London open: FTSE steady as bond selloff eases

(Sharecast News) - London stocks were steady in early trade on Thursday as the selloff in the bond market eased, and as investors continued to mull developments in the Middle East conflict.

At 0845 BST, the FTSE 100 was flat at 10,757.73, while Brent crude was down 0.6% at $95.04 a barrel and West Texas Intermediate was 0.5% lower at $90.53.

US President Donald Trump told reporters at the Oval Office on Wednesday that the US was prepared to launch another attack on Iran at "any time".

"We took out all of the new equipment that they tried to build along the Strait of Hormuz - some defensive, some offensive," he said. "It was a very heavy attack last night, and we're prepared to do another one any time we want."

However, he also said that a renewed campaign would not last "too long".

Kathleen Brooks, research director at XTB, said: "As we move into the second half of the week, the oil price is dipping and there are signs of stabilisation in the bond market and in stocks."

She noted that Treasury yields are also easing on Thursday, after the 10-year Treasury yield rose to a multi-year high on Wednesday. "This does not mean that inflation concerns have gone away or that bonds won't sell off again. 10-year US Treasury yields are still higher by 13bps this week," Brooks said. "However, after a rough start to September, it could be time to take a breather, and UK and European yields may follow suit. UK yields have been under intense pressure this week, but the sell off eased on Wednesday and we expect UK yields to moderate further on Thursday."

Brooks said that for a recovery in market sentiment to be sustained, energy prices would need to pull back to early summer levels. "Until there is a complete stop to attacks from both sides it is hard to see commodity prices pull back in a meaningful way, or bonds stage a long term recovery as central banks will remain wary about inflation risks."

In equity markets, Hilton Foods surged after it lifted its full-year profit guidance as it hailed a good interim performance from core meat and fresh prepared food, but weakness in the Foppen business. It now expects full-year adjusted profit before tax from continuing operations of between £66m and £71m, up from previous guidance of £60m to £65m and reflecting the removal of Dalco losses and favourable FX.

Dunelm rallied as Deutsche Bank upgraded the homeware retailer to 'buy' from 'hold' ahead of its strategy update, as it believes management will outline a revamped digital offer and increased store investment to drive accelerating earnings growth as Dunelm progresses towards 10% market share. DB also hiked the price target to 1,050p from 850p.

On the downside, Grafton Group lost ground as it held on to its full-year earnings guidance after a solid first half, while investment manager M&G was in the red after saying it swung to a first-half loss after tax.

Crest Nicholson tumbled after it downgraded its full-year guidance for profit and completions as it said market conditions have been more subdued than expected over the summer. The housebuilder now expects full-year completions of between 1,350 and 1,400, down from previous guidance 1,400 to 1,500, and an EBIT loss of around £10m, versus previous guidance for a profit of £5m to £10m.

Other housebuilders followed suit, with Barratt Redrow, Persimmon and Vistry all lower.

Admiral, Aviva, Hammerson, Rathbones and Vesuvius fell as they traded without entitlement to the dividend.

Market Movers

FTSE 100 (UKX) 10,757.73 0.01%

FTSE 250 (MCX) 24,307.82 -0.07%

techMARK (TASX) 6,084.26 0.35%

FTSE 100 - Risers

Airtel Africa (AAF) 351.60p 2.93%

Vodafone Group (VOD) 122.00p 1.54%

Prudential (PRU) 1,017.00p 1.39%

Babcock International Group (BAB) 1,010.00p 1.36%

SSE (SSE) 2,394.00p 1.31%

Associated British Foods (ABF) 2,054.00p 1.23%

Halma (HLMA) 3,594.00p 1.18%

Fresnillo (FRES) 3,103.00p 1.11%

London Stock Exchange Group (LSEG) 8,644.00p 1.07%

AstraZeneca (AZN) 12,062.00p 0.97%

FTSE 100 - Fallers

Admiral Group (ADM) 3,840.00p -2.39%

Burberry Group (BRBY) 1,055.00p -2.18%

Barratt Redrow (BTRW) 299.00p -1.81%

M&G (MNG) 337.00p -1.78%

Bunzl (BNZL) 2,676.00p -1.76%

Aviva (AV.) 719.00p -1.72%

Persimmon (PSN) 1,121.50p -1.54%

Investec (INVP) 655.00p -1.13%

Smith & Nephew (SN.) 1,049.50p -1.08%

Convatec Group (CTEC) 231.40p -0.94%

FTSE 250 - Risers

Hilton Food Group (HFG) 692.00p 9.84%

Avon Technologies (AVON) 1,914.00p 5.16%

Rosebank Industries NPV (ROSE) 356.00p 4.09%

Ashoka India Equity Investment Trust (AIE) 259.50p 3.80%

Raspberry PI Holdings (RPI) 578.00p 3.21%

SDCL Efficiency Income Trust (SEIT) 36.50p 2.82%

Ocado Group (OCDO) 210.80p 2.73%

WPP (WPP) 370.80p 2.66%

W.A.G Payment Solutions (EWG) 103.00p 2.59%

Dunelm Group (DNLM) 859.00p 2.57%

FTSE 250 - Fallers

Ithaca Energy (ITH) 271.00p -5.17%

Vistry Group (VTY) 273.00p -3.87%

Hammerson (HMSO) 356.00p -3.11%

AEP Plantations (AEP) 195.00p -3.07%

Aston Martin Lagonda Global Holdings (AML) 33.36p -2.91%

Rathbones Group (RAT) 1,632.00p -2.74%

Watches of Switzerland Group (WOSG) 665.50p -2.63%

Trustpilot Group (TRST) 263.80p -2.44%

Vesuvius (VSVS) 372.20p -2.36%

Bellway (BWY) 2,042.00p -2.30%