London close: Top flight index stages slight bounce, second-tier index underperforms

London's top flight index staged a slight bounce at the start of the week, paring the sharp losses seen near the start of the session as shares on Wall Street found their footing, even as investors sifted through the latest developments in the US-China trade war over the weekend.

In a White Paper published on Sunday, Beijing shifted the blame for the failure of trade talks to Washington and left analysts and market commentary divided regarding the extent to which Beijing remained open to further talks or not.

Against that backdrop, IHS Markit's manufacturing sector Purchasing Managers' Index for the UK printed at 49.4 for May (consensus: 52.1), versus 53.1 in April, amid reports of clients diverting supply chains away from Britain.

"Persistent uncertainty from the domestic leadership contest and escalating trade war all signal a sharp deterioration in IP ahead," said economists at Barclays Research.

"Additional uncertainty from the domestic leadership contest and “no deal” rhetoric from hard line candidates may exacerbate this problem," they explained.

"Signs of factory weakness were seen across the euro area, and Asian as manufacturing PMI contraction was seen across key economies such as Germany, Japan and South Korea as the US-China trade war escalates and broadens to other countries beyond China."

By the end of trading, the FTSE 100 was trading up by 0.32% or 23.09 points to 7,184.80, having fallen as low as 7,079.71 shortly after the start of the session.

Front month Brent crude oil futures were also off their earlier lows, slipping by 0.96% to $61.40 a barrel on the ICE, and the pound was down by 0.39% at 1.1264 versus the single currency and little changed versus the US dollar at 1.26357.

The second-tier index on the other hand underperformed its European peers, giving back 0.49% or 93.08 points to end at 18,877.17 as shares of Kier were walloped after the company warned on profits.

Manufacturing PMIs in the US also came in on the weak side.

On a more positive note, activity in China's manufacturing sector was steady last month, according to the results of perhaps the most closely-followed survey of conditions in the sector.

Caixin's factory sector PMI for the month of May printed at 50.2, unchanged from the month before and ahead of the consensus forecast for a reading of 50.0.

Nevertheless, Julian Evans-Pritchard at Capital Economics said: "overall, the downbeat PMI readings for April and May suggest that economic growth has not yet bottomed out and is consistent with our view that there are still some downside risks to near-term activity.

"Further ahead, we expect renewed policy easing and the lagged impact of faster credit growth to support the economy."

Still ahead for later on Monday evening, two top Fed officials, the head of the Richmond Fed, Tom Barkin, and his opposite number at St. Louis Fed, James Bullard, were set to take to the podium after the close of trading in London.

AstraZeneca delivers, Kier sinks

AstraZeneca announced on Monday that its Lynparza pancreatic cancer drug has returned positive phase three trial results, doubling the amount of patients with no disease progression. Three-year overall survival data showed no disease progression at one year for 34% of patients using Lynparza versus 15% on placebos, while 22% of patients with Lynparza had no progression compared to 15% on placebo after two years in multi-centre trials that saw subjects taking two 300mg doses per day.

Troubled construction company Kier said full year underlying operating profit would be £25m lower than previous expectations with higher net debts. Kier, which had reported debt at the end of 2018 of £180.5m, down from £624m said it was likely to report a net debt position as at 30 June 2019, which would have an adverse impact on its FY2019 average month-end net debt position. Net costs from a strategic review of the company were also expected to be £15m than previously forecast.

Smith & Nephew has completed its acquisition of orthopaedic joint reconstruction outfit Brainlab, whose technology is used in more than 500 hospitals worldwide. The FTSE 100-listed global medical technology business said the transaction continues its strategy of investing in best-in-class technologies that enhance its portfolio of digital and robotic surgical products.

Market Movers

FTSE 100 (UKX) 7,184.80 0.32%
FTSE 250 (MCX) 18,877.17 -0.49%
techMARK (TASX) 3,509.98 0.62%

FTSE 100 - Risers

NMC Health (NMC) 2,351.00p 4.35%
Fresnillo (FRES) 796.80p 3.75%
Evraz (EVR) 602.60p 2.48%
BAE Systems (BA.) 462.50p 2.23%
WPP (WPP) 960.80p 2.08%
AstraZeneca (AZN) 5,941.00p 1.90%
GlaxoSmithKline (GSK) 1,549.80p 1.45%
Hikma Pharmaceuticals (HIK) 1,595.50p 1.36%
Anglo American (AAL) 1,919.00p 1.30%
Associated British Foods (ABF) 2,500.00p 1.30%

FTSE 100 - Fallers

TUI AG Reg Shs (DI) (TUI) 698.00p -4.38%
Auto Trader Group (AUTO) 579.40p -3.34%
Schroders (SDR) 2,842.00p -2.57%
Standard Life Aberdeen (SLA) 261.00p -2.36%
Imperial Brands (IMB) 1,871.00p -2.30%
ITV (ITV) 105.15p -1.96%
Ocado Group (OCDO) 1,171.50p -1.93%
easyJet (EZJ) 854.80p -1.88%
Micro Focus International (MCRO) 1,881.60p -1.84%
Standard Chartered (STAN) 675.20p -1.80%

FTSE 250 - Risers

Amigo Holdings (AMGO) 280.00p 12.90%
Centamin (DI) (CEY) 97.64p 10.26%
Hochschild Mining (HOC) 164.90p 6.84%
Funding Circle Holdings (FCH) 246.50p 4.89%
Wizz Air Holdings (WIZZ) 3,274.00p 4.47%
Mediclinic International (MDC) 311.20p 3.05%
Vivo Energy (VVO) 130.00p 3.01%
Contour Global (GLO) 203.50p 2.49%
Acacia Mining (ACA) 161.00p 2.29%
Rotork (ROR) 294.50p 2.12%

FTSE 250 - Fallers

Kier Group (KIE) 163.80p -41.12%
Stobart Group Ltd. (STOB) 108.00p -9.55%
Metro Bank (MTRO) 625.50p -8.49%
Royal Mail (RMG) 194.50p -5.21%
Capita (CPI) 106.20p -4.73%
FirstGroup (FGP) 109.90p -4.68%
Sophos Group (SOPH) 398.50p -4.55%
Spirent Communications (SPT) 150.00p -4.34%
Ascential (ASCL) 367.00p -4.33%
Cairn Energy (CNE) 151.90p -3.98%