London midday: Stocks maintain gains despite escalating Sino-US tensions

London stocks were still in the black by midday on Monday despite a further escalation of tensions between the US and China.

The FTSE 100 was up 0.6% at 6,087.35, off earlier highs but showing resilience following news that China is 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 shutdown of the TikTok video platform in the US unless it finds non-Chinese owners within 45 days.

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.

IG market analyst Joshua Mahony said: "European stocks are on the rise in early trade, with markets continuing last week’s optimistic tone after Donald Trumps signed an executive order to extend the enhanced unemployment benefits that had come to an end.

"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. 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.

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

Cineworld was sitting pretty at the top of the FTSE 250, 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 ground 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 after a fresh round of regional bus funding from the government.

Outsourcer Capita was on the front foot as it secured an extension to a Transport for London contract.

On the downside, Hargreaves Lansdown fell 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 a little 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) 6,066.01 0.56%
FTSE 250 (MCX) 17,738.74 0.66%
techMARK (TASX) 3,875.23 0.38%

FTSE 100 - Risers

International Consolidated Airlines Group SA (CDI) (IAG) 194.35p 4.69%
Melrose Industries (MRO) 105.90p 4.54%
Evraz (EVR) 321.50p 3.61%
BP (BP.) 295.20p 2.77%
NATWEST GROUP PLC ORD 100P (NWG) 113.65p 2.76%
Whitbread (WTB) 2,439.00p 2.52%
Rolls-Royce Holdings (RR.) 258.70p 2.41%
Legal & General Group (LGEN) 232.60p 2.38%
Aveva Group (AVV) 4,607.00p 2.26%
Burberry Group (BRBY) 1,348.50p 2.16%

FTSE 100 - Fallers

Hikma Pharmaceuticals (HIK) 2,335.00p -2.42%
Hargreaves Lansdown (HL.) 1,820.50p -2.39%
GVC Holdings (GVC) 716.40p -1.21%
Avast (AVST) 590.00p -1.17%
Glencore (GLEN) 172.58p -1.13%
Flutter Entertainment (FLTR) 11,875.00p -1.08%
Intertek Group (ITRK) 5,750.00p -1.03%
Halma (HLMA) 2,227.00p -1.02%
Aviva (AV.) 290.60p -1.02%
Compass Group (CPG) 1,166.00p -0.89%

FTSE 250 - Risers

Cineworld Group (CINE) 39.84p 14.15%
Clarkson (CKN) 2,330.00p 10.95%
FirstGroup (FGP) 41.60p 7.22%
Just Group (JUST) 49.40p 6.15%
Aston Martin Lagonda Global Holdings (AML) 70.90p 6.06%
WH Smith (SMWH) 986.00p 5.45%
Watches of Switzerland Group (WOSG) 272.00p 5.22%
Meggitt (MGGT) 297.80p 4.86%
Airtel Africa (AAF) 56.70p 4.81%
Royal Mail (RMG) 193.20p 4.57%

FTSE 250 - Fallers

William Hill (WMH) 128.05p -5.50%
FDM Group (Holdings) (FDM) 1,008.00p -2.89%
Bank of Georgia Group (BGEO) 757.00p -2.57%
CLS Holdings (CLI) 193.80p -1.92%
Greencore Group (GNC) 129.00p -1.90%
TP ICAP (TCAP) 304.40p -1.81%
Games Workshop Group (GAW) 9,300.00p -1.80%
Marshalls (MSLH) 642.00p -1.76%
BMO Commercial Property Trust Limited (BCPT) 64.50p -1.68%
TR Property Inv Trust (TRY) 356.50p -1.52%