London close: Stocks extend bounce ahead of US-China trade talks
By Alexander Bueso
Date: Monday 07 Oct 2019
(Sharecast News) - London stocks started the week higher, despite worries about a global slowdown and jitters ahead of this week's Sino-US trade talks.
The FTSE 100 was 0.59% firmer at 7,197.88, while the pound was down 0.15% against the US dollar to 1.23154 and by 0.13% versus the euro at 1.1215, respectively.
Sterling's move lower came on the back of a report in the Daily Telegraph that the Prime Minister was prepared to go to the Supreme Court in order to avoid having to ask Brussels for another extension if he had not clinched a withdrawal deal by 19 October, as the Benn Act required of him.
Helping to lift stocks, US National Economic Council director, Larry Kudlow, reportedly said that Washington had no plans to delist Chinese companies from US stockmarkets.
Yet at the same time, investors were mulling a report over the weekend suggesting that Chinese officials are increasingly reluctant to agree to the broad trade deal pursued by US President Donald Trump.
According to Bloomberg, Chinese officials have significantly narrowed the scope of topics they are willing to discuss at the trade talks in Washington on Thursday. Vice Premier Liu He, the leader of China's trade delegation, was said to have told dignitaries that China will not commit to reforming industrial policies or government subsidies.
Chris Beauchamp, chief market analyst at IG, said: "with 'no progress' now the base case, anything resembling progress will be gratefully received by investors keen to see this pernicious issue dealt with.
"All other events this week will likely pale into insignificance, especially as investors await the start of earnings season and the next Fed meeting. But equities are now into the strong final three months of the year, and at present it promises to be much more pleasant experience for investors than the final months of 2018."
The release of more disappointing data out of Germany on the other hand weighed on the mood, with factory orders down more than expected in August as domestic orders slumped.
According to Destatis, orders declined 0.6% on the month in August, which was an improvement on the revised 2.1% drop seen the month before but steeper than the 0.3% dip expected. On the year, factory orders slumped 6.7% compared to a downwardly-revised 5% decline in August and expectations of a 6.4% fall.
On home shores, Brexit was also firmly in focus as always after French president Emmanuel Macron said that the EU will decide at the end of the week whether a deal is possible.
Neil Wilson, chief market analyst at Markets.com, said: "Brexit will dominate the agenda this week as the UK government tries to get the EU to look at its homework. So far Brussels is not prepared to even look at the proposals, let alone grade it.
"Boris Johnson has his work cut out if he's to pass this test. Still seems odds-on to take Britain out of the EU on October 31 whatever deal is on the table, however there are a lot of rumours and noise about what Parliament will do to prevent a no-deal exit at any cost. MPs seem prepared to completely crash the constitution to block Boris."
Earlier, the latest survey from mortgage lender Halifax showed that annual house price growth slowed to its worst pace in six years in September. House prices were up 1.1% on the year, marking the lowest level of growth since April 2013
On the month, prices were down 0.4%, which was the first monthly fall since May.
Halifax managing director Russell Galley said: "Underlying market indicators, including completed sales and mortgages approvals, continue to be broadly stable. Meanwhile for buyers, important affordability measures - such as wage growth and interest rates - still look favourable.
"Looking ahead, we expect activity levels and price growth to remain subdued while the current period of economic uncertainty persists."
In equity markets, shares in SIG tumbled after the building materials supplier warned on profits, citing deteriorating markets caused by Brexit worries and a weaker German economy. The company said it now anticipated "significantly lower" full-year underlying profits in both its specialist distribution and roofing merchanting businesses.
SIG also announced the sale of its air handling division and building solutions business for a combined £235.8m, which would "significantly strengthen" its balance sheet.
Russ Mould, investment director at AJ Bell, said: "SIG has issued numerous profit warnings in the past few years as the UK construction market goes through a very difficult patch. Right-sizing its business now could be a sensible thing to do, particularly as it is managing to sell assets on decent valuation multiples."
Shares of B&Q owner Kingfisher, Howden Joinery, Travis Perkins, Grafton and Polypipe were all lower.
Just Eat retreated after a report over the weekend that it, Deliveroo and Uber Eats host thousands of restaurants with poor hygiene ratings, while cruise operator Carnival was hit by a downgrade at HSBC.
Sports Direct was lower as it responded to press speculation, saying it is not planning on closing a large number of House of Fraser stores in the new year.
HSBC shares finished a tad higher, and off their intraday lows, following reports the bank was planning to axe up to 10,000 jobs worldwide in a cost-cutting drive.
Market Movers
FTSE 100 (UKX) 7,197.88 0.59%
FTSE 250 (MCX) 19,420.24 -0.31%
techMARK (TASX) 3,848.04 0.61%
FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 468.60p 3.06%
NMC Health (NMC) 2,551.00p 2.80%
Centrica (CNA) 71.46p 2.58%
Hiscox Limited (DI) (HSX) 1,603.00p 1.97%
Fresnillo (FRES) 674.00p 1.90%
Antofagasta (ANTO) 845.00p 1.88%
Vodafone Group (VOD) 160.74p 1.82%
Smith (DS) (SMDS) 341.00p 1.79%
Ocado Group (OCDO) 1,307.00p 1.75%
Mondi (MNDI) 1,541.00p 1.51%
FTSE 100 - Fallers
JD Sports Fashion (JD.) 734.80p -2.57%
Associated British Foods (ABF) 2,162.00p -1.81%
Informa (INF) 783.00p -1.76%
Coca-Cola HBC AG (CDI) (CCH) 2,546.00p -1.66%
Hargreaves Lansdown (HL.) 1,790.50p -1.43%
Persimmon (PSN) 2,071.00p -1.29%
Carnival (CCL) 3,130.00p -1.17%
Phoenix Group Holdings (PHNX) 659.00p -1.11%
Pearson (PSON) 716.00p -1.00%
Berkeley Group Holdings (The) (BKG) 4,000.00p -0.91%
FTSE 250 - Risers
Clarkson (CKN) 2,575.00p 6.63%
Restaurant Group (RTN) 134.90p 5.04%
Sirius Minerals (SXX) 3.86p 4.61%
Airtel Africa (AAF) 51.40p 2.99%
Premier Oil (PMO) 76.14p 2.74%
Sabre Insurance Group (SBRE) 291.00p 2.65%
Hammerson (HMSO) 279.10p 2.23%
Telecom Plus (TEP) 1,242.00p 1.97%
Hunting (HTG) 432.00p 1.89%
Kaz Minerals (KAZ) 405.30p 1.83%
FTSE 250 - Fallers
SIG (SHI) 100.60p -15.90%
IP Group (IPO) 57.70p -4.94%
Grafton Group Units (GFTU) 707.50p -4.26%
Vivo Energy (VVO) 112.00p -3.95%
PureTech Health (PRTC) 235.00p -3.29%
Riverstone Energy Limited (RSE) 510.00p -3.23%
Howden Joinery Group (HWDN) 538.00p -3.06%
B&M European Value Retail S.A. (DI) (BME) 356.10p -2.92%
Sirius Real Estate Ltd. (SRE) 73.70p -2.90%
Dechra Pharmaceuticals (DPH) 2,666.00p -2.78%
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