London open: Shares climb on US-China trade hopes, dip in pound

London stocks have started the session firmly higher, amid a degree of optimism around the ongoing US-China trade talks and tracking the gains seen on Wall Street during the previous session, even as investors wait on the result of lawmakers' vote in Parliament on the Prime Minister's proposed withdrawal agreement.

On Friday, US Secretary of the Treasury, Steve Mnuchin, said he and Trade Representative, Robert Lighthizer, had concluded "constructive" talks in China.

Against that backdrop, as of 0829 GMT, the FTSE 100 was adding 0.68% or 49.35 points to 7,283.12 as the pound reversed an early bounce to trade 0.28% lower against the euro to 1.1593.

MPs were scheduled to begin to debate the government's motion at 09:30 GMT with the voting due to start at 14:30 GMT.

Analysts at ING believed the course of events over the next two weeks was "highly uncertain", although in their opinion a softer form of Brexit remained the most likely scenario, albeit only narrowly, followed by a second referendum.

"However, the odds of 'no deal' and a general election appear to have climbed," they said in a research note sent to clients.

Those same analysts at the Dutch broker put the odds of May's deal passing at 10%, of a softer Brexit at 25%, of a 'no deal' Brexit also at 25% and of a general election at 15%.

In order to circumvent the objections of the Speaker of the House to a third vote on Theresa May's proposed deal, lawmakers would not be asked to vet the political declaration, only the withdrawal agreement, which covers the post-Brexit transition period, the Irish backstop and EU citizens' rights.

Some observers believed that might allow the government to secure Brexit and clinch an extension of Article 50 until 22 May, in order to sort out the paperwork that was left to do, all in one fell swoop.

But it was not clear whether Parliament would still need to approve the political declaration at a later date or if the law could be changed so that it is no longer needed.

A raft of UK data is scheduled for release ahead of the vote in Parliament, including a reading on gross domestic product in the fourth quarter and consumer credit and mortgage lending data covering the month of February.

Overnight, mortgage lender Nationwide reported a month-on-month increase of 0.2% in UK house prices during the month of March.

That pushed the year-on-year rate of growth up from 0.4% during the previous month to 0.7% (consensus: 0.5%).

According to Samuel Tombs at Pantheon Macroeconomics, the steady levels of mortgage approvals seen year-to-date, together with signs that wages could continue to grow at a 3% pace and only gradual increases in mortgage rates pointed to year-on-year growth in house prices recovering to about 2% by the end of 2019.

For later in the the session, a raft of economic reports are scheduled for release in the States, including data on personal income and spending for January and February and the Chicago NAPM regional manufacturing sector Purchasing Managers' Index.

Among some of the broker recommendations that were making themselves felt in early trading, analysts at ShoreCap reiterated their 'buy' recommendation for shares of AstraZeneca and Jefferies a 'buy' on Standard Life Aberdeen, although it cut its target price from 410p to 361p.

TUI left scrambling by 737 MAX debacle, Astra decides now is the best time to raise cash

Shares of TUI are trading sharply lower after the company said that the grounding of the 737 MAX Boeing aircraft in its fleet would subtract roughly €200m from its full-year operating profits, assuming it could get them back in the air by mid-July - at the latest. In the meantime, the tour operator was scrambling to rectify the situation, utilising spare jets, renewing expiring leases and leasing additional aircraft.

EasyJet shares were also lower.

AstraZeneca plans to raise $3.5bn (£2.7bn) in a share placing to fund a new cancer drug collaboration with Japan's Daiichi Sankyo and repay some of its bonds. The collaboration is for the novel HER2-targeting antibody-drug conjugate, with the two companies aiming to accelerate and expand development of trastuzumab deruxtecan across breast and other cancers.

Software company Micro Focus International reiterated its previous guidance for the financial year on Friday, as its investors gathered for its annual general meeting. The FTSE 100 firm said that guidance was for further moderation of revenue decline, and consequently constant currency revenue for the continuing Micro Focus product portfolio business for the 12 months to 31 October 2019 was expected to be between -4% and -6%, compared to a decline of 7.1% for the 2018 financial year.

Travis Perkins chief executive John Carter will step down in August after five years in the role and be succeeded by Nick Roberts, currently CEO of engineer Atkins. Roberts will join the builders merchants as a director of and CEO designate on 1 July and take over the full role on 5 August, with Carter remaining with the group until the end of the year.

Market Movers

FTSE 100 (UKX) 7,261.78 0.38%
FTSE 250 (MCX) 18,965.36 0.30%
techMARK (TASX) 3,491.88 -0.22%

FTSE 100 - Risers

Antofagasta (ANTO) 956.80p 2.62%
Rio Tinto (RIO) 4,481.00p 2.22%
Glencore (GLEN) 318.25p 2.13%
Anglo American (AAL) 2,029.00p 1.85%
BHP Group (BHP) 1,850.60p 1.79%
Burberry Group (BRBY) 1,953.50p 1.72%
Scottish Mortgage Inv Trust (SMT) 505.91p 1.22%
Smith (DS) (SMDS) 331.20p 1.19%
Standard Life Aberdeen (SLA) 261.20p 1.18%
Ashtead Group (AHT) 1,848.00p 1.12%

FTSE 100 - Fallers

TUI AG Reg Shs (DI) (TUI) 698.00p -9.33%
AstraZeneca (AZN) 6,234.00p -4.03%
easyJet (EZJ) 1,100.00p -1.61%
United Utilities Group (UU.) 813.40p -1.31%
Severn Trent (SVT) 1,974.00p -1.30%
SSE (SSE) 1,191.01p -1.00%
National Grid (NG.) 846.60p -0.99%
Ocado Group (OCDO) 1,348.00p -0.88%
Berkeley Group Holdings (The) (BKG) 3,728.00p -0.82%
Auto Trader Group (AUTO) 521.60p -0.80%

FTSE 250 - Risers

Ferrexpo (FXPO) 249.50p 3.83%
Man Group (EMG) 135.80p 3.82%
Vivo Energy (VVO) 121.68p 3.05%
Kaz Minerals (KAZ) 640.00p 2.99%
Aveva Group (AVV) 3,186.00p 2.77%
Fidelity China Special Situations (FCSS) 233.50p 2.64%
GVC Holdings (GVC) 556.00p 2.39%
Premier Oil (PMO) 92.60p 2.26%
Babcock International Group (BAB) 497.40p 2.22%
Tullow Oil (TLW) 235.00p 2.17%

FTSE 250 - Fallers

Victrex plc (VCT) 2,108.00p -3.21%
Convatec Group (CTEC) 138.60p -2.60%
Kier Group (KIE) 353.01p -2.59%
Pennon Group (PNN) 742.80p -2.03%
Rank Group (RNK) 154.00p -1.91%
Go-Ahead Group (GOG) 1,935.00p -1.78%
Wizz Air Holdings (WIZZ) 3,014.00p -1.57%
HGCapital Trust (HGT) 2,060.00p -1.44%
Apax Global Alpha Limited (APAX) 143.00p -1.38%
Drax Group (DRX) 373.00p -1.32%