LONDON MARKET CLOSE: Stocks Close Mixed As Earnings Season Looms

(Alliance News) - Stocks in London ended mixed on Friday as investors gear up for a potentially gloomy week of earnings next week in the US. The large-cap FTSE 100 index closed 3.85 points lower, or 0.1%, at 7,505.97, ending the week 0.6% lower.The mid-cap FTSE 250 index ended up 108.67 points, or 0.6%, at 19,551.83, while the AIM All-Share finished marginally lower at 917.35.The Cboe UK 100 index ended down 0.2% at 12,717.55. The Cboe UK 250 closed up 0.3% at 17,432.75, while the Cboe UK Small Companies finished down 0.7% at 11,159.47.In mainland Europe, the CAC 40 index in Paris and DAX 30 in Frankfurt closed up 0.4% and down 0.1% respectively."The morning's initial gains for the FTSE 100 have faded away. A sense of exhaustion pervades markets, after a week that has seen wild swings in expectations for the upcoming Fed meeting, while the imminent arrival of earnings season will also prompt some understandable caution with US indices at record highs," said IG's Chris Beauchamp."But it has been another strong week on Wall Street, thanks to Jerome Powell. The question is now whether equities can survive an earnings season that at present is forecast to show the second quarter of declines in earnings, previous instances have often led to a period of sustained weakness, so investors will be hoping the current truce in the trade war and a more dovish Fed will help burnish the outlook for the next few months and help reduce the focus on a weaker quarter just past," Beauchamp added.US officials will travel to China in the "very near future" to resume trade negotiations that collapsed in May, a White House official said Friday.President Donald Trump and China's leader Xi Jinping agreed to "fully engage" on trade when they met in Japan at the end of June, and since then trade officials have spoken by phone, White House trade advisor Peter Navarro said on CNBC.US Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin will go to Beijing "in the very near future and we're going to have constructive talks to deal with these significant structural issues," Navarro said.In the US on Friday Wall Street is higher, with the Dow Jones up 0.5%, the S&P 500 0.2% higher, and the Nasdaq was gaining 0.3%.US earnings season kicks off in earnest next week. On Monday, bank Citigroup releases second quarter numbers, with fellow banks JPMorgan, Goldman Sachs, and Wells Fargo doing the same Tuesday alongside consumer products firm Johnson & Johnson.On Wednesday come second quarter results from streaming service Netflix, Bank of America, and technology services giant IBM. On Thursday are second quarter figures from Morgan Stanley, software firm Microsoft and tobacco firm Philip Morris, while on Friday comes fund manager BlackRock and credit card firm American Express."The upcoming earning season is shaping up to be a weak one. Of the 114 companies that have issued guidance for the period, 77% of them have issued negative forecasts," said cityindex's Fiona Cincotta."A weak earning season amid the ongoing trade dispute could knock investors' appetite for risk, regardless of whether the Fed is looking to cut or not."Producer prices in the US nudged up just 0.1% in June, the Bureau of Labor Statistics said on Friday, unchanged from the prior month.The 0.1% rise in June on May followed a 0.1% month-on-month rise in May, and a 0.2% increase in April. In June 2018, final demand producer prices had risen 0.3% on the month prior.On a year-on-year basis, June's producer price index rose 1.7%, after a 1.8% year-on-year rise in May. June 2018 had climbed 3.3% year-on-year."The tame inflation trend remains intact," said analysts at Oxford Economics."With elevated risks on the trade front and subdued inflation at home, the Fed is expected to cut rates by 25 basis points on July 31 and by another 25 basis points in September."On the London Stock Exchange housebuilders had a good end to the week, with Barratt ending up 2.1%, with Persimmon up 2.1%, and Bovis Homes 2.5% higher.Hiscox slipped 5.3% in the FTSE 100, easing back from a steeper fall earlier on, after warning on profit due to catastrophes.The insurer said pretax profit for the first half of 2019 is estimated to be between USD150 million and USD170 million amid continued deterioration in the insurance market from 2018 catastrophes, including Typhoon Jebi in Japan and Hurricane Michael in Florida.The insurer said the scale of deterioration in the market has been significant, with industry loss estimates having increased materially since the two damaging storms.In the FTSE 250, engineer Senior ended down 3.0% after Peel Hunt downgraded the engineer to Hold from Add.Sophos finished up 4.2% after saying it is well positioned for growth despite moving to a loss in the first quarter of its current financial year.The FTSE 250-listed security software firm swung to a pretax loss of USD4.0 million for the three months to the end of June compared to a pretax profit of USD7.3 million reported in the first quarter last year. More positively for Sophos, its adjusted operating profit increased to USD24.1 million from USD21.9 million and its renewal rate as of June 30 stood at 118% compared to 115% a year ago.Elsewhere on the Main Market, Thomas Cook dived 59% after news Chinese investor Fosun Tourism Group said it is in talks to inject GBP750 million into the travel agent.The tour operator added its 2019 summer programme is 75% sold, slightly ahead of the year before, but underlying earnings in the second half will be behind year-on-year due to the "uncertain consumer environment" in the UK.Thomas Cook said the investment, which will likely comprise a capital injection and new financing facilities, will see a reorganisation of the company's Tour Operator and Airline businesses. This will lead to Fosun owning a "significant" minority interest in Thomas Cook's Airline.Fosun already holds an 18% stake in Thomas Cook, making it the firm's largest shareholder.Shares in Lookers dipped 8.3%, clawing back from a much steeper fall earlier on, after the car seller said it expects a drop in profit for the first half of 2019, and profit for the full year is now set to be below previous expectations.Although trading in the first quarter to the end of March was positive, the second quarter ended June 30 was challenging, as the UK new car market continued its decline with registrations down by 4.6%. Underlying pretax profit for the six months to the end of June is expected to be GBP32 million, down 25% from GBP43 million a year before.Looking ahead, Lookers expects the challenging conditions to continue into the second half, stoked by continued weakness in UK consumer confidence due to political and economic uncertainty. As a result, Lookers expects underlying pretax profit for 2019 to be below previous expectations.The pound was quoted at USD1.2554 at the London equities close, flat from USD1.2555 at the close Thursday.Monday's UK corporate calendar is thin, with miner Rio Tinto providing a second quarter operations update late in the evening, at 2330 BST. Peer BHP releases its own update at the same time on Tuesday.Also on Tuesday are first quarter figures from credit checker Experian and luxury fashion firm Burberry, while gold miner Centamin releases second quarter figures Thursday. Also on Thursday are full year results from Sports Direct and first quarter figures from utility SSE, and interim production from Anglo American.Brent oil was quoted at USD66.80 a barrel at the London close, down from USD66.95 at the close Thursday. Gold was quoted at USD1,409.05 an ounce, lower than USD1,412.00 Thursday.The economic calendar next week has Chinese gross domestic product early Monday, as well as industrial output. On Tuesday comes UK labour statistics and US retail sales. On Wednesday is the UK consumer price index, and also producer prices, then UK retail sales on Thursday. Lastly, on Friday, comes German producer prices and the Michigan consumer sentiment survey in the US. London Midday is available to subscribers as an email newsletter. Contact info@alliancenews.com