LONDON MARKET MIDDAY: Stocks Rise As Brexit And Trade War Fears Ebb

Fri, 11th Oct 2019 12:03

(Alliance News) - Stocks in London were higher at midday on Friday as investor fears over two of the world's biggest economic uncertainties eased.

The FTSE 100 index was up 23.06 points, or 0.3%, at 7,209.42. The FTSE 250 was up a massive 465.87 points, or 2.4% at 19,701.59 and the AIM All-Share was up 7.10 points, or 0.8% at 863.38.

The Cboe UK 100 index was flat at 12,209.20. The Cboe UK 250 was 2.7% higher at 17,614.58 and the Cboe UK Small Companies was up 0.%, at 10,841.44.

In mainland Europe, the CAC 40 in Paris and DAX 30 in Frankfurt were up 1.1% and 1.8% respectively.

"European markets are trading in the green as we look to close out the week in a positive fashion. With US President Donald Trump expected to meet the Chinese Vice Premier today, there is a growing sense of optimism over a potential deal that could at least deescalate the situation by delaying or postponing currently planned tariffs," said IG Group's Josh Mahony.

"Suggestions of a currency pact point towards a short-term solution that could appease Trump for now, buying room for both sides to continue negotiating without the threat of the December tariffs hanging over talks," Mahony added.

On the London Stock Exchange, domestic-focused stocks such as banks and housebuilders all made rapid gains as no-deal Brexit hopes eased.

State-backed lender Royal Bank of Scotland was the best blue chip performer, up 11%, while high street bank Lloyds Banking Group was up 9.3%.

In addition, housebuilders Persimmon, Taylor Wimpey, Barratt Developments, Berkeley Group were up 8.5%, 7.8%, 9.5% and 7.2% respectively.

At the other end of the large cap index, advertising firm WPP was down 3.9% suffering a negative read-across from French peer Publicis.

Late on Thursday, Publicis guided for a fall in organic revenue growth in 2019 due to "very cautious" spending approaches by some clients.

"WPP shares have slid sharply after sector counterpart Publicis warned on its 2019 revenue guidance, the second such warning in three months. Publicis appears to have been caught out by the move towards digital marketing, away from the more traditional TV and billboard advertising, with Europe a particular source of concern," said CMC Markets analyst Michael Hewson.

Publicis shares were down 14% in Paris.

In the FTSE 250, Man Group was the worst performer, down 2.0% after the fund manager said the outlook for flows remains mixed, following a decrease in funds under management in the third quarter of 2019.

Man Group, which focuses on private markets, said funds under management stood at USD112.7 billion at the end of September, down 1.5% from USD114.4 billion on June 30. The decline was driven by net outflows of USD1.1 billion, comprising sales of USD6.6 billion and redemptions of USD7.7 billion, and negative foreign exchange and other movements of USD1.3 billion, Man Group explained.

Negative foreign exchange and other movements were driven by the US dollar strengthening against the Australian dollar, sterling and the euro, the company said. Man Group also highlighted its management fee margin continues to decline due to the ongoing mix shift towards institutional assets, which are at a lower margin.

The pound was quoted at USD1.2540 at midday, sharply higher than USD1.2306 at the London equities close Thursday, on hopes the EU and UK could still agree a Brexit deal ahead of the October 31 deadline.

In the latest development, UK and EU negotiators met on Friday in a last-ditch bid to restart talks on an orderly Brexit, amid "promising signals" that a deal could still be possible just days before a key EU summit.

The UK's Stephen Barclay and EU chief negotiator Michel Barnier met for two hours behind closed doors in the Brussels headquarters of the EU, one day after talks between Prime Minister Boris Johnson and his Irish counterpart Leo Varadkar.

As they met, the president of the European Council and host of next week's Brussels summit Donald Tusk warned that Britain has yet to come forward with a "workable, realistic proposal" for a Brexit deal.

"A week ago I told Prime Minister Johnson that if there was no such proposal by today, I would announce publicly that there are no more chances, because of objective reasons, for a deal during the incoming European Council," Tusk said.

The euro was quoted at USD1.1030 at midday on Friday, up from USD1.1004 late Thursday.

On the economic front, German inflation reached 1.2% on the year in September, the Federal Statistical Office confirmed, with consumer prices rising at their slowest rate since February 2018.

This followed an inflation rate of 1.4% in August compared with the same month a year earlier.

People in Germany had to particularly pay less for energy than in September 2018, with energy product prices down 1.1%. The increase in food prices also slowed to 1.3%.

Compared to August, consumer prices in September were unchanged.

The inflation rate is an important indicator for the monetary policy of the European Central Bank, which aims for an overall rate of just under 2%. Germany is its largest economy.

Stocks in New York were set for a higher open after the first day of trade talks between the US and China ended on a positive note.

The DJIA and the S&P 500 index were called up 1.0% and the Nasdaq Composite up 1.1%.

US and Chinese delegations will continue trade talks on Friday at the White House, President Donald Trump said, claiming that the first day in the latest round of trade negotiations went "really well."

Chinese Vice Premier Liu He took part in the first day of talks along with Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer. The president earlier indicated he would meet Liu.

"Going to see them tomorrow right here," Trump told reporters outside the White House on Thursday. "It's going very well."

As the goal of a comprehensive US-China trade deal appears more elusive, both countries are seeing troubling signs of their trade war's impact on their economies and derail global growth.

Financial markets in Japan will be closed on Monday for the Health & Sports Day public Holiday.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

London Midday is available to subscribers as an email newsletter. Contact info@alliancenews.com