LONDON MARKET CLOSE: Stocks End Week Poorly On Mixed Trade Deal Signs

(Alliance News) - Stocks in London ended a positive week on a gloomy note as further mixed messages in the ongoing US-China trade war halted the week's rally.

On Friday, US President Donald Trump said he will not remove all the existing tariffs imposed on Chinese goods as part of a deal to resolve the long-standing trade war.

"I won't do it," he told reporters at the White House when asked about a complete rollback of tariffs he imposed on almost USD400 billion in Chinese goods to date.

Trump also said the initial deal will be signed "in our country," possibly in Iowa.

Key White House adviser Peter Navarro told public radio earlier Friday the US could "postpone" further tariffs on China.

"We would be willing, I think, again it's up to the president, to postpone those tariffs," Navarro told NPR's Morning Edition. "But not roll back any existing tariffs."

This move would be to facilitate a "Phase 1" deal with China.

This is contradicts White House spokeswoman Stephanie Grisham, who told Fox News she was "very, very optimistic" about a potential "Phase 1" deal amid signs of internal disputes over China within the US administration. She implied that if a deal is reached, tariffs could be rolled back.

This followed comments from Chinese Commerce Ministry spokesman Gao Feng this week also sounding upbeat on the prospect of a deal between the world's two largest economies, suggesting that tariffs could be rolled back in phases.

The FTSE 100 closed 47.03 points, or 0.6%, lower at 7,359.38 Friday. The blue chip index is 0.8% higher, however, from Monday morning.

The FTSE 250 ended down 75.59 points, or 0.4%, at 20,357.63, and the AIM All-Share finished down 0.2% at 891.92.

The Cboe UK 100 index closed down 0.5% at 12,476.40. The Cboe UK 250 ended down 0.3% at 18,253.25 and the Cboe UK Small Companies closed down 0.2% at 11,259.67.

In European equities, the CAC 40 index in Paris ended marginally lower while the DAX 30 in Frankfurt ended down 0.5%.

SpreadEx analyst Connor Campbell said: "Friday's mixed trade deal signals continued, unsurprisingly, once Trump got involved."

"Though this didn't spark mass panic, it did ensure that the markets remained in the red as the session went on," Campbell added.

Turning to the London Stock Exchange, miners were also giving back recent gains after enjoying a bounce on the hopes a mini trade deal was nearing completion between the two world's largest economies, with Rio Tinto losing 2.9%, Anglo American 2.3%, Fresnillo 1.5% and Antofagasta shedding 1.1%. Steel maker Evraz lost 3.8%.

Other stocks with a substantial exposure to the world's second largest economy saw share price losses, such as Prudential, down 2.3%, and Burberry, down 3.5%.

Early Friday, China reported its foreign trade continued to fall in October compared to the same period last year, according to official data, as the trade war with the US weighs on the giant Asian economy.

Exports dropped 0.9% from last October to USD212.9 billion, while imports plunged 6.4% to USD170.1 billion, according to customs data released on Friday. The declines were, however, smaller than analysts had expected.

China's foreign trade with the US dropped 15.8% year-on-year in October.

Back in London, FTSE 100-listed Intertek ended 2.5% lower after HSBC cut the stock to Reduce from Hold.

In the midcaps, Games Workshop was by the best performer, up 19%, after the wargames manufacturer and retailer guided for a solid increase in profit and revenue for the first half of its financial year.

Games Workshop said its trading to November 3 has remained robust since its last update on September 18, with sales and profit ahead of the same period the year before. Royalties receivable are also significantly ahead of the prior year, driven by the timing of guarantee income on the signing of new licences.

As a result, for the six months ending December 2, Games Workshop expects pretax profit to be no less than GBP55 million, and sales to be at least GBP140 million. At the very least, this reflects a 34% rise from GBP40.8 million pretax profit, and 11% from GBP125.2 million in revenue the year before.

Joining Games Workshop at the top of the FTSE 250 was Lloyd's insurer Beazley, adding 7.1%. The company posted a 12% increase in year-to-date gross premiums due to double-digit premium growth across its business, driven by organic growth and rate rises across several business lines.

For the nine months to September 30, Beazley recorded gross premiums of USD2.19 billion versus USD1.99 billion a year before. Year-to-date investment return stood at 4.0% versus 0.5%.

The company, however, also warned that increased storm insurance claims will hit its 2019 combined ratio, a key profitability measure for insurers.

London-headquartered Beazley expects a combined ratio of between 100% and 102% for 2019, assuming normalised claims levels for the remainder of the year. In 2018, the company's combined ratio was 98%.

Spirent Communications gained 3.0% after keeping its annual expectations unchanged after a solid third quarter performance boosted by 5G and high-speed Ethernet testing.

Spirent, in its trading update for the three months ended September 30, said order intake continued to grow in line with the first half of 2019.

The company provides testing, measurement, analytics and assurance technology that is used for next-generation networks, devices, and applications. It has therefore benefited from a shift to 5G and higher-speed Ethernet testing in 2019.

Dunelm and Tate & Lyle were on the rise following a pair of broker upgrades. UBS raised Dunelm to Buy from Neutral, sending the stock 2.9% higher. Kepler Cheuvreux upped Tate & Lyle to Hold from Reduce, sending the company 3.1% higher at the close.

EasyJet was heading in the opposite direction, losing 2.6%, after the budget airline acquired airport slots of now-defunct travel firm Thomas Cook Group for GBP36 million in total.

The FTSE 250-listed airline said it was awarded 12 summer slot pairs and eight winter slot pairs at Gatwick Airport, and six summer slots pairs and one winter slot pair at Bristol Airport.

Thomas Cook collapsed into bankruptcy in September after failing to secure a USD250 million funding package. Chinese conglomerate Fosun International snapped up the Thomas Cook brand for GBP11 million in November.

Outsourcer G4S shed 2.3% after Royal Bank of Canada cut the stock to Sector Perform from Outperform.

In the local corporate calendar on Monday, there is full year results from farm supplies firm Carr's Group and Bangladeshi pharma company Beximco Pharma, interim results from software firm Kainos Group, third quarter from funeral service provider Dignity and a trading statement from publisher Informa.

The pound was quoted at USD1.2784 at the close on Friday, sharply lower compared to USD1.2823 late Thursday.

IG Chief Market Analyst Chris Beauchamp commented: "Sterling continues its drift lower as the UK election campaign slowly gathers speed."

"Next week's UK data storm needs to be set against yesterday's more dovish BoE, which would likely be even further down the road to looser policy were it not for the B word that is keeping everything on hold. Still, with cable within easy distance of its recent high there appears to be some cautious optimism on the UK economy," Beauchamp added.

The euro stood at USD1.1019 at the European equities close Friday, down from USD1.1045 at the same time on Thursday.

Stocks in New York were mixed at the London equities close, with the Dow Jones down 0.3%, the S&P 500 index down 0.1%, while the Nasdaq Composite was 0.1% higher.

IG's Beauchamp added: "As night follows day, so the tariff removal denial has followed yesterday's positive news. Donald Trump's comments on potential tariff rollback prompted a brief drop in equity markets, but even this has not lasted long – equities are broadly in the red, but not by much.

"Perhaps these headlines are beginning to lose their power, or perhaps buying pressure is simply becoming too strong. After all, investors still seem to be underweight equities, and if that is beginning to change then no trade war headline will stand in their way. It has been another strong week for equities, and despite today's weakness there seems little sign of things slowing down. It would be nice to get trade wars out of the way, but if markets can reduce their sensitivity to this sort of thing then that will be a decent consolation prize even if the US and China continue to spar."

Against the yen, the dollar was trading at JPY109.12, lower compared to JPY109.26 late Thursday.

In commodities, Brent oil was quoted at USD61.70 a barrel at the London equities close Friday down versus USD62.51 late Thursday.

Gold was quoted at USD1,467.30 an ounce at the London equities close Friday, flat from USD1,467.40 at the close on Thursday.

In the economic calendar over the weekend, there is China consumer price index figures due overnight on Saturday. On late Sunday, there is Japan's trade balance due. This is followed by the UK Rightmove house price index at midnight.

Turning to Monday, there is the UK GDP, manufacturing production, industrial production and trade balance at 0930 GMT.

By Paul McGowan; paulmcgowan@alliancenews.com

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