LONDON MARKET MIDDAY: FTSE 100 Rallies As US-China Talks Continue

LONDON (Alliance News) - Gains for London stocks accelerated as Tuesday's session progressed amid ongoing US-China trade talks, with the FTSE 100 racking up nearly 75 points despite Wm Morrison Supermarkets dragging after Christmas sales undershot analyst forecasts.The FTSE 100 was up 74.85 points, or 1.1%, at 6,885.73, while the FTSE 250 was 215.51 points higher, or 1.2%, at 18,191.66. The AIM All-Share was up 0.3% at 889.83.The Cboe UK 100 was up 1.1% at 11,686.56, while the Cboe UK 250 was up 1.3% at 16,297.06, and the Cboe UK Small Companies up 0.2% at 11,043.27.The CAC 40 in Paris was up 1.3% while the DAX 30 in Frankfurt lagged behind its European counterparts slightly, rising 0.7%."European indices are clocking up some small gains this morning, after US markets finished in positive territory yesterday, but some caution persists as yet more poor German data intervenes to spoil the party," said IG chief market analyst Chris Beauchamp.Data from Germany's Federal Statistical Office showed the country's industrial production decreased for a third straight month in November, defying expectations for an increase, amid a sharp fall in consumer goods and energy output.Industrial production fell a calendar and seasonally adjusted 1.9% from October, when it decreased 0.8%, revised from 0.5%. Economists had expected a 0.3% increase.Manufacture of consumer goods fell 4.1%, while energy output declined 3.1%. "At face value, today's industrial production data has clearly increased the risk of a technical recession in Germany in the second half of 2018. Watch out for tomorrow's trade data. Another disappointment, combined with the high inventory build-up in 2Q and 3Q, would clearly increase the likelihood of a technical recession," warned Carsten Brzeski, economist at ING.However, Brzeski noted that even a technical recession "should be nothing to be too worried about"."The recent pick-up in orders in the automotive industry and favourable financing conditions in the entire economy also bode well for at least solid industrial and investment activity in 2019," he said. In the US, Wall Street is pointed to a higher open with both the Dow Jones and S&P 500 called up 0.5%, while the Nasdaq is seen gaining 0.4%. The second day of trade talks between the US and China got underway on Tuesday as a spokesman for China's Foreign Ministry predicted "positive and constructive discussions."IG's Beauchamp commented: "Hopes of progress between the US and China have provided the underpinning for [Tuesday's equity rally], but given the inability of both sides to agree it makes sense to expect these hopes to be dashed in due course."Also in Beijing is North Korean leader Kim Jong Un, who arrived on Tuesday for talks with Chinese President Xi Jinping that could help set the stage for a second US-North Korea summit. Kim will be in Beijing until Thursday, according to Chinese media. This is his fourth visit to China and is being held amid speculation that Kim and US President Donald Trump are discussing a new summit focused on ridding North Korea of its nuclear weapons.In Washington, Trump is planning a live address to the nation and a visit to the Mexico border to highlight his demands for a border wall as pressure grows over a partial government shutdown.Trump said he would discuss the "Humanitarian and National Security crisis on our Southern Border" on Tuesday evening. He maintains that more than USD5 billion for a wall is necessary to secure the border, creating an impasse which resulted in a partial government shutdown now into a third week. Other fixtures in the US events calendar on Tuesday is the trade balance at 1330 GMT, the Redbook index at 1355 GMT and consumer credit change at 2000 GMT. In London, grocers were higher after data from Kantar Worldpanel showed supermarkets had a record Christmas. The research agency - reporting market share figures for the 12 weeks to December 30 - said that overall UK grocers achieved GBP29.3 billion in sales during the festive season up 1.6% on the prior year, with consumers spending an extra GBP450 million on groceries compared to a year ago.Of the big four supermarkets, Walmart Inc's-owned Asda, which is in the process of merging with J Sainsbury, came on top with overall year-on-year sales growth of 0.7% in the 12 week period, as online sales increased by 12%. The UK's biggest supermarket, Tesco, came neck-to-neck with Asda after experiencing sales growth of 0.6%. Sainsbury's sales fell 0.4%, while online retailer Ocado Group saw sales up 1.3%.Tesco shares were up 3.2%, while Ocado was up 2.8% and Sainsbury's was up 0.6%. Bucking the trend was Wm Morrison Supermarkets as it reported its Christmas trading figures, with shares falling 3.6%, making it the worst performer in the FTSE 100. For the 9 weeks to January 6, Morrisons reported 3.6% growth in group like-for-like sales excluding fuel, with retail sales inching 0.6% higher and wholesale rising 3.0%. Like-for-like sales, including fuel, grew 3.4%.Company-compiled consensus forecast Morrison to have posted a 0.5% rise in retail like-for-like sales with group like-for-like sales up 4.1% in the holiday period, meaning that the retailer fell slightly short of expectations. Separately, Kantar said Morrisons saw 0.1% growth in sales for the 12 week period. Electrocomponents was among the gainers in the FTSE 250, with shares up 5.1%, as two banks - UBS and Jefferies - both raised their recommendations on the electronics products distributor to Buy. Greene King advanced 4.5% after a strong trading performance over the festive period. For the 36 weeks to January 6, the FTSE 250 constituent reported like-for-like sales up 3.2%. Just in the two weeks covering Christmas and the New Year, Greene King said like-for-like sales climbed 11%, tills ringing to the tune of GBP7.7 million on Christmas day alone.Nicholas Hyett, equity analyst at Hargreaves Lansdown, commented: "It's worth noting that cost inflation means profit growth may not keep pace with sales this year, despite Rooney Anand's corporate self-help measures, and the group's tenanted estate has seen profit shrink year to date. Nonetheless these are certainly healthy numbers from the pub group, and will leave investors breathing a sigh of relief."SIG slumped 7.7% after trading conditions in Germany and France dented its performance in the second half of 2018. SIG said its focus on better pricing management and planned withdrawals from unprofitable businesses reduced revenue in the second half of 2018. SIG's like-for-like revenue for 2018 is expected to come in 2.3% lower year-on-year.A weaker trading environment reduced demand for SIG's products, it said, and is a key factor behind lower like-for-like revenue in the UK & Ireland, which was down 8.8% in the second half of 2018.Trading conditions in construction markets across mainland Europe also slowed materially, SIG said, particularly in France and Germany, where like-for-like revenue was down by 3.2% and 4.6%, respectively.