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LONDON MARKET CLOSE: Stocks Up As Investors Cast Trade Fears Aside

Thu, 12th Jul 2018 18:05


LONDON (Alliance News) - Stocks in London ended higher on Thursday with trade concerns surrounding the US and China's trade war subsiding, as US President Donald Trump embarked on his two-day tour of the UK.

The FTSE 100 index closed up 0.8%, or 59.37 points at 7,651.33. The FTSE 250 ended up 0.7%, or 137.50 points, at 20,779.77, and the AIM All-Share closed up 0.1%, or 0.90 points, at 1,090.24.

The Cboe UK 100 closed up 0.8% at 12,971.15, the Cboe UK 250 closed up 0.7% at 18,980.31, and the Cboe UK Small Companies closed down 0.4% at 12,523.78.

In Paris the CAC 40 ended up 1.0%, while the DAX 30 in Frankfurt ended up 0.6%.

"European markets are closing out the day in positive fashion, with the trade fears going out the window in favour of a more optimistic stance. With Donald Trump heading to London, Theresa May is likely to shift the rhetoric onto a potentially beneficial future trading relationship with the US," said IG market analyst Joshua Mahony.

"With no major trade deficit to complain about, Trump is likely to be more open with the future relationship between the US and UK, following a tumultuous few days of meetings with NATO," added Mahony.

The US President arrived in the UK for talks with Prime Minister Theresa May just hours after attacking her Brexit plan and highlighting cabinet divisions.

The US president landed in Air Force One at Stansted Airport in Essex at lunchtime on Thursday at the start of a four-day UK visit expected to see protesters take to the streets in large numbers.

Stock markets across Europe rebounded from heavy losses incurred on Wednesday amid easing trade concerns following US threats of a new 10% tariff on USD200 billion worth of Chinese imports.

China vowed to take countermeasures in response to the new tariffs, although the markets have responded positively to the lack of the announcement of specific retaliation by the Chinese.

Investors were also offered relief after Trump reaffirmed his country's commitment to NATO on Thursday and said he was "very happy" because allies had pledged to substantially increase defence spending, after threatening that Washington could go it alone otherwise.

Trump was speaking after a tumultuous NATO summit at which he lashed out at allies - notably Germany - for their failure to come close to the US' share of defence spending.

"I think that NATO is much stronger now than it was two days ago," Trump said, noting that allies had pledged to increase defence spending "like they never have before".

On the London Stock Exchange, AstraZeneca ended as the best performer up 3.5% after the Anglo-Swedish drugmaker said that Health Canada has approved its oncology treatment Tagrisso for the first-line treatment of patients with non-small cell lung cancer.

The Anglo-Swedish drugmaker, through its Canada arm, said Tagrisso has been granted a notice of compliance under priority review status based on data from the phase III FLAURA trial.

The trial showed that patients who received first-line treatment of Tagrisso demonstrated 18.9 months median progression-free survival versus 10.2 months in patients receiving earlier generation first-line EGFR tyrosine kinase inhibitorserlotinib or gefitinib.

Sky closed up 3.4% after suitor Comcast Corp raised its offer in its bidding war with rival Twenty-First Century Fox, as the latter received UK government approval over its own takeover bid.

Comcast, which owns NBCUniversal, on Wednesday increased its cash offer for Sky to 1,475 pence per share, taking the total value of the UK pay-TV operator to GBP26 billion. The offer from Comcast trumped that of its rival Fox which Early Fox offered 1,400p for Sky earlier on Wednesday, valuing Sky at GBP24.50 billion.

In addition, new UK Secretary of State for Digital, Culture, Media and Sport Jeremy Wright gave clearance to Fox to acquire the 61% of Sky it does not already own.

At the other end of the large cap index, ITV closed down 1.0% after Goldman Sachs downgraded the broadcaster to Neutral from Buy.

In the FTSE 250, Computacenter closed up 9.3% after the IT services group said it expects trading results for 2018 financial year to be "comfortably" in excess of previous expectations.

The company said its trading for the six months ended June demonstrates "considerable progress" in adjusted profitability.

At the other end of the midcap index, Intu Properties closed down 3.6% after Deutsche Bank cut the shopping mall operator to Sell from Hold.

The pound was slightly lower versus the dollar quoted at USD1.3223 at the London equities close, compared to USD1.3274 at the close Wednesday, as plans for the UK's future relations with the EU were revealed in Prime Minister May's White Paper.

The plan involves the creation of a free trade area for goods between the UK and the EU, in effect keeping the sector under EU single market rules and ensuring an open border between Northern Ireland and Ireland, she said earlier.

But the UK would leave the single market for services, which accounts for some 80% of Britain's economy, said May, who has been rocked by the resignation of Conservative rebel David Davis, former foreign secretary Boris Johnson and a high-profile junior Brexit minister opposed to her plan.

"It would deliver a principled and practical Brexit that is in our national interest, and the UK's and the EU's mutual interest," May said in a foreword to her plan.

Brexit Secretary Dominic Raab, who replaced Davis on Monday, told parliament that the plan would mean ending freedom of movement for EU citizens to Britain; giving the country the ability to sign free trade deals with non-EU nations; and ending the jurisdiction of the European Court of Justice.

Speaking in Brussels, where she attended a NATO summit, May said she had received a "positive response" from other EU leaders.

The euro stood lower at USD1.1691 at the European equities close, against USD1.1722 late Wednesday, as investors took stock of the latest minutes from the European Central Bank.

Policymakers at the central bank widely agreed that there was a need for retaining ample monetary policy stimulus to support inflation in the euro area, minutes of the bank's June 13-14 Governing Council meeting showed. ECB rate-setters also stressed that the forward guidance on interest rates should remain "open-ended".

Last month, the ECB decided to halve its monthly asset purchases to EUR15 billion after September and to eventually stop them at the end of the year. The bank also signalled that the interest rates will remain at their present levels through the summer of 2019.

In addition, rate-setters expressed caution that the economic slowdown in the euro area witnessed in the first three months of the year was likely to extend into the second quarter in several member countries.

"In the light of prevailing uncertainties that could put a sustained convergence of inflation at risk, it was widely considered prudent to stress the Governing Council's continued readiness to adjust all of its instruments," the minutes said.

The ECB policymakers also raised concerns over the threat of protectionism and said "the risk of persistent heightened financial market volatility warranted monitoring".

Stocks in New York were higher at the London equities close. The DJIA was up 0.7%, the S&P 500 index up 0.6% and the Nasdaq Composite up 0.9%.

In economic news, consumer prices in the US edged slightly higher in the month of June the Labor Department revealed.

The Labor Department said its consumer price index inched up by 0.1% in June after rising by 0.2% in May. Economists had expected consumer prices to increase by 0.2%.

While consumer prices showed only a modest monthly increase, the annual rate of growth still accelerated to a more than six-year high of 2.9% in June from 2.8% in May.

Core consumer price growth also edged up to 2.3% in June from 2.2% in May, reaching the highest level since January of 2017.

"The uptick by the annual rate of core consumer price growth keeps the Federal Reserve on track to raise interest rates twice more this year," Andrew Hunter, US economist at Capital Economics said.

"With the labor market exceptionally tight and activity expanding strongly, we think that core inflation has further to rise," Hunter added. "The prospect of further tariffs on Chinese imports will only add to that upward pressure".

Ahead, financial services juggernauts Citigroup, JPMorgan Chase and Wells Fargo will report quarterly earnings before the start of trading on Friday.

Brent oil was quoted down at USD73.44 a barrel at the London equities close from USD77.16 at the close Wednesday as prices suffered their worst daily decline in a year after the larger than expected drop in US crude inventories.

Gold was quoted lower at USD1,247.38 an ounce at the London equities close against USD1,250.38 late Wednesday.

The economic events calendar on Friday has trading statements from credit checking agency Experian, distribution and support services company DCC, emerging markets-focused money manager Ashmore Group, flexible office provider Workspace Group and recruiter Hays.

The UK corporate calendar on Friday trading statements from Japan industrial production data at 0530 BST, Germany wholesale price index readings at 0700 BST and US import and export prices at 1330 BST.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

Copyright 2018 Alliance News Limited. All Rights Reserved.

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