London close: Stocks edge higher as investors mull trade war headlines
By Alexander Bueso
Date: Tuesday 05 Nov 2019
(Sharecast News) - London stocks edged higher on Tuesday as continued hopes of a Sino-US trade deal boosted the mining sector, but gains were unspectacular as investors mulled the latest reading on the services sector.
According to Bloomberg, Chinese and US officials were "wrangling" over to what degree Washington needed to roll-back previously applied trade tariffs, while yet other reports indicated that Washington was studying a partial roll-back.
"Equities are trimming gains this afternoon, after pushing relentlessly higher over the previous two sessions. Optimism on trade wars is the driving force behind the move, as the US and China continue to make the right noises about removing tariffs," said IG chief market analyst Chris Beauchamp.
"But a rise in the Vix over the past 48 hours should send a message that the uninterrupted gains of the past few weeks may be challenged in fairly short order."
The FTSE 100 was 0.25% firmer by the end of trading at 7,388.08, while the pound was down 0.1% against the US dollar at 1.28665 and 0.43% stronger versus the euro at 1.1626.
Data released earlier showed the UK services sector stagnated in October as companies awaited a resolution over Britain's departure from the European Union.
The IHS Markit CIPS services PMI business activity index edged up to 50.0 from 49.5 in September, beating expectations for a reading of 49.6. However, October's figure was still one of the decade's lowest and marked no change. Anything above 50.0 indicates growth while a figure below signals contraction.
Business levels were supported by existing contracts as the volume of new work continued to decline. The outlook improved slightly, as firms expected Brexit to be resolved early next year, but overall, sentiment remained weak. International demand for UK-based services was also undermined by Brexit uncertainty.
Joshua Mahony, senior market analyst at IG, said: "The surprise rise into 50 comes in a year that has seen a distinct lack of clarity over exactly how this critical sector is going to fare in such uncertain times. Despite the Brexit fears hurting manufacturing and construction sectors, September was just the second month of contraction for the services sector this year. To a large extent, the reliance on the services sector has helped shield the UK from a trade war that has focused on restricting the sale of physical goods.
"While the pound has seen moderate gains off the back of this better-than-expected figure, the fact is that this critical sector remains perilously close to another slide into contraction given the huge political and economic uncertainty ahead."
In equity markets, miners were the top performers again, with Glencore, Antofagasta, Anglo American, Rio Tinto and BHP all higher as copper and iron ore prices rose amid growing expectations that the US and China will strike a trade deal.
A Financial Times report out earlier cited five people briefed on the discussions as saying that the White House is considering rolling back levies on $112bn of Chinese imports, including clothing, appliances, and flatscreen monitors, that were introduced on 1 September at a 15% rate.
Neil Wilson, chief market analyst at Markets.com, said the move would be a critical step in agreeing a 'phase one' deal.
"A plan to hike tariffs on $250bn of Chinese goods from 25% to 30% on October 15th has already been shelved," he said.
"The US is also said to be ready to suspend the planned December 15th tariffs. If all of this is accurate, the US has blinked. There is a real mix of factors going on here - mainly to do with the Presidential election next year. It seems that tariffs are hurting voters in some important states. And at a time of impeachment fears, Trump could do with a 'win' on trade soon."
Elsewhere, Associated British Foods was sitting pretty at the top of the FTSE 100 after it reported a rise in adjusted full-year profits as its Primark and grocery businesses offset a sharp fall in sugar earnings. Adjusted pre-tax profit rose 2% to £1.4bn on a 2% increase in group revenue to £15.8bn.
Imperial Brands reversed earlier losses even after posting a decline in full-year profits amid "tough" trading in its net generation products.
Gambling stocks Rank Group and William Hill were down for the second day running after MPs recommended curbs on online casino games, although GVC and 888 Holdings managed to finish higher.
Ascential took a hit after Barclays cut its price target, while Babcock was under pressure after an initiation at 'underweight' by Barclays. Hunting slipped lower as it was cut to 'sell' at Goldman Sachs.
Market Movers
FTSE 100 (UKX) 7,388.08 0.25%
FTSE 250 (MCX) 20,294.99 0.22%
techMARK (TASX) 3,957.50 -0.23%
FTSE 100 - Risers
Associated British Foods (ABF) 2,374.00p 5.56%
Rolls-Royce Holdings (RR.) 769.00p 4.46%
Schroders (SDR) 3,253.00p 4.26%
Antofagasta (ANTO) 929.00p 3.36%
Glencore (GLEN) 259.15p 2.76%
Hargreaves Lansdown (HL.) 1,794.00p 2.57%
Standard Chartered (STAN) 736.60p 2.56%
BHP Group (BHP) 1,764.60p 2.43%
Aviva (AV.) 431.80p 2.32%
Johnson Matthey (JMAT) 3,262.00p 2.00%
FTSE 100 - Fallers
Aveva Group (AVV) 4,140.00p -2.73%
United Utilities Group (UU.) 848.00p -2.17%
Experian (EXPN) 2,370.00p -2.11%
Polymetal International (POLY) 1,246.50p -1.93%
Fresnillo (FRES) 707.40p -1.91%
Rentokil Initial (RTO) 439.90p -1.86%
BAE Systems (BA.) 573.00p -1.61%
Smurfit Kappa Group (SKG) 2,714.00p -1.60%
AstraZeneca (AZN) 7,363.00p -1.59%
GlaxoSmithKline (GSK) 1,730.00p -1.37%
FTSE 250 - Risers
Oxford Instruments (OXIG) 1,406.00p 5.24%
Softcat (SCT) 1,051.00p 4.28%
TI Fluid Systems (TIFS) 202.00p 4.12%
Bank of Georgia Group (BGEO) 1,346.00p 3.54%
Weir Group (WEIR) 1,480.00p 3.32%
Jupiter Fund Management (JUP) 359.30p 3.13%
Elementis (ELM) 163.80p 3.08%
Kaz Minerals (KAZ) 515.00p 3.02%
Diploma (DPLM) 1,670.00p 2.83%
Morgan Advanced Materials (MGAM) 255.00p 2.82%
FTSE 250 - Fallers
Rank Group (RNK) 220.00p -7.76%
Fisher (James) & Sons (FSJ) 1,884.00p -5.57%
Future (FUTR) 1,422.00p -4.70%
Centamin (DI) (CEY) 114.40p -4.47%
Ascential (ASCL) 335.00p -4.12%
Hochschild Mining (HOC) 198.50p -3.17%
Sirius Minerals (SXX) 2.93p -2.91%
McCarthy & Stone (MCS) 141.60p -2.68%
Babcock International Group (BAB) 530.20p -2.36%
Homeserve (HSV) 1,148.00p -2.30%
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