London close: Stocks finish September with solid gains

Pound strength held back London's top-flight index at the end of the month, despite news that the US was not contemplating limits on Chinese companies ability to list on US exchanges.

"The announcement from Mr Navarro has encouraged traders to pick-up stocks as this puts the US-China trade relationship back on positive footing. Traders are optimistic about next week’s trade negotiations," said David Madden, market analyst at CMC Markets UK.

The FTSE 100 was down 0.24% at 7,408.21, while the pound was 0.13% higher against the US dollar at 1.2304 and 0.4% firmer versus the euro at 1.1278.

However, the Footsie ended the month of September sporting an advance of 2.79%, alongside a nearly identical gain for the second-tier index - despite a rising pound.

Jitters had set in after a report on Friday suggested that the US would consider banning Chinese listings on US markets as part of the trade war. The report was denied on Saturday by a US Treasury official, who said: "The administration is not contemplating blocking Chinese companies from listing shares on US stock exchanges at this time."

And come Monday, US trade advisor, Peter Navarro dubbed such reports "fake news".

In parallel, gold was unloved, with December futures for the yellow metal on COMEX dropping by 1.99% to $1,476.40/oz..

"While equities recover, gold has come under significant pressure," said IG's Chris Beauchamp.

"The price has slipped through the support levels of mid-September, and with investor positioning already heavily-long the yellow metal, the fuel for continued gains appears lacking. Gold’s best hope remains a revival of trade wars, but hopes are still high ahead of October that the two sides can make at least some progress."

In the background, Caixin's purchasing managers’ index for China's manufacturing sector, hit its highest level since January 2018, coming in at 51.4 for September, up from 50.4 in August and ahead of expectations of 50.2.

Caixin said the improvement was mostly due to firmer domestic demand as foreign sales continued to be hit by the Sino-US trade spat.

Meanwhile, Freya Beamish at Pantheon Macroeconomics said: "On our reading of the industrial profits data in recent months, private firms appear to be recovering while state-owned enterprises remain in the doldrums.

"We aren’t convinced, however, that the private sector recovery is sustainable yet; monetary conditions remain too tight."

On the home front, after meeting with opposition leaders, Labour leader, Jeremy Corbyn, said that he would not pursue a no-confidence vote until a no-deal Brexit was off the table.

As an aside, in a research report sent to clients earlier, strategists at JP Morgan said: "[A] No-deal crash out of EU is not our base case, at least not until after the early elections happen, potentially taking place in late Nov/early December.

"Another possibility one should not dismiss is that Boris Johnson does get a deal through before October 31st deadline. This would clearly be very bullish for UK domestics in GBP terms, and would significantly help our Eurozone upgrade."

Market participants were also digesting the latest UK economic growth figures from the Office for National Statistics, which confirmed a contraction in the second quarter, with the manufacturing sector proving a drag.

Gross domestic product in volume terms was estimated to have fallen by 0.2% in the three months to June, in line with the consensus and the previous estimate, although growth for the prior two quarters was revised up.

And absent a couple of 'one-off' shocks, the pace of GDP growth would have been closer to its trend rate of 0.3% quarter-on-quarter, said Samuel Tombs at Pantheon Macroeconomics.

"The latest national accounts show that the economy is holding up much better in the face of heightened Brexit uncertainty than previously thought," Tombs said.

In equity markets, Premier Inn owner Whitbread was near the bottom of the leaderboard on the FTSE 100 after a downgrade to ‘equalweight’ from ‘overweight’ at Barclays, but Homeserve was boosted by an upgrade at RBC Capital Markets.

DS Smith was higher after the Competition & Markets Authority said it will not refer the acquisition of its flexible plastic packaging division by Liqui-Box to a phase two investigation.

GlaxoSmithKline was on the front after it said that a late-stage study in cancer patients showed that its maintenance therapy for a form of ovarian cancer reduced the risk of disease progression or death by 38%.

Rio Tinto lost ground ground following a report that it has scrapped plans for a sale or initial public offering of its Canadian iron-ore unit following a year-long attempt to offload the business. According to the Wall Street Journal, Rio had not been able to agree a price with any potential suitors for its 59% stake in Iron Ore Co. of Canada.

Iron ore miner Ferrexpo erased early gains even as it denied allegations made on social media during the previous week that its chief executive officer Kostyantin Zhevago was being investigated in relation to a business he owned in Ukraine until 2015.

Market Movers

FTSE 100 (UKX) 7,408.21 -0.24%
FTSE 250 (MCX) 19,936.67 -0.17%
techMARK (TASX) 3,886.28 -0.30%

FTSE 100 - Risers

Imperial Brands (IMB) 1,828.20p 3.02%
British American Tobacco (BATS) 3,007.50p 2.12%
JD Sports Fashion (JD.) 750.40p 2.06%
WPP (WPP) 1,018.00p 1.86%
Smith (DS) (SMDS) 360.40p 1.78%
Admiral Group (ADM) 2,118.00p 1.63%
Ocado Group (OCDO) 1,322.50p 1.38%
Johnson Matthey (JMAT) 3,057.00p 1.29%
GlaxoSmithKline (GSK) 1,744.60p 1.14%
Rentokil Initial (RTO) 467.80p 1.10%

FTSE 100 - Fallers

Reckitt Benckiser Group (RB.) 6,344.00p -3.97%
Whitbread (WTB) 4,294.00p -3.87%
Fresnillo (FRES) 683.60p -2.76%
NMC Health (NMC) 2,710.00p -2.24%
AstraZeneca (AZN) 7,261.00p -1.65%
3i Group (III) 1,166.50p -1.52%
Lloyds Banking Group (LLOY) 54.12p -1.49%
Intertek Group (ITRK) 5,478.00p -1.44%
Tesco (TSCO) 241.00p -1.43%
BHP Group (BHP) 1,732.40p -1.28%

FTSE 250 - Risers

Sirius Minerals (SXX) 3.98p 37.00%
Telecom Plus (TEP) 1,230.00p 5.31%
PureTech Health (PRTC) 253.00p 2.85%
Apax Global Alpha Limited (APAX) 153.00p 2.68%
Big Yellow Group (BYG) 1,039.00p 2.36%
Essentra (ESNT) 425.60p 2.31%
Cairn Energy (CNE) 191.90p 2.13%
Pennon Group (PNN) 827.00p 2.07%
Bellway (BWY) 3,347.00p 1.95%
Premier Oil (PMO) 77.74p 1.83%

FTSE 250 - Fallers

Finablr (FIN) 155.40p -11.33%
Aston Martin Lagonda Global Holdings (AML) 526.20p -6.87%
Marston's (MARS) 123.50p -5.58%
Travis Perkins (TPK) 1,291.00p -3.40%
Coats Group (COA) 74.35p -2.87%
JPMorgan Indian Investment Trust (JII) 744.00p -2.87%
Mediclinic International (MDC) 331.20p -2.79%
SSP Group (SSPG) 620.00p -2.52%
Rank Group (RNK) 191.60p -2.47%
IP Group (IPO) 63.70p -2.45%