London open: Stocks nudge up ahead of services PMI; gambling sector still weak

Mining stocks rallied again on Tuesday amid growing optimism over a US-China trade deal, but the Footsie was just a touch higher overall following solid gains in the previous session, as investors awaited the release of key UK services data.

At 0830 GMT, the FTSE 100 was 0.1% firmer at 7,379.95, while the pound was up 0.1% against the dollar and the euro at 1.2899 and 1.1584, respectively.

Investors were eyeing the release of the UK services purchasing managers' index for October, which is expected to have ticked up to 49.7 from 49.5 in September.

Ipek Ozkardeskaya, senior market analyst at London Capital Group, said: "Released last week, the UK’s October manufacturing PMI surprised on the upside. Services PMI is more relevant for the health of the British economy, as services make up to 80% of its economy.

"A consensus of analyst expectations points at a reading of 49.7 for the services PMI today. This expectation is a touch below the 50 level which distinguishes expansion from contraction. Hence, a better-than-expected services PMI print, ideally a surprise expansion could reverse the pound sell-off and encourage an advance past the 1.29 level. A disappointment should flourish the sell-side and pressure the pair toward the 1.2820/1.2800 support zone."

In equity markets, miners were the top performers again, with Glencore, Antofagasta, Anglo American, Rio Tinto and BHP all higher as copper and iron ore prices rose amid growing expectations that the US and China will strike a trade deal.

A Financial Times report out earlier cited five people briefed on the discussions as saying that the White House is considering rolling back levies on $112bn of Chinese imports, including clothing, appliances, and flatscreen monitors, that were introduced on 1 September at a 15% rate.

Neil Wilson, chief market analyst at Markets.com, said the move would be a critical step in agreeing a 'phase one' deal.

"A plan to hike tariffs on $250bn of Chinese goods from 25% to 30% on October 15th has already been shelved," he said.

"The US is also said to be ready to suspend the planned December 15th tariffs. If all of this is accurate, the US has blinked. There is a real mix of factors going on here - mainly to do with the Presidential election next year. It seems that tariffs are hurting voters in some important states. And at a time of impeachment fears, Trump could do with a 'win' on trade soon."

Elsewhere, Associated British Foods was sitting pretty at the top of the FTSE 100 after it reported a rise in adjusted full-year profits as its Primark and grocery businesses offset a sharp fall in sugar earnings. Adjusted pre-tax profit rose 2% to £1.4bn on a 2% increase in group revenue to £15.8bn.

Richard Hunter, head of markets at Interactive Investor, said: "AB Foods is playing to its strengths, with its two largest units doing most of the heavy lifting.

"Amid the positive potential, the missing part of the jigsaw of late has been a share price which has fallen 12% over the last six months and has drifted 7% over the last year, as compared to a 3.7% gain for the wider FTSE 100. Today’s share price reaction to these results undoes some of that damage and the general market view of the shares as a buy is also a reflection of the esteem in which the company is held."

Euromoney was in the green after it said full-year 2019 results were set to be slightly above the board's expectations while Wood Group and Micro Focus were both boosted by upgrades to 'neutral' at Goldman Sachs.

Imperial Brands was in the red as it posted a decline in full-year profit despite a rise in revenue, amid "tough" trading in its net generation products. In the year to the end of September, reported pre-tax profit fell to £1.69bn from £1.82bn the year before, while operating profit ticked down to £2.07bn from £2.28bn, despite a 5.1% jump in revenue to £31.59bn.

On the downside, Weir Group retreated after it issued a profit warning for its oil and gas division.

Gambling stocks William Hill, Rank Group, GVC and 888 Holdings were weaker for the second day running after MPs recommended curbs on online casino games.

Babcock was down after an initiation at 'underweight' by Barclays, while Hunting gushed lower as it was cut to 'sell' at Goldman Sachs.

Market Movers

FTSE 100 (UKX) 7,379.95 0.14%
FTSE 250 (MCX) 20,241.48 -0.04%
techMARK (TASX) 3,954.05 -0.32%

FTSE 100 - Risers

Associated British Foods (ABF) 2,348.00p 4.40%
Glencore (GLEN) 256.95p 1.88%
Rolls-Royce Holdings (RR.) 747.80p 1.58%
Anglo American (AAL) 2,106.50p 1.27%
British American Tobacco (BATS) 2,819.50p 1.17%
Antofagasta (ANTO) 909.20p 1.16%
Aviva (AV.) 426.60p 1.09%
Schroders (SDR) 3,151.00p 0.99%
Carnival (CCL) 3,215.00p 0.91%
Royal Dutch Shell 'B' (RDSB) 2,322.00p 0.85%

FTSE 100 - Fallers

Rentokil Initial (RTO) 439.40p -1.66%
Ocado Group (OCDO) 1,332.50p -1.30%
Sage Group (SGE) 709.40p -1.03%
London Stock Exchange Group (LSE) 6,984.00p -0.94%
AstraZeneca (AZN) 7,415.00p -0.90%
Flutter Entertainment (FLTR) 7,866.00p -0.83%
Burberry Group (BRBY) 2,046.00p -0.78%
United Utilities Group (UU.) 857.80p -0.76%
TUI AG Reg Shs (DI) (TUI) 1,033.50p -0.72%
Experian (EXPN) 2,402.00p -0.70%

FTSE 250 - Risers

Wood Group (John) (WG.) 377.80p 3.20%
Euromoney Institutional Investor (ERM) 1,388.00p 2.21%
Vivo Energy (VVO) 127.60p 2.08%
Ferrexpo (FXPO) 134.35p 2.05%
TI Fluid Systems (TIFS) 197.60p 1.86%
St. Modwen Properties (SMP) 454.00p 1.68%
Watches of Switzerland Group (WOSG) 305.00p 1.67%
Clarkson (CKN) 2,845.00p 1.61%
PureTech Health (PRTC) 253.00p 1.61%
Ashmore Group (ASHM) 485.20p 1.51%

FTSE 250 - Fallers

William Hill (WMH) 167.35p -5.05%
Rank Group (RNK) 227.00p -4.82%
Babcock International Group (BAB) 526.80p -2.98%
Ascential (ASCL) 341.00p -2.40%
Senior (SNR) 183.70p -2.34%
Marshalls (MSLH) 709.00p -1.80%
Dixons Carphone (DC.) 124.15p -1.70%
PayPoint (PAY) 889.00p -1.66%
Playtech (PTEC) 392.95p -1.64%
888 Holdings (888) 153.00p -1.54%