings target will be met a year earlier than previously guided.
But investors are perhaps more intrigued by the possibility of a takeover of the UK telco by French billionaire Patrick Drahi, founder of broadband challenger Altice. Under City rules, Drahi cannot bid until December because he built a 12% earlier this year though he stated there were no takeover plans.
An upgrade to ‘outperform’ by France’s BNP Paribas lifted shares in Lloyds (LLOY) by 1.75% to 51.1p.
DOUBTS CAST OVER DARKTRACE VALUATION
On the downside, cyber security firm Darktrace (DARK) continues to feel the heat following a last week’s research note from Peel Hunt that poured water on its currently lofty valuation. The analyst highlighted that Darktrace has low customer review scores compared to its main peers among other criticisms, putting a 473p target price on the stock.
Darktrace shares fell 12.7% on Monday, totting up losses over recent days from 945.5p to today’s 700p.
Property regeneration company U&I (UAI) soared more than 70% in after agreeing to be taken over by commercial landlord Land Securities (LAND) in a £190 million deal.
U&I stormed 63p higher to 148.2p, while Land Securities Group nudged 0.3% higher to 689p.
Howden Joinery (HWDN) gained 0.2% to 920p after saying it expects annual profits to be at the top end of current analyst forecasts of between £298 million and £360 million as the surge in DIY demand continued into the second half.
