LONDON MARKET OPEN: US-China Trade Talks Give Lift After Delay Worries

(Alliance News) - London stocks continued to remain highly sensitive to US-China trade war headlines on Thursday, with the mood picking up in the early morning on reports that the two sides have agreed to remove some tariffs step-by-step.

The FTSE 100 was 17.08 points higher, or 0.2%, at 7,413.73 early Thursday. The FTSE 250 was up 101.22 points, or 0.5%, at 20,317.81, and the AIM All-Share was down 0.2% at 892.27.

The Cboe UK 100 index was up 0.4% at 12,568.03. The Cboe UK 250 was up 0.7% at 18,221.97 and the Cboe UK Small Companies was flat at 11,252.40.

In European equities, the CAC 40 index in Paris was up 0.3 and the DAX 30 in Frankfurt flat in early trade.

In Asia on Thursday, the Japanese Nikkei 225 index closed up 0.1%. In China, the Shanghai Composite ended flat, while the Hang Seng index in Hong Kong closed up 0.6%, having surged in the last hour of trading.

"Asian equity markets were initially under pressure overnight reflecting concerns that the signing of a Phase 1 trade deal between the US and China may be delayed until December. However, a recent report that the two sides may have agreed to lower tariffs in stages has given a lift to risk assets in early European trading," said Lloyds Banking.

This saw London-listed miners rise in early trade, with Glencore shares up 2.8%, Anglo American up 1.9% and Antofagasta up 1.6%.

Outside of the miners, J Sainsbury was another gainer in the FTSE 100, up 1.2% after releasing its interim results.

Revenue was broadly flat at GBP15.1 billion in the half-year to September 21, while the grocer's pretax profit dropped to GBP9 million from GBP107 million a year ago. Sainsbury's booked GBP229 million in one-off costs in the half-year, up from GBP172 million a year ago.

Like-for-like sales excluding fuel were down 1.0% year-on-year, falling 1.6% in the first quarter but just 0.2% in the second. Total retail sales were down 0.6% on a year before, again seeing trends improve over the period with a 1.2% fall in the first quarter and a 0.1% rise in the second.

Within retail, grocery sales were down 0.1% year-on-year, falling 0.5% in the first three months and rising 0.6% in the following quarter. General Merchandise sales were down 3.1% in the first quarter and 2.0% in the second, leading to a decline of 2.5% for the first half overall. Clothing sales slipped 4.5% in the first quarter, but recovered impressively to post growth of 3.3% in the second, and down 1.2% over the half as a whole.

Insurer Hiscox was the worst blue-chip performer in early trade Thursday, down 3.7% after JPMorgan cut the stock to Neutral from Overweight.

In the FTSE 250, Aston Martin shares surged 10% despite the luxury car maker flagging that challenging trade conditions have persisted, putting sales under pressure.

Aston Martin reported revenue of GBP250.1 million for the third quarter of 2019, down 11% on a year ago. The firm swung to a pretax loss of GBP13.5 million from a GBP3.1 million profit a year ago, and adjusted earnings before interest, tax, depreciation and amortisation fell 12% to GBP47.7 million.

Total wholesale volumes were down 16% in the quarter to 1,497. In the year-to-date, they dipped 3% to 3,939.

"Tough trading conditions, particularly in the UK and Europe, persist and whilst retail sales have grown 13% year-to-date, wholesale volumes remain under pressure," said Aston Martin President & Chief Executive Andy Palmer.

Meanwhile, there will be focus on the Bank of England later on Thursday.

The BoE will announce its latest monetary policy decision, alongside the release of the Monetary Policy Committee meeting minutes, at midday in London on Thursday. At the same time, the re-branded Inflation Report, now the Monetary Policy Report, will be released.

There will be a press conference with BoE Governor Mark Carney shortly after the rate decision, at 1230 GMT.

No change is expected from the BoE on Thursday given ongoing Brexit uncertainty and a looming general election in the UK.

"A change to policy is very unlikely. The Bank’s Monetary Policy Committee has been indicating for some time that given ongoing uncertainties, including Brexit, they prefer to sit on the sidelines for now. Given the close proximity of the general election, they will probably think there is even less reason to make an immediate move. Consequently, we expect a unanimous vote for no change although some media sources are suggesting that there may be a couple of votes for a rate cut," commented Lloyds.

Away from the BoE, the economic calendar has Irish CPI at 1100 GMT. In the US, there are initial jobless claims at 1330 GMT.

Already released, industrial production in Germany shrank by more than expected in September compared to August, pushing the largest eurozone economy into a deeper annual output fall.

Provisional data from Destatis showed industrial production fell 0.6% in September on August. This was a striking deterioration on the upwardly revised 0.4% month-on-month growth reported in August.

According to FXStreet compiled data, economist consensus was for a 0.4% monthly decline in September from the initially reported 0.3% growth reported in August.

By Lucy Heming; lucyheming@alliancenews.com

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