London close: Stocks finish higher as China confirms US tariff cut

London stocks remained off their earlier highs, but were still in the green at the close on Thursday, with sentiment underpinned by China’s plans to cut tariffs on $75bn of US goods.

The FTSE 100 ended the session up 0.3% at 7,504.79, and the FTSE 250 was 0.25% firmer at 21,572.86.

In currencies, sterling was weaker against both of its major pairs, last falling 0.54% against the dollar to $1.2932, and 0.36% on the euro to €1.1779.

The mood was lifted earlier in the session after China said it would halve tariffs on more than 1,717 US products.

That cut on levies would be introduced on 14 February, which is the day the US is set to reduce tariffs on $120bn worth of Chinese imports.

“The move by Beijing is a nice way to take the pressure off the Chinese economy in light of the coronavirus situation, plus it’s a great distraction for dealers - it will take their mind off of the deepening health crisis,” said CMC Markets analyst David Madden.

“The reduction in levies from the Chinese side shows they are willing to play ball with the US, and it should help mend the frayed trade relations.”

Additionally, a fall in the number of Americans filing for unemployment benefits to its lowest level since last April also helped to lift sentiment generally.

US initial jobless claims declined by 15,000 from the previous week’s revised level to 202,000, according to the Labor Department, compared expectations for a reading of 215,000.

The previous week’s level was revised up by 1,000.

In equity markets, catering company Compass closed up 2.7% after it said organic revenue for the three months ended 31 December grew 5.3%, driven by strong levels of new business wins and good retention rates, particularly in North America.

Tesco was on the rise, adding 2.46% following a Financial Times report that three Thai family conglomerates have submitted formal first-round bids for its Thai and Malaysian operations and started second-round talks over a deal expected to fetch as much as $10bn.

The bidders are Charoen Pokphand, which owns Thailand's 7-Eleven convenience chain; Thailand's biggest department store operator Central Group; and TCC Group, controlled by brewing tycoon Charoen Sirivadhanabhakdi, the FT said.

Over on the FTSE 250, insurer Beazley was a standout gainer, advancing 8.22% after it posted a better-than-expected surge in full-year pre-tax profit as three of its six divisions achieved double-digit growth.

In the year to the end of December, pre-tax profit surged 250% to $267.7m, as the investment return grew 4.8%.

Gross premiums written were up 15% to $3.0bn and net premiums written were 11% higher at $2.5bn.

Analysts had been expecting pre-tax profit of $220.9m.

On the downside, NMC Health fell 7.22%, having surged earlier in the day on the back of a report that the company’s founder is looking to buy out his Emirati partners and return to an "active leadership position" at the UAE private healthcare operator.

According to the Financial Times, Indian-born entrepreneur BR Shetty is conducting an operational review ahead of formal talks to explore various options with shareholders and regulators.

GlaxoSmithKline was in the red by 2.58% a day after the release of disappointing full-year results.

“GSK are clearly working hard to transform the pharma business by improving the level of innovation, but the headwind of 50% of the current business continuing to decline at a mid-to-high single digit rate is a meaningful drag on the speed of transformation,” noted Credit Suisse.

“Operating profits for pharma fell 22% in 2019 without full US respiratory genericisation and we expect they will fall further in 2020.”

Credit Suisse said that much of the oncology research and development pipeline was still unproven, with “limited” de-risking in 2020.

“The growth of the consumer joint venture remains lacklustre at 2% proforma, although expectations remain high for cost synergies over time.”

Elsewhere, software company Sage was 0.8% weaker as its stock went ex-dividend.

Royal Mail tumbled 5.52% as it said recent trading was broadly in line with expectations, but the company warned that its outlook was challenging.

Letter volumes would fall faster than expected next year and the parcels and letters business is more likely to be loss-making, it said.

“Royal Mail’s restructuring plans are being derailed by strikes and the company is likely to miss its targets,” said Neil Wilson, chief market analyst at Markets.com.

“This should hardly be a big surprise to investors - in November it warned that its transformation programme was behind schedule.”

Wilson added that ongoing industrial action threats were a “persistent drag” on the stock.

“What’s more worrying is that we’ve been waiting for something to happen for a long time now and still it’s the same old story.

“Parcel volumes up, letters down, GLS doing OK and no change in the culture or management of this ex-monopoly.”

Micro Focus was on the back foot by 0.8% as non-executive chairman designate Greg Lock and his wife bought 184,300 shares in the company at an average price of 787.66p.

When Lock becomes a director on 14 February, he will have 200,000 shares.

Market Movers

FTSE 100 (UKX) 7,504.79 0.30%
FTSE 250 (MCX) 21,572.86 0.25%
techMARK (TASX) 4,148.39 0.22%

FTSE 100 - Risers

Kingfisher (KGF) 213.70p 2.84%
Vodafone Group (VOD) 151.02p 2.75%
Evraz (EVR) 404.90p 2.74%
Compass Group (CPG) 1,958.00p 2.70%
Tesco (TSCO) 254.40p 2.46%
Ashtead Group (AHT) 2,652.00p 2.31%
Barclays (BARC) 176.72p 2.17%
Polymetal International (POLY) 1,259.00p 2.15%
Prudential (PRU) 1,452.00p 1.72%
Diageo (DGE) 3,202.00p 1.68%

FTSE 100 - Fallers

NMC Health (NMC) 900.00p -7.22%
Barratt Developments (BDEV) 807.40p -4.17%
Flutter Entertainment (FLTR) 8,418.00p -2.68%
Hargreaves Lansdown (HL.) 1,708.50p -2.68%
GlaxoSmithKline (GSK) 1,694.80p -2.58%
Taylor Wimpey (TW.) 217.70p -2.16%
BP (BP.) 475.00p -1.92%
Berkeley Group Holdings (The) (BKG) 5,180.00p -1.89%
Smurfit Kappa Group (SKG) 2,848.00p -1.86%
Persimmon (PSN) 3,046.00p -1.58%

FTSE 250 - Risers

Beazley (BEZ) 579.00p 8.22%
Fresnillo (FRES) 653.80p 4.84%
Pets at Home Group (PETS) 306.80p 4.50%
Helios Towers (HTWS) 146.50p 3.97%
Cineworld Group (CINE) 182.10p 3.47%
Clarkson (CKN) 3,105.00p 3.33%
Rank Group (RNK) 302.00p 2.90%
Playtech (PTEC) 357.50p 2.88%
Centamin (DI) (CEY) 130.90p 2.87%
Hochschild Mining (HOC) 161.40p 2.80%

FTSE 250 - Fallers

Royal Mail (RMG) 178.90p -5.52%
Redrow (RDW) 780.00p -3.82%
Tullow Oil (TLW) 49.38p -3.40%
Provident Financial (PFG) 479.40p -2.46%
Contour Global (GLO) 187.40p -2.29%
Babcock International Group (BAB) 572.00p -2.26%
Quilter (QLT) 170.15p -2.21%
Coats Group (COA) 71.10p -2.20%
Countryside Properties (CSP) 502.00p -2.14%
Future (FUTR) 1,164.00p -2.02%