MILAN (Reuters) – The UK’s top share index snapped two days of losses on Wednesday as some export-oriented companies found support in a weaker pound and financial stocks were led higher by Standard Chartered after a broker upgrade.
Gains were driven by a return of risk appetite ahead of a speech by U.S. President Donald Trump with details of his plans to reduce corporate tax, which helped offset recent weakness due to growing geopolitical worries.
Britain’s blue-chip FTSE 100 index was up 0.3 percent at 7,308.50 points by 0820 GMT, underpinned by strength among financials and materials stocks, while mid-caps , which benefit less from a weakening pound, were flat.
“Softer pound translates into a better FTSE-appetite in London, although the overall lack of enthusiasm across the equity markets could limit gains,” said Ipek Ozkardeskaya, Senior Market Analyst at London Capital Group.
The FTSE is still up more than 2 percent so far this year but has underperformed the broader pan-European STOXX 600 index, as some brokers have turned more bearish on British equities.
Among financials, which provided the biggest uplift to the FTSE on Wednesday, Standard Chartered (STAN.L) rose 2.8 percent after Investec upgraded the stock to hold from sell. It said that after a 15-percent drop in the last two months, it was time to close short positions.
“We see this as largely a ‘dawning of reality’ in relation to a continuing weak revenue performance (and outlook), with a little ‘overshoot’ seemingly driven by fresh geopolitical concerns. We remain cautious on the stock, but … we advise closing short positions,” they said in a note.
Gains in miners also buoyed the FTSE, with Anglo American, Rio Tinto and Glencore all up more than 1.5 percent, as copper rose for the first time in the past six sessions. [MET/L]
Pearson (PSON.L) rose 1.5 percent after Exane BNP Paribas upgraded the stock to “outperform” from “underperform”, saying a change in strategy at the group, which is cutting jobs and dividends to revive its business, should help shares recover.
WPP (WPP.L), which has fallen 24 percent since the start due to the deterioration of its advertising outlook, fell 1.2 percent after Morgan Stanley downgraded the stock to “equal-weight” saying an early revival of confidence in the group’s business model appeared unlikely.
Among small caps, Carillion (CLLN.L) was an outstanding gainer, up 18.3 percent after a media report said “at least one” Middle Eastern construction company was preparing an offer for the troubled British outsourcer. Carillion shares have lost three quarters of their value this year.