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(Alliance News) - Stocks in London were mixed at midday on Wednesday as investors counterbalanced tumultuous US-China relations with hopes of a US stimulus agreement.
US President Donald Trump on Tuesday said he has cancelled trade talks with Beijing days after a scheduled review of the initial Phase One trade agreement was postponed.
Relations between Washington and Beijing have been tense since Trump took office, initially largely over trade and intellectual property disputes, and spiralling downwards as the coronavirus pandemic worsened.
Additionally, investors are holding out hope over a possible breakthrough in deadlocked US economic stimulus talks.
House Speaker Nancy Pelosi provided a ray of optimism by saying her party could be willing to make cuts to its offer in order to seal a deal, then return to thrash out other issues after November's elections.
In London, the blue-chip FTSE 100 index was up 6.81 points, or 0.1%, at 6,083.43. The mid-cap FTSE 250 index was up 44.23 points, or 0.2%, at 17,578.79. The AIM All-Share index was up 1.82 points, or 0.2% at 961.87.
The Cboe UK 100 index was up 0.1% at 605.69. The Cboe 250 was down 0.4% at 14,964.68, and the Cboe Small Companies was off 0.1% at 9,603.65.
In mainland Europe, the CAC 40 index in Paris was down 0.1%, while the DAX 30 in Frankfurt was 0.2% higher.
"European markets have seen a somewhat mixed start, with strained US-China relations continuing to provide a grey cloud to affairs. Nevertheless, the US outlook took a turn for the better overnight, with Nancy Pelosi indicating her potential willingness to compromise in a bid to push through the next coronavirus stimulus package," said IG Group's Josh Mahony.
In the FTSE 100, WM Morrison Supermarkets was up 1.9% after the supermarket chain said it has launched a platform for its products on Amazon.co.uk, allowing customers to purchase products which will be picked directly from Morrisons stores.
Morrisons also operates a larger grocery delivery business directly through its own website, which is fulfilled through a distribution deal with Ocado Group.
British Airways parent International Consolidated Airlines Group was up 1.8% amid plans by Heathrow airport for the development of a new coronavirus testing facility.
Heathrow hopes this could lead to the end of the mandatory 14-day quarantine for those returning from certain countries and "protect the economy". Arriving passengers will be able to book swab tests and have results sent to them in seven hours under the proposal, which is being used in Germany and Iceland.
Heathrow executives hope those who test negative could leave quarantine five to eight days after landing, though the airport's programme needs UK government approval before it can begin.
At the other end of the large-cap index, Persimmon was the worst blue-chip performer, down 3.0%. The housebuilder was hit by profit-taking after reporting well-received interim results on Tuesday. The stock had closed up 8.0% on Tuesday.
Separately on Wednesday, Persimmon said its incoming chief executive Dean Finch is expected to take up the role earlier than originally planned. Finch will leave his role as CEO of FTSE 250 transport operator National Express Group on August 31. National Express was off 6.3%.
In the FTSE 250, Hochschild Mining was the worst performer, down 8.5%, after the gold miner's profit sharply declined in the first half of 2020, as the Covid-19 pandemic resulted in stoppages at all mines between mid-March and late May.
Hochschild posted a USD6.5 million pretax profit for the six months ended June 30, a fraction of the previous year's USD29.5 million profit. Revenue dropped 35% year-on-year to USD232.0 million from USD354.5 million as production shrank 47% to 126,835 gold equivalent ounces from 239,090 gold equivalent ounces.
In addition, Hochschild has decided not to reinstate its dividend.
The pound was quoted at USD1.3240 Wednesday midday, up from USD1.3225 at the London equities close Tuesday. Sterling hit an intraday high of USD1.3267 against the greenback following the release of UK inflation figures but then retreated.
The UK inflation rate rose in July as the country continued its emergence from coronavirus lockdown measures, according to the latest figures from the Office for National Statistics.
The annual UK inflation rate was 1.0% in July, accelerating from 0.6% in June. The figure beat consensus, cited by FXStreet, for an 0.6% rise.
However, analysts anticipate a slowdown in inflation in August after the UK government cut tax for the hospitality and tourism sectors.
Analysts at ING commented: "The inflation picture is likely to get muddier still when we get the August figures. We're likely to see a heavy drag from the VAT cut from 20% to 5% on things like restaurants, hotels and various recreational activities, but also the 'Eat Out to Help Out' scheme. This latter policy has enabled restaurants to offer half-price food and non-alcoholic drinks on Monday-Wednesday through August.
"More importantly, we'd reiterate that the wider Covid-19 crisis is unlikely to be inflationary. While ongoing supply-chain disruption will inevitably cause price spikes in certain areas, the more dominant factor will be the widely-predicted rise in unemployment."
As such, ING thinks policymakers from both from the UK Treasury and Bank of England will be under growing pressure to add additional stimulus heading into the tail-end of 2020 to support the economy.
The euro was priced at USD1.1939, firm from USD1.1924. Against the yen, the dollar was trading at JPY105.26, down from JPY105.45.
In economic news from the continent, the annual inflation rate in the eurozone edged upwards in July as Covid-19 containment measures continued to ease, Eurostat reported.
The euro area annual inflation rate was 0.4% in July, picking up from 0.3% in June. However, in July 2019, the annual inflation rate was 1.0%.
The largest contributors to the slightly stronger inflation rate were non-energy industrial goods and services, followed by food, alcohol and tobacco, while energy continued to act as a drag. Month-on-month, however, prices fell by 0.4% in July after a 0.3% rise in June.
In the evening, minutes from the US Federal Reserve's latest Open Market Committee meeting will be published.
"The FOMC meeting minutes are eagerly anticipated later today as investors look for hints as to the Federal Reserve's next move. Although the Fed minutes may offer light relief to the falling USD, many will be waiting on September's stimulus announcement," said analysts at OFX.
New York is set to continue its positive momentum after the S&P 500 and Nasdaq Composite indices ended at record highs on Tuesday.
The Dow Jones Industrial Average, the S&P 500 and the Nasdaq Composite were all called up 0.1%, based on futures trading.
On the political front, US Democrats on Tuesday nominated Joe Biden as their 2020 presidential candidate, formally designating the Washington veteran as the party's challenger to incumbent President Trump in the November election. In an unprecedented roll call vote that took place entirely online due to the coronavirus pandemic, all 50 states and seven territories announced their vote tallies that cemented Biden's role as the party flagbearer.
In commodities, Brent oil was quoted at USD45.12 a barrel Wednesday midday, lower than USD45.34 late Tuesday. Gold was trading at USD1,989.75 an ounce, down from USD2,000.34.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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