LONDON MARKET CLOSE: FTSE 100 Higher On Eve Of US-China Trade Talks

(Alliance News) - Stocks in London ended mixed on Wednesday, as investors look ahead to the start ...

Alliance News 9 October, 2019 | 5:05PM
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(Alliance News) - Stocks in London ended mixed on Wednesday, as investors look ahead to the start of high level trade talks between the US and China starting on Thursday.

China remains open to a limited trade deal as long as US President Donald Trump imposes no more tariffs, Bloomberg News and the Financial Times reported, citing people close to the upcoming talks.

In return, Beijing would offer non-core concessions such as purchases of US agricultural products, the reports added.

With less than a week to go before the next round of punitive tariffs is due to hit, Beijing's top trade envoy Liu He will on Thursday meet US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin.

The FTSE 100 index closed up 23.35 points, or 0.3%, at 7,166.50. The FTSE 250 ended down 29.30 points, or 0.2%, at 19,171.60, and the AIM All-Share closed down 0.54 points, or 0.1%, at 856.79.

The Cboe UK 100 ended up 0.1% at 12,157.20, the Cboe UK 250 closed down 0.3% at 17,088.48, and the Cboe Small Companies ended down 0.3% at 10,781.90.

In European equities, the CAC 40 in Paris ended up 0.8%, while the DAX 30 in Frankfurt ended up 1.0%.

CMC Markets analyst David Madden said: "Sentiment in Europe is positive on reports that China are open to the idea of striking a partial trade deal with the US. It is believed that Beijing are willing to increase their purchases of US agricultural goods, in exchange for no additional tariffs from the US - levies are planned for this month as well as December. Traders are buying back into stocks as the news from China lays a slightly upbeat foundation for the trade talks that will take place tomorrow.

"The gains in stocks might be limited as it was also reported that China are still unwilling to compromise on big issues. The Trump administration have concerns about Chinese government subsidies, and Beijing have recently stated they are unwilling to bend on the issue. Hopes have been raised a little, so dealers are using any excuse to snap up stocks."

In the FTSE 100, Hargreaves Lansdown ended the best performer, up 3.3% after Liberum started coverage on the fund supermarket with a Buy rating.

Liberum's Rahim Karim said Hargreaves Lansdown's best-in-class service levels, agile technology platform and pricing strategy will see it remain the "clear market leader" in the direct-to-consumer platform market.

London Stock Exchange Group ended up 2.9% after JPMorgan resumed coverage on the stock exchange operator with an Overweight rating.

JPMorgan's Gurjit Kambo and James Goulbourne said LSEG's deal to buy market data firm Refinitiv can reinforce its position as a leading market infrastructure player.

Just Eat closed up 0.9% with the online takeaway platform benefitting from a positive read-across from Dutch peer

The Amsterdam-headquartered firm said order growth jumped sharply in the third quarter on acquisition activity, whilst it presses ahead with its proposed combination with Just Eat. closed up 1.8% in Amsterdam.

In the FTSE 250, GVC Holdings ended the best performer, up 5.2%. The gambling company raised its annual guidance after reporting a solid third quarter of trading and said it still expects to close 900 stores in the UK.

Stocks in New York were higher at the London equities close, with the DJIA up 0.7%, the S&P 500 index up 0.8% and the Nasdaq Composite up 0.9%.

Meanwhile, investors will be looking for clues from the US Federal Reserve when the central bank release the minutes from its September 17-18 meeting at 1900 BST.

Investors will be hoping the minutes will provide details on whether Fed officials believe another interest rate cut might be warranted at the upcoming meeting at the end of the month.

"The Fed cut interest rates at the [September] meeting by 0.25%. However, it was considered a hawkish cut, after the Fed didn’t signal any further cuts in the cycle. According to the CME Fedwatch tool the markets are placing an 85% probability on the Fed cutting at the next meeting on October 30. Given that several Fed policy makers have hit the wires, speaking out in favour of another rate cut and Fed Chair Jerome Powell spoke yesterday acknowledging the softer US data, the minutes already could be considered out of date. Should the minutes show the Fed to be more dovish then we could see the dollar sell off further," said City Index analyst Fiona Cincotta.

The pound was quoted at USD1.2222 at the London equities close, marginally higher than USD1.2204 at the close Tuesday, amid Brexit concerns.

The UK and European Union are currently not on track to strike a Brexit deal, chief EU negotiator Michel Barnier told the European Parliament, pointing to "three major problems" in the proposals presented by London.

These relate to: Britain's proposed approach on Irish border checks; the need for a legally binding, operational solution; and the plan to hand power of consent to the Northern Irish assembly, which could reject the arrangement, Barnier said.

"The British government proposal, as it is today, and which we cannot accept, would replace an operational, practical, legal solution with a hypothetical and provisional solution," Barnier said.

"As I speak to you now, we're not on the point of envisioning and finding a deal," Barnier added, playing down hopes of a breakthrough before next week's EU summit.

The euro stood at USD1.0982 at the European equities close, up from USD1.0959 late Tuesday. analyst Fawad Razaqzada said: "We continue to expect the shared currency may be able to advance and finally break that USD1.10 hurdle at the umpteenth time of asking. This is because the yield spread between German and US bonds has widened, as we reported previously. The yield spread has widened thanks mainly to the recent soft patch in US data and the Fed becoming increasingly dovish, rather than a rise for German yields.

"With most major central banks cutting interest rates and in the case of the ECB re-starting QE, the pressure has been growing on the Fed to become more aggressive in its rate cuts - not least by President Donald Trump. Well, at a speech yesterday, Fed Chair Jay Powell said the central bank will resume short-term US Treasury bond purchases soon in order to expand its balance sheet. It hopes to prevent a repeat of the recent disruption in repo markets."

Brent oil was quoted at USD58.54 a barrel at the London equities close, up from USD57.86 at the close Tuesday.

Gold was quoted at USD1,507.45 an ounce at the London equities close, firm against USD1,503.60 late Tuesday.

The economic events calendar on Thursday has UK industrial and manufacturing figures at 0930 BST and US inflation readings at 1330 BST.

The UK corporate calendar on Thursday has trading statements from fund supermarket Hargreaves Lansdown, paper and packaging firm Mondi, and homewares retailer Dunelm Group. There are also interim results from Jacamo, JD Williams and Simply Be clothing brands owner N Brown Group.

By Arvind Bhunjun;

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Securities Mentioned in Article

Security Name Price Change (%) Morningstar
Hargreaves Lansdown PLC 1,831.50 GBX -0.11 -
GVC Holdings PLC 813.20 GBX 2.57 -
London Stock Exchange Group PLC 8,126.00 GBX 1.20
Just Eat PLC

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