London close: Stocks edge higher as investors wait on US-China trade talks
By Alexander Bueso
Date: Friday 22 Feb 2019
(Sharecast News) - London stocks edged higher on Friday, helped along by strength in the mining sector and well-received results from Pearson and amid growing optimism over Sino-US trade talks.
The FTSE 100 was up 0.16% at 7,178.60, while the pound was up 0.13% against the dollar at 1.3055 and by 0.1% versus the euro at 1.1514.
Chinese Vice Premier Liu He is due to meet President Trump at the White House on Friday following reports that both sides have started to outline commitments in principle six issues that could halt a trade war.
IG market analyst Joshua Mahony said: "There is a certain degree of optimism which centres around the growing feeling that we are closing in on some form of resolution in talks between the US and China. Donald Trump is now scheduled to meet with the top Chinese negotiator, Liu He, raising hopes that the hardest issues are going to be ironed out by the president himself."
On home shores, the pound was not building on its gains earlier in the week, despite reports that Theresa May will request a three-month extension to the Brexit date. May is under pressure to make the move amid a potential Cabinet revolt, while she also battles to head off more defections from the party.
Leaderships of both main parties have been shaken after eight Labour MPs quit at the start of the week to form the Independent Group, before being joined by three Tories on Wednesday. Overnight, May met former ministers Justine Greening and Phillip Lee in Downing Street in an attempt to persuade them to stay, while also sitting down with Justice Secretary David Gauke and Business Secretary Greg Clark, both of whom warned her about opposition to a no-deal Brexit scenario.
On Friday, Andrew Percy, co-chairman of a band of remain and soft-Brexit supporting MPs calling themselves the Brexit Delivery Group, told BBC radio that dozens of Tory MPs are prepared to vote against the government in order to block the UK leaving the EU without a deal. Ahead of an expected vote next week, at least four cabinet ministers and more than 10 junior ministers are reported to be prepared to resign their positions in order to back a motion to delay Brexit.
On the data front, the latest survey from the Confederation of British Industry showed the reported retail sales balance held steady at zero in February, coming in below consensus expectations of +5.
Anna Leach, CBI head of economic intelligence, said: "The High Street has seen a slow start to the year, with year-on-year sales volumes unchanged again this month. Although real earnings growth is higher, consumer confidence has been ebbing away, keeping a lid on demand.
"Retail investment plans have taken a hit this quarter, falling to their weakest since 2012. Until politicians can agree a deal that commands a majority in parliament, is acceptable to the EU and protects our economy, business despair will deepen. A deal must be negotiated, and no-deal averted."
In equity markets, miners were the standout gainers, with Rio, Glencore, BHP and Antofagasta all higher as copper prices rose.
On a related note, in research sent to clients, analysts at Danske Bank pointed to a "big jump" in credit in China in January, explaining that it was a sign that official stimulus measures "were kicking in with more force".
"The data added to optimism in the Chinese equity market, which rallied further this week, putting gains at close to 15% this year," they added.
In individual company news, publishing group Pearson was in the green as it said underlying full-year adjusted operating profit rose 8% to £546m for 2018, in the in the upper half of the guidance range of £520m to £560m.
Metro Bank gained as it was awarded £120m from the fund set up with cash from Royal Bank of Scotland designed to boost competition in the banking sector, with Starling Bank getting £100m and ClearBank £60m.
But one of the 13 banks that missed out on funds distributed by the Banking Competition Remedies body, CYBG, saw its shares dive into the red.
Legoland and Madame Tussauds owner Merlin Entertainments slipped as it announced the sale of its Australian ski resorts, Hotham and Falls Creek, to Vail Resorts, for AUD174m (£95m).
GSK was down slightly, despite being told by the Serious Fraud Office that its investigation has concluded with no further action required.
Elsewhere, there was a rash of deal news. Cathedral City owner Dairy Crest surged as it agreed to be bought by Canadian dairy Saputo Inc for around £975m.
Russ Mould, investment director at AJ Bell, said: "The bid from Canada's Saputo will be a pleasant surprise to investors who may be smiling like the cat who got the cream at the news.
"The cash offer gives them a chance to get out of a fairly pedestrian business and at a price that hasn't been seen since September 2017."
Sub-prime lender Provident Financial also racked up healthy gains after receiving a £1.3bn offer from smaller rival Non-Standard Finance.
Numis said: "A combination of no premium and the poor track record of delivering value (NSF came to market at 100p and is currently valued at 58p) and the poor operational performance within their own home credit business leads us to question why Provident shareholders would accept the offer."
In broker note action, Centrica was hit by a downgrade to 'neutral' from 'buy' at Goldman Sachs, although by the end of trading its shares had recovered, while GlaxoSmithKline was cut to 'neutral' from 'buy' at UBS.
Kaz Minerals was downgraded to 'sell' from 'hold' at VTB Capital and RSA Insurance was started at 'equalweight' by Morgan Stanley.
Market Movers
FTSE 100 7,178.60 +0.16%
FTSE 250 19,269.59 +0.17%
FTSE 100 - Risers
Evraz (EVR) 550.20p +3.54%
Anglo American (AAL) 2,057.00p +3.38%
Hikma Pharmaceuticals (HIK) 1,703.00p +3.27%
Glencore (GLEN) 308.85p +2.78%
Melrose Industries (MRO) 174.00p +2.35%
BHP Group (BHP) 1,827.40p +2.24%
Pearson (PSON) 903.00p +2.22%
Antofagasta (ANTO) 946.00p +1.81%
Rio Tinto (RIO) 4,465.00p +1.66%
TUI AG Reg Shs (DI) (TUI) 833.20p +1.29%
FTSE 100 - Fallers
Barclays (BARC) 156.14p -2.89%
GVC Holdings (GVC) 628.00p -2.33%
Kingfisher (KGF) 233.60p -2.26%
Unilever (ULVR) 4,190.00p -1.54%
Reckitt Benckiser Group (RB.) 5,879.00p -1.51%
Tesco (TSCO) 222.80p -1.46%
CRH (CRH) 2,390.00p -1.24%
BT Group (BT.A) 228.05p -1.23%
Smith (DS) (SMDS) 333.40p -1.04%
Ocado Group (OCDO) 895.60p -0.89%
FTSE 250 - Risers
Dairy Crest Group (DCG) 640.00p +15.32%
Provident Financial (PFG) 589.40p +15.25%
Metro Bank (MTRO) 1,430.00p +9.66%
Indivior (INDV) 106.45p +7.16%
Go-Ahead Group (GOG) 2,078.00p +6.02%
Serco Group (SRP) 128.00p +5.18%
Funding Circle Holdings (FCH) 373.75p +5.02%
TBC Bank Group (TBCG) 1,470.00p +4.11%
Cineworld Group (CINE) 277.60p +3.89%
Ted Baker (TED) 1,995.00p +3.64%
FTSE 250 - Fallers
IG Group Holdings (IGG) 574.50p -5.74%
Plus500 Ltd (DI) (PLUS) 780.00p -5.28%
CYBG (CYBG) 187.10p -5.17%
Acacia Mining (ACA) 249.80p -2.65%
BlackRock Smaller Companies Trust (BRSC) 1,305.00p -2.25%
Bakkavor Group (BAKK) 166.20p -2.24%
Galliford Try (GFRD) 699.50p -2.03%
Ferrexpo (FXPO) 270.10p -1.89%
Domino's Pizza Group (DOM) 239.50p -1.80%
Inmarsat (ISAT) 393.30p -1.77%
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