Miners Hold Back FTSE 100, Lloyds Hit By PPI Again

Miners Hold Back FTSE 100, Lloyds Hit By PPI Again

CMC Markets  | Sep 09, 2019 10:47

Stocks got off to a solid start at the beginning of the trading day, but some of the gains have been handed back. In London, mining stocks like Glencore (LON:GLEN), Anglo American (LON:AAL) and Rio Tinto (LON:RIO) are in the red on the back of disappointing trade data from China over the weekend. Chinese imports declined by 5.6%, and that suggests that demand is cooling, and that hit natural resources stocks as the country is a major importer of commodities.

The European Central Bank meeting is on Thursday, and there is wide speculation about a loosening of monetary policy, so a sense of optimism is likely to swirl around the markets on the run up to the meeting.

Lloyds (LON:LLOY) shares are lower this morning as there was a ‘significant spike’ in the number of customers calming compensation for the mis-selling of payment protection insurance (PPI).

The bank is the worst offender in relation to PPI provisions, as it has already set aside over £19 billion, and today it confirmed it will set aside an additional £1.2-£1.8 billion. The bank has suspended its share buyback scheme on account of new PPI provision, and that added to the negative move. The cut off to claim compensation for PPI was August, so it is possible a line should now be drawn under this situation. The update from Llloyds wasn’t exactly a surprise given that last week Royal Bank of Scotland Group PLC (LON:RBS) and CYBG PLC (LON:CYBGC) revealed PPI provisions.

Associated British Foods (LON:ABF) issued a mixed trading update. It’s the same old story at the group, whereby Primark is the driver of the firm and the sugar unit underperforms. Primark’s increased selling space slightly offset the 2% decline in like-for-like (LFL) sales. It is concerning that Primark registered a dip in LFL sales as it has been one of stronger firms in the fashion industry in recent years. The group full-year outlook was left unchanged.

Thomas Cook (LON:TCG) shares are lower as a fresh dispute over pensions has erupted. China’s Fosun are on the verge of rescuing the troubled travel firm in exchange for a 75% stake in the tour business, and a 25% holding in the airline operation, but trustees of the travel firm’s pension’s scheme want reassurances that annual contributions of £25 million will be maintained.

Berkeley Group (LON:BKGH) received an upgrade from HSBC as the bank issued a buy rating for the stock, and the previous rating was hold. The finance house also raised the price target to 4,540p from 4,130p.

GBP/USD is higher on the day on the back of some positive economic updates from the UK today. The UK GDP estimate for July was 0.3% on a monthly basis, and that easily topped the 0.1% forecast. The industrial output and manufacturing output for July came in at 0.1% and 0.3% respectively.

We are expecting the Dow Jones to open 49 points higher at 26,846 and we are calling the S&P 500 up 8 point at 2,986.

DISCLAIMER: CMC Markets is an execution-only provider. The material (whether or not it states any opinions) is for general information purposes only and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.

No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction, or investment strategy is suitable for any specific person.

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