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(Alliance News) - London stock prices on Monday were struggling to capitalise on positive developments in the US-China trade saga, as HSBC slipped following a disappointing third quarter.
The FTSE 100 index was down 3.82 points, or 0.1%, at 7,320.65 Monday midday. The FTSE 250 was up 28.04 points, or 0.1%, at 20,131.55. The AIM All-Share was flat at 891.13.
The Cboe UK 100 index was flat at 12,412.77. The Cboe UK 250 was up 0.3% at 18,080.19 and the Cboe UK Small Companies was down 0.1% at 11,224.92.
In European equities, the CAC 40 index in Paris was up 0.1% and the DAX 30 in Frankfurt up 0.5%.
Markets in Europe have posted a "more mixed" start to the week despite an upbeat Asian session overnight, commented Joshua Mahony, senior market analyst at IG.
Over the weekend, the US Trade Representative's office said Washington and Beijing are making "headway" on key issues in their ongoing trade dispute.
US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke with China's Vice Premier Liu He Friday on "Phase One of the US-China trade agreement," the USTR announced. The Chinese Commerce Ministry said Saturday both sides agreed to "properly address each other's core concerns."
Both sides have said discussions will go on continuously at the deputy level and the top trade officials will have another call "in the near future".
IG's Mahony said: "For the FTSE, we continue to see gains for the miners in response to the recent a thawing in US-China tensions. Gains for Antofagasta, Glencore, and Anglo American highlight a sector which is growing in confidence as traders prepare for a likely breakthrough in talks next month."
Antofagasta was the top performer in the FTSE 100 on Monday, up 3.1%, while Glencore was 1.6% higher and Anglo American up 1.5%.
Meanwhile, the pound was flat following news of a three-month Brexit extension.
EU members agreed Monday to postpone Brexit for up to three months, stepping in with their decision less than 90 hours before Britain was due to crash out with no divorce deal.
The next deadline for departure will be January 31 – although the other 27 capitals would allow an earlier date if London ratifies a withdrawal agreement before then.
"The EU27 has agreed that it will accept the UK's request for a Brexit flextension until 31 January 2020," the president of the European Council representing member states, Donald Tusk, tweeted.
According to a copy of the agreement seen by AFP, if UK Prime Minister Boris Johnson convinces the parliament to approve an amicable divorce accord before next year, Brexit could be on November 30 or December 31. But in the meantime London must nominate a senior official to serve on the next European Commission and must agree that the withdrawal agreement it struck last month will not now be renegotiated, according to the EU text.
Sterling was quoted at USD1.2829 at midday, broadly unchanged from USD1.2831 late Friday.
"The decision to provide an extension must be seen as a positive thing, given how close we are to a disorderly Brexit. However, while a no-deal has been averted for now, this extension points to more uncertainty and economic decline as businesses remain in the dark over where the country is heading," said IG's Mahony.
In the US on Monday, stocks are pointed to a higher start with the Dow Jones Industrial Average seen up 0.3%, the S&P up 0.2%, and the Nasdaq Composite up 0.3%.
As earnings season in the US continues, third-quarter results are due from Google owner Alphabet after Wall Street closes on Monday.
Shares in jewellery retailer Tiffany & Co were up 29% in pre-market trade on Monday after LVMH Moet Hennessey Louis Vuitton confirmed it is in talks over a potential marriage of the two firms.
French luxury brand owner LVMH was responding to a number of press stories over the weekend, including that it was considering offering USD120 per share for Tiffany, a deal that would value the firm at USD14.5 billion. Tiffany shares last closed at USD98.55.
"In light of recent market rumours, the LVMH group confirms that it has held preliminary discussions regarding a possible transaction with Tiffany," the statement read. "There can be no assurance that these discussions will result in any agreement."
On a read-across from the M&A activity in the luxury sector, shares in trenchcoat maker Burberry were up 1.9% at midday in London.
At the bottom of the FTSE 100, however, was HSBC Holdings, after a disappointing third quarter.
For the three months ended September, pretax profit narrowed 18% to USD4.84 billion from USD5.92 billion the year prior. This was after operating income fell 3.2% to USD13.36 billion from USD13.80 billion the year before.
"Parts of our business, especially Asia, held up well in a challenging environment in the third quarter," HSBC Chief Executive Officer Noel Quinn said. "However, in some parts, performance was not acceptable, principally business activities within continental Europe, the non-ring-fenced bank in the UK, and the US."
In August, Quinn took the helm of HSBC after former CEO John Flint left the role after only a year and a half.
"This is hardly an auspicious start for Noel Quinn, who as acting chief executive officer is auditioning for the role on a permanent basis. Given a difficult backdrop and the short time he has been in post a little patience is probably required but, in an unforgiving corporate world, he might not get a second read," said Russ Mould at AJ Bell.
"Along with the herculean task of bringing simplicity to a business as large and complex as HSBC, the bank has no control over factors such as a US-China trade war, Brexit and the escalating political tensions on its home turf in Hong Kong," Mould added.
Joining HSBC towards the bottom of the index was Informa, 2.3% lower after Goldman Sachs cut the events and publishing group to Sell from Neutral.
Another stock suffering from a ratings downgrade at the start of the week was luxury car maker Aston Martin Lagonda Global Holdings, down to Underperform from Neutral.
By Lucy Heming; lucyheming@alliancenews.com
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