Miners rise; Thomas Cook shares tumble on FTSE 250
British blue-chip stocks rose Wednesday, on course for a third session of gains, as a fall in the U.S. dollar helped lift mining shares.
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Meanwhile, shares of house builders lost ground as investors braced for the U.K. finance minister's presentation of the government's Autumn Budget, which is expected to tackle affordable housing.
What markets are doing: The FTSE 100 index rose 0.2% to 7,422.46, led by advances for the basic materials and financial groups. But the tech, health care and consumer-related sectors were in the red. On Tuesday, the London benchmark picked up 0.3%. (http://www.marketwatch.com/story/ftse-100-edges-lower-as-brexit-hopes-buoy-pound-2017-11-21)
The pound traded at $1.3252, up from $1.3237 late Tuesday in New York.
See:How German political turmoil could hurt the pound more than the euro (http://www.marketwatch.com/story/heres-why-german-political-turmoil-could-hurt-sterling-more-than-the-euro-2017-11-21)
What's moving markets: The Conservative-led government will present its first budget -- its spending and taxation plans -- since the U.K.'s snap election in June. As the Conservatives don't have a parliamentary majority on their own, Chancellor of the Exchequer Philip Hammond is seen as having little room to maneuver.
Hopes rose that the stalled Brexit talks may regain momentum after the Financial Times reported (https://www.ft.com/content/525c4bd8-cede-11e7-9dbb-291a884dd8c6) that the U.K. and the European Union are looking to agree on a "divorce bill" -- the amount the U.K. will have to pay on withdrawing from the bloc -- within three weeks.
U.K. budget: The chancellor is expected to reveal plans to address a shortage of affordable housing in the U.K. Likely measures include a reduction in stamp duty -- levied when a house is bought -- for first-time buyers and a GBP10 billion boost to the government's Help to Buy program.
Read:5 things to watch for in the U.K. budget (http://www.marketwatch.com/story/5-things-to-watch-for-in-uk-budget-2017-11-22)
Home builder stocks were in focus in the runup to the tax and spending announcement. Persimmon PLC (BKG.LN) and Barratt Developments PLC (BDEV.LN) each fell 0.7%, while Taylor Wimpey PLC (TW.LN) lost 0.5%.
Hammond is scheduled to present the Autumn Budget in parliament at around 12:30 p.m. London time, or 7:30 a.m. Eastern Time.
What strategists are saying: "The Chancellor's plans will undoubtedly be dictated by the fact that the Office for Budget Responsibility will have to downgrade its outlook for the U.K. economy from the figures we saw in March, where it estimated that the U.K. economy would see 2% GDP growth this year. This is likely to see a downgrade to about 1.5%," said Michael Hewson, chief market analyst at CMC Markets, in a note.
"Against that backdrop and calls for greater investment in public services, the Chancellor will have to navigate a tricky path in maintaining the confidence of markets that the government will still seek to do what is responsible, against the need to support the economy," he said.
Miners on the up: Mining shares rose as dollar-denominated metals prices gained "amid [dollar] weakness (U.S. holiday, dovish Yellen, tax delays), Indonesian mine-supply disruptions and hopes that Chinese output cuts will be less than expected," said Accendo Markets analysts.
Among miners, Fresnillo PLC (FRES.LN) added 2.1%, Randgold Resources PLC (RRS.LN) moved up 1%, and BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) tacked on 0.8%.
Stock movers: TUI AG fell 3.5%, with the travel services company tracking a 12% plunge in shares of rival Thomas Cook Group PLC (TCG.LN) on the mid-cap FTSE 250 .
Thomas Cook said in its full-year 2017 earnings report that gross margin was reduced in part because of a competitive market in Spain. The company's fiscal pretax profit rose to GBP46 million. (http://www.marketwatch.com/story/thomas-cook-fy-profit-rises-hikes-dividend-by-20-2017-11-22)
Sage Group PLC (SGE.LN) fell 1.1% even as business software company said pretax profit rose 41% (http://www.marketwatch.com/story/sage-pretax-profit-up-41-raises-final-dividend-2017-11-22) and that it's raising its final dividend. Sage shares have risen about 17% this year.
(END) Dow Jones Newswires
November 22, 2017 04:31 ET (09:31 GMT)