LONDON (Alliance News) - Optimism in Asia overnight on renewed US-China trade talks failed to flow through to the FTSE 100 at the start of the week, with Centrica and Intercontinental Hotels Group among the biggest losers on Monday.However, the FTSE 250 gained as constituent Dunelm climbed 10% following a strong Christmas trading performance. The FTSE 100 was down 44.18 points, or 0.7%, at 6,793.24, while the FTSE 250 was 95.87 points higher, or 0.5%, at 17,891.75. The AIM All-Share was up 1.3% at 885.60.The Cboe UK 100 was down 0.7% at 11,523.49, while the Cboe UK 250 was up 0.7% at 16,011.18, and the Cboe UK Small Companies up 0.8% at 11,009.50."European markets have failed to follow their Asian counterparts, as the bullish surge sparked on Friday comes to a halt. All eyes have been and will remain on the US, with Friday's Fed and payrolls focus shifting onto US-China trade talks today," commented IG market analyst Joshua Mahony."Realistically we are unlikely to see any form of tangible breakthrough in the immediate future, with issues such as the protection of intellectual property rights providing a major stumbling block that needs to be overcome," he said. US-China talks start on Monday following the "ceasefire" reached by US President Donald Trump and Chinese President Xi Jinping in December.As part of the 90-day truce, Washington postponed a planned increase of tariffs on USD200 billion worth of Chinese imports from 10% currently, to 25%. The Chinese side has compromised by suspending additional tariffs on US cars and by buying US soybeans.The Nikkei 225 in Tokyo had closed up 2.4% overnight, while the SSE Composite in Shanghai finished 0.7% higher and the Hang Seng in Hong Kong up 0.8%.However, stocks in the US are pointed towards a soft start to the week amid the trade talks, with the Dow Jones seen flat, the S&P 500 down 0.1% and the Nasdaq called 0.2% lower. The partial US government shutdown remains ongoing, with Trump over the weekend renewing a threat to declare a national emergency over border security.Trump said he may decide a national emergency exists "depending on what happens over the next few days", indicating a round of talks that started Saturday could last into mid-week. Trump is standing firm on his demand that Congress provide USD5.6 billion in funding for a wall on the US-Mexico border to bolster security and help control illegal immigration, human trafficking and the flow of illegal drugs.The stalemate over spending on border security has resulted in the partial government shutdown, now in day 16. Several hundred thousand government employees are on furlough without pay, while others are working but not receiving pay checks.In mainland Europe on Monday, the CAC 40 in Paris and the DAX 30 in Frankfurt were down 0.4% and 0.5% respectively.Behavioral research institute Sentix showed Eurozone investor confidence deteriorated for a fifth straight month in January to its lowest level in over four years, though the fall was less severe than expected by economists. The Sentix investor confidence index dropped to -1.5 from -0.3, marking the lowest level since December 2014. Economists had forecast a score of -2 for January."With these data, the eurozone is dangerously close to stagnation," Sentix Managing Director Manfred Hubner warned. "Neither politicians nor central banks seem to have really grasped the extent of this loss of momentum."The continuing protest of the yellow vests in France could weigh more heavily, while a possible "hard Brexit" and lack of support from the global economy remain negative factors, the institute added.British Gas owner Centrica was at the bottom of the FTSE 100 on Monday, shares shedding 4.5% after Jefferies cut its rating on the energy provider to Hold from Buy. Jefferies said it expects "further disappointment" from Centrica at its trading update in February, which should weigh on the stock. Another loser was Intercontinental Hotels Group, down 2.5% as the firm also suffered from a broker rating downgrade. Morgan Stanley cut its recommendation on the Crowne Plaza and Holiday Inn owner to Underweight from Equal Weight. Meanwhile, retail stocks were among those in the green on Monday. Following on from a well-received Christmas trading update from Next last week, homewares retailer Dunelm further helped to dispel fears the festive period compounded a miserable year for UK shops. Shares in Dunelm rose 10% on Monday after the firm said like-for-like sales grew 6.9% in the 26 weeks to December 29. The retailer now expects its interim pretax profit to be around GBP70.0 million, up 17% from GBP60.0 million a year ago. Dunelm also said it expects to deliver annual profit "modestly ahead" of current analyst forecasts should the homewares market continue to grow at the same rate experienced in the first half. According to the company, analysts currently expect Dunelm's pretax profit for the year ending June 30 to be between GBP108.0 million and GBP112.0 million."Later this week we'll get updates from Marks and Spencer, Wm Morrison, Sainsbury and Tesco which could also surprise to the upside, given that this morning Aldi saw 10% growth in its sales numbers which came in just under GBP1bn. The big question here is how much did the two young upstarts of Aldi and Lidl steal the big four's Christmas lunch," commented CMC Markets chief market analyst Michael Hewson.The German discounter said it experienced its "best-ever Christmas trading" in the UK as demand for premium product lines surged. During December, Aldi sold more than 17 million bottles of wine, champagne and prosecco, equivalent to 3.2 million glasses per day. It also sold nearly 50 million mince pies and almost 100 million sprouts.Shares in blue-chip grocers were higher in a positive read-across, with many due to report their trading performance over the Christmas period later in the week. J Sainsbury, due to report on Wednesday, was up 3.0% at midday, while Marks & Spencer was up 1.7% and Tesco up 1.5%. Both M&S and Tesco release statements on Thursday. Wm Morrison Supermarkets, which releases an update on Tuesday, was 1.1% higher at midday. In the FTSE 250, Merlin Entertainments was 1.0% higher after announcing plans to build a Legoland park in South Korea, scheduled to open by 2022. It will be Merlin's tenth Legoland park, it said. The company also noted that it is in advanced discussions with third parties about a number of sites for Legoland parks in China."It's been long in gestation, but I'm delighted that we are now in a position to move forward with opening Legoland Korea resort," said Merlin Chief Executive Nick Varney.The total cost of the resort, including the on-site accommodation, is expected to be GBP205 million. Merlin will invest GBP148 million into the development of the resort, it said, which will be fully owned and operated by Merlin.
2 Mar 2016 09:35
