London close: Stocks finish higher amid US-China escalations

London stocks managed to finish in positive territory on Monday, as investors digested a further escalation of tensions between the US and China.

The FTSE 100 ended the session up 0.31% at 6,050.59, and the FTSE 250 was 0.58% firmer at 17,724.94.

Sterling was trading stronger at the end of the day, last rising 0.26% on the dollar to $1.3086 and gaining 0.48% against the euro to €1.1130.

London’s top-flight index remained green throughout the session, even after the news that China was imposing sanctions on 11 Americans, including senators Ted Cruz and Marco Rubio, in retaliation for similar measures announced by the US on Friday.

Others on China's sanctions list include Kenneth Roth, executive director of Human Rights Watch, and Michael Abramowitz, the president of Freedom House, according to Bloomberg.

On Friday, the US said it would place sanctions on 11 officials in China and Hong Kong, including Hong Kong Chief Executive Carrie Lam, over restrictions to political freedom in Hong Kong.

Also at the end of last week, US President Donald Trump ordered a ban on American dealings with Chinese companies Tencent and ByteDance - owners of the WeChat and TikTok apps, respectively - to take effect in 45 days.

“With trade talks - via video conference - scheduled for Saturday, you’d think investors would be in a state of distress over the tinderbox situation between the two superpowers,” said Spreadex analyst Connor Campbell.

“Instead the markets were fairly blasé about a topic that has caused triple-digit losses in the past.”

Sentiment was underpinned by Trump’s unilateral extension of a relief package.

Over the weekend, the US president signed four executive orders on coronavirus relief, one of which will provide up to $400 in enhanced unemployment benefits.

“European stocks are on the rise ... with markets continuing last week’s optimistic tone after Donald Trump signed an executive order to extend the enhanced unemployment benefits that had come to an end,” said IG market analyst Joshua Mahony earlier.

“Crucially, Trump’s $400 per week payment to be implemented as of 1 August, thus ensuring that the disruption caused by the recent congress disagreement is lessened.

“Unfortunately, the positive impact of this benefit boost is lessened somewhat by the fact that congress could still mount legal challenges given that it is typically their role to control federal government spending.”

Chinese inflation data was also helping to underpin the tone, as figures from the National Bureau of Statistics showed factory gate prices fell at a slower pace in July, with consumer inflation up on the back of higher food prices.

Investors were now looking towards UK employment figures, due out first thing on Tuesday, as well as the latest data on economic sentiment in Germany and the wider euro area.

In equity markets, British Airways and Iberia parent IAG was 8.65% higher, while oil giants BP and Shell added 2.84% and 1.31%, respectively, as oil prices rose after Saudi Aramco said it was seeing signs of an oil market recovery.

Cineworld rocketed ahead 17.62%, tracking gains for US peers on Friday after a US judge granted the government’s request to end the Paramount Decrees - a set of antitrust rules from the 1940s and 1950s that banned film studios from owning theatres.

Shipping services firm Clarkson gained 12.14% after saying it would reinstate a previously-deferred dividend as it reported a “robust” first half with higher profits driven by its broking division.

Transport operators FirstGroup and Go-Ahead were both trading up, by 5.68% and 3.59%, after a fresh round of regional bus funding from the government.

Outsourcer Capita was 1.3% firmer as it secured an extension to a Transport for London contract.

On the downside, Hargreaves Lansdown fell 4.24% after Credit Suisse reiterated its ‘underperform’ rating on the shares, arguing that the premium PE is unjustified by a negative earnings growth outlook.

Ocado was knocked 1.74% lower by a downgrade to ‘underweight’ at Barclays, which said the company was well placed to benefit from a dramatic step-up in demand for online groceries but that the stock is expensive.

Market Movers

FTSE 100 (UKX) 6,050.59 0.31%
FTSE 250 (MCX) 17,724.94 0.58%
techMARK (TASX) 3,849.25 -0.30%

FTSE 100 - Risers

International Consolidated Airlines Group SA (CDI) (IAG) 201.70p 8.65%
Melrose Industries (MRO) 107.70p 6.32%
Rolls-Royce Holdings (RR.) 265.70p 5.19%
Evraz (EVR) 326.30p 5.16%
JD Sports Fashion (JD.) 684.40p 3.82%
NATWEST GROUP PLC ORD 100P (NWG) 114.10p 3.16%
Pearson (PSON) 608.80p 3.15%
Whitbread (WTB) 2,447.00p 2.86%
BP (BP.) 295.40p 2.84%
Legal & General Group (LGEN) 233.00p 2.55%

FTSE 100 - Fallers

Hargreaves Lansdown (HL.) 1,786.00p -4.24%
Hikma Pharmaceuticals (HIK) 2,297.00p -4.01%
Flutter Entertainment (FLTR) 11,650.00p -2.96%
Sage Group (SGE) 745.20p -2.64%
Scottish Mortgage Inv Trust (SMT) 879.00p -2.60%
Intertek Group (ITRK) 5,680.00p -2.24%
Smurfit Kappa Group (SKG) 2,640.00p -2.00%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,628.00p -1.98%
Avast (AVST) 585.50p -1.93%
Halma (HLMA) 2,210.00p -1.78%

FTSE 250 - Risers

Cineworld Group (CINE) 41.05p 17.62%
Clarkson (CKN) 2,355.00p 12.14%
Go-Ahead Group (GOG) 656.50p 10.22%
Carnival (CCL) 968.00p 9.27%
Hammerson (HMSO) 51.34p 9.21%
TUI AG Reg Shs (DI) (TUI) 348.90p 8.19%
WH Smith (SMWH) 1,010.00p 8.02%
Cairn Energy (CNE) 139.30p 7.15%
Just Group (JUST) 49.86p 7.13%
ICG Enterprise Trust (ICGT) 842.00p 6.87%

FTSE 250 - Fallers

Games Workshop Group (GAW) 9,090.00p -3.38%
William Hill (WMH) 131.00p -3.32%
Network International Holdings (NETW) 445.00p -3.26%
Petropavlovsk (POG) 33.40p -3.19%
Allianz Technology Trust (ATT) 2,360.00p -3.07%
Marshalls (MSLH) 634.00p -2.98%
Domino's Pizza Group (DOM) 325.00p -2.93%
FDM Group (Holdings) (FDM) 1,018.00p -2.89%
Edinburgh Worldwide Inv Trust (EWI) 270.50p -2.87%
Greencore Group (GNC) 128.20p -2.51%