London close: Shares jump as trade concerns ebb

London stocks ran higher following reports that the Trump administration had decided to use solely existing legislation to curb Chinese investments in the country, foregoing the use of alternate methods.

The FTSE 100 was up by 1.11% or 83.77 points at 7,621.69; energy shares did especially well as the oil price continued moving higher at its recent fast clip.

Out on the FTSE 250 however, gains were more restrained, with the second-tier index adding 0.42% or 86.93 points to 20,844.14.

"Equities are reaching for the stars once again, with healthy gains across the board. Many market watchers will remember when it was the Fed that was scared into policy changes by financial market volatility. Now the financial markets appear to be doing the same to the US president. Trade war concerns remain high on the agenda, but the White House’s comments on using existing legislation rather than new rules has helped boost risk appetite," said Chris Beuchamp at IG.

"[...] Also helping equity markets this afternoon is oil, which has enjoyed a stellar week. OPEC’s move to raise production did not dispel concerns about a supply shortage, and those concerns have only increased thanks to US jawboning on Iranian exports, a Canadian shutdown and now a fresh drop in US crude stockpiles. So long as OPEC keeps a lid on production increases, we can expect further bullish momentum in oil."

In a further boost to the top flight index, the pound was dipping by 0.15% against the euro to 1.1339 and was 0.65% lower versus the dollar at 1.31422, as Bank of England governor Mark Carney warned about significant risks of disruption to financial services from Brexit and called on the EU to do more to ensure a smooth transition.

In its financial stability report, the BoE said progress had been made on Brexit preparations but that there were risks to derivative contracts. The BoE’s financial policy committee, chaired by Governor Mark Carney, called on the EU to show willingness to solve the problem.

Meanwhile, retailers were in focus as the latest survey from the Confederation of British Industry showed that the sales recovery continued this month, even as high street behemoth John Lewis issued a profit warning.

Retailers reported that average sales jumped to a balance of +32 in June, up from May's +11 and ahead of expectations for an unchanged reading.

The balance comes from 43% of retailers saying sales volumes were higher in the year to June and another 10% saying they were down.

Furthermore, there was a balance of +19% of retailers saying that the volume of sales was good for the time of year, a measure that more closely mirrors the official retail sales data, which was up from -1% a month before. Retailers expect seasonal sales volumes to improve in the year to July, with a balance of +25%.

High street sales growth was reported across retail sub-sectors, with the pick-up in June driven particularly by a rise in non-store sales, department stores, durable household goods, with grocers and hardware stores faring well. On the downside, carpet and furniture stores and clothing retailers saw a drop in sales volumes in the year to June.

Earlier, the latest survey from mortgage lender Nationwide revealed that house prices in the UK rose at their slowest annual rate in five years in June amid subdued economic activity and squeezed household budgets.

House prices were up 2%, down from 2.4% growth in May but above expectations for a 1.7% increase. On the month, prices were up 0.5% in June, accelerating from 0.2% growth the month before and ahead of expectations of 0.3% growth.

London was the weakest performing region in the second quarter and the only region to see a decline, with prices down 1.9% on the year.

Oil majors provided much of the upside, with BP and Shell both higher as oil prices rallied after US DoE data on Tuesday showed that crude stocks were down 9.9m barrels for the week ended 22 June, versus expectations for a 2.5m barrel draw.

Carnival was sitting pretty at the top of the FTSE 100 as Berenberg upgraded the cruise operator to 'buy', while Sainsbury's followed close behind as Barclays boosted the stock to 'overweight'.

Intermediate Capital rallied after an upgrade to 'buy' from 'neutral' by Bank of America Merrill Lynch.

Elsewhere in broker note action, Petrofac was lifted to 'buy' at Kepler Cheuvreux, while Independent Oil & Gas was started at 'buy' by Peel Hunt.

Whitbread rose after saying it expected annual results to meet expectations as it reported declining like-for-like sales at its Premier Inn and Costa coffee businesses in the first quarter.

AstraZeneca edged up after it said that a phase 3 trial of its cancer drug Lynparza showed success in improving progression-free survival for women with advanced ovarian cancer with a mutation in the BRCA gene.

Housebuilder and urban regeneration partner Countryside Properties was in the green as it said that current trading was in line with expectations and issued new medium-term guidance.

On the downside, there were two profit warnings for investors to sink their teeth into, with serviced office provider IWG and defence company Ultra Electronics in the frame.

IWG sank after cutting its 2018 operating profit forecast by between £15m and £20m, citing the cost of opening new space and weakness in its UK business.

Meanwhile, Ultra Electronics tumbled after saying it now expects full-year operating profit at constant currencies to be down between £4m and £6m as its US defence and aerospace business Herley took a hit from cost overruns on development contracts.

Distribution and outsourcing group Bunzl was on the back foot after saying it slowed to a "more normal" pace of growth in the second quarter of the year.

Broadcaster ITV fell as it announced the retirement of its chief operating officer and group finance director Ian Griffiths.

Market Movers

FTSE 100 (UKX) 7,621.69 1.11%
FTSE 250 (MCX) 20,844.14 0.42%
techMARK (TASX) 3,502.29 0.85%

FTSE 100 - Risers

Micro Focus International (MCRO) 1,323.00p 4.67%
Ocado Group (OCDO) 1,061.00p 3.92%
Whitbread (WTB) 4,022.00p 3.44%
Rolls-Royce Holdings (RR.) 961.20p 3.35%
BP (BP.) 582.30p 3.35%
Sainsbury (J) (SBRY) 316.20p 3.33%
Carnival (CCL) 4,473.00p 3.04%
Royal Dutch Shell 'B' (RDSB) 2,724.50p 2.81%
BHP Billiton (BLT) 1,688.20p 2.75%
Royal Dutch Shell 'A' (RDSA) 2,635.50p 2.58%

FTSE 100 - Fallers

Just Eat (JE.) 755.20p -7.11%
Bunzl (BNZL) 2,257.00p -1.31%
Royal Bank of Scotland Group (RBS) 254.50p -1.09%
Associated British Foods (ABF) 2,811.00p -0.85%
easyJet (EZJ) 1,685.00p -0.79%
Standard Life Aberdeen (SLA) 331.10p -0.78%
London Stock Exchange Group (LSE) 4,459.00p -0.76%
Direct Line Insurance Group (DLG) 343.10p -0.69%
ITV (ITV) 174.70p -0.68%
United Utilities Group (UU.) 753.40p -0.66%

FTSE 250 - Risers

Tullow Oil (TLW) 249.90p 8.07%
Premier Oil (PMO) 125.00p 7.88%
Intermediate Capital Group (ICP) 1,140.00p 5.95%
Petrofac Ltd. (PFC) 552.80p 4.86%
Vedanta Resources (VED) 658.20p 3.88%
Hikma Pharmaceuticals (HIK) 1,507.50p 3.70%
Hunting (HTG) 825.00p 3.64%
Weir Group (WEIR) 1,988.50p 3.54%
Cairn Energy (CNE) 258.80p 3.27%
Coats Group (COA) 77.00p 2.67%

FTSE 250 - Fallers

Fisher (James) & Sons (FSJ) 1,716.00p -5.18%
Clarkson (CKN) 2,465.00p -4.27%
TI Fluid Systems (TIFS) 252.00p -3.08%
Equiniti Group (EQN) 235.00p -2.89%
esure Group (ESUR) 211.20p -2.85%
IWG (IWG) 315.10p -2.81%
Stobart Group Ltd. (STOB) 229.50p -2.72%
Dixons Carphone (DC.) 189.35p -2.17%
Phoenix Group Holdings (DI) (PHNX) 665.00p -2.13%
Sanne Group (SNN) 686.00p -2.01%