London close: Stocks track gains on Wall Street, miners in focus

London stocks extended gains on Tuesday, with strength in the commodity sector helping to offset some disappointing corporate updates, as investors brushed off trade war worries, focusing instead on the positive backdrop of Wall Street's push back towards its year-to-date highs.

Just the day before, analyst Mislav Matejka at JP Morgan had pointed out that there was scope for multiple positive surprises to push shares higher, for example, if trade fears did not escalate - contrary to what most market watchers now expected.

Robust company earnings growth in the second quarter and Chinese easing were also helping to offset trade uncertainty, according to Matejka.

By the end of the day, the FTSE 100 was up by 0.71% or 54.70 points to 7,718.48, alongside a stable pound versus the US dollar at 1.29478, although versus the single currency it was off by 0.32% o 1.1168.

In parallel, the S&P 500 was adding 10.76 points and trading at 2,861.18, just below the 52-week high of 2,872.87 reached on 26 January.

That was when stocks had suddenly corrected lower amid a jump in volatility, as the opiate-like effect of the Trump administration's tax cuts had worn off, with investors then suddenly waking up to the very real risk of trade wars, combined with the prospect for further Fed tightening.

Miners were the strongest group from among the FTSE 350, boosted by data showing that China's foreign exchange reserves did not rise much last month.

According to some analysts, that showed China had not started a 'currency war'. Indeed, it followed Beijing's move last Friday to stem weakness in its currency by raising the cost for speculators to 'short' the yuan. In parallel, the country's Politburo had announced measures to help prop-up growth in the short-term.

On the UK data front, the latest figures from lender Halifax showed that house prices rose more than expected in July, with the average house price hitting a new record.

House prices were up 1.4% on the month compared to a 0.9% jump in June, beating expectations for a 0.2% increase. June's figure was revised up from 0.3%. On the year, house prices were 3.3% higher, up from a 1.8% increase in June and ahead of expectations for a 2.7% rise. This marked the largest increase since last November.

The average house price hit its highest level on record, at £230,280, with prices in the three months to July 1.3% firmer than in the previous quarter, versus a 0.5% decline in June.

Halifax managing director Russell Galley said: "While the quarterly and annual rates of house price growth have improved, housing activity remains soft. Despite the recent modest improvement in mortgage approvals, the latest survey data for new buyer enquiries and agreed sales suggest that approvals will remain broadly flat until the end of the year.

Elsewhere, the latest figures from Barclaycard revealed that consumer spending was up 5% year-on-year in July, with essential spending up 8.7% compared to July last year, and pub spending 16.8% higher thanks to the World Cup and the heatwave.

Data from the British Retail Consortium-KPMG sales monitor was less inspiring, showing that retail sales growth eased back in July. Sales were up 0.5% on a like-for-like basis compared to the same month last year, down from a 1.1% increase in June and missing expectations of 1.5% growth. Total sales growth dipped to 1.6% year-over-year from 2.3% in June.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics said he expects consumer spending to grow only at a modest rate even when the weather-drag on sales has faded.

"Real wage growth will strengthen gradually, but business surveys point to a slowdown in employment growth over the next six months, while the recent increase in Bank Rate will take more momentum out of the housing market, hitting confidence," he said.

In corporate news, Standard Life Aberdeen was in the green despite saying that profits fell in the first half, as investors cheered the early start of a buyback programme.

Moneysupermarket slipped even after confirming the completion of the UK merger control process phase of its proposed acquisition of Decision Technologies.

On the downside, pensions and investment provider Hargreaves Lansdown was in the red, albeit just a shade beneath its 52-week highs - as it rewarded shareholders with a bumper special dividend and said active clients for the year topped 1m, but annual numbers came in slightly short of expectations.

InterContinental Hotels Group retreated despite posting a 9.7% jump in operating profit that topped the consensus estimate of $397.7m, while Domino's Pizza tumbled even as it posted a 2.5% increase in first-half pre-tax profit to £45.7m, with analysts pointing to a disappointing overseas performance and store openings.

Meggitt fell after saying first-half pre-tax profit declined 39% as a result of lower gains from disposals.

Product testing company Intertek slumped even as it posted a rise in first half-profit thanks to a strong performance from its products divisions and hiked its dividend, as the shares had a strong run into the results.

Rotork declined even as the FTSE 250 maker of industrial flow equipment reported a jump in first-half pre-tax profit as revenue and order intake grew on the back of larger orders and favourable market trends.

In broker note action, William Hill was upgraded to 'neutral' at Goldman Sachs, while Ferrexpo was lifted to 'overweight' at JPMorgan.

Ocado was downgraded to 'underweight' at Barclays, while Ultra Electronics was cut to 'hold' at Kepler Cheuvreux and Man Group and Spire Healthcare were cut to 'neutral' at Bank of America Merrill Lynch. Hiscox was started at 'hold' by Jefferies.

Market Movers

FTSE 100 (UKX) 7,718.48 0.71%
FTSE 250 (MCX) 20,675.64 0.18%
techMARK (TASX) 3,610.71 0.25%

FTSE 100 - Risers

Standard Life Aberdeen (SLA) 321.30p 4.79%
Glencore (GLEN) 326.30p 3.92%
Anglo American (AAL) 1,736.20p 3.47%
Centrica (CNA) 147.90p 2.25%
WPP (WPP) 1,210.00p 2.24%
BHP Billiton (BLT) 1,724.60p 2.23%
Burberry Group (BRBY) 2,175.00p 2.21%
AstraZeneca (AZN) 5,935.00p 1.96%
United Utilities Group (UU.) 734.20p 1.69%
Antofagasta (ANTO) 958.40p 1.68%

FTSE 100 - Fallers

Intertek Group (ITRK) 5,296.00p -9.78%
Hargreaves Lansdown (HL.) 2,031.00p -4.11%
InterContinental Hotels Group (IHG) 4,607.00p -2.99%
Croda International (CRDA) 5,122.00p -2.07%
Ocado Group (OCDO) 1,060.00p -1.67%
Next (NXT) 5,634.00p -1.30%
Admiral Group (ADM) 1,954.50p -0.99%
Smurfit Kappa Group (SKG) 3,232.00p -0.92%
Royal Mail (RMG) 455.30p -0.78%
Direct Line Insurance Group (DLG) 334.00p -0.71%

FTSE 250 - Risers

Contour Global (GLO) 240.00p 5.26%
Ferrexpo (FXPO) 171.95p 4.62%
Ibstock (IBST) 245.80p 4.43%
Tullow Oil (TLW) 230.10p 4.02%
Millennium & Copthorne Hotels (MLC) 515.00p 3.52%
Kaz Minerals (KAZ) 610.80p 3.04%
Stobart Group Ltd. (STOB) 230.50p 2.46%
Synthomer (SYNT) 546.50p 2.44%
Petrofac Ltd. (PFC) 622.40p 2.27%
Drax Group (DRX) 372.00p 2.25%

FTSE 250 - Fallers

Domino's Pizza Group (DOM) 287.20p -9.69%
Rotork (ROR) 332.30p -6.14%
Ultra Electronics Holdings (ULE) 1,609.00p -5.30%
Sirius Minerals (SXX) 36.92p -4.60%
Capita (CPI) 123.50p -4.15%
Sophos Group (SOPH) 499.20p -3.54%
Provident Financial (PFG) 667.60p -2.77%
Euromoney Institutional Investor (ERM) 1,350.00p -2.46%
Equiniti Group (EQN) 204.50p -2.39%
Just Group (JUST) 99.00p -2.27%