London open: Next boosts retailers but trade worries remain

London stocks nudged a touch higher in early trade on Tuesday as the retail sector was boosted by a guidance upgrade from Next, but gains were limited amid ongoing concerns about the US-China trade conflict.

At 0840 BST, the FTSE 100 was up 0.1% to 7,462.74, while the pound was flat against the dollar at 1.3120 and down 0.1% versus the euro at 1.1156.

Investors were keeping an eye on developments between the US and China following reports that China’s vice commerce minister Wang Shouwen said at a news conferencethat it was difficult to go ahead with negotiations at the moment and that the discussions would depend on the will of the US.

Analyst Jasper Lawler at London Capital Group said: "Asian markets struggled as investors digested escalated tensions in the next chapter of the growing trade spat. Both sides are digging their feet in, with tariffs being levied. Hope for negotiating a way out of this impasse is declining. The latest market moves highlight just how difficult it is to trade these escalating trade tensions.

"On the announcement of these latest tariffs the markets moved higher, given that the tariffs were lower than what traders had been expecting. Fast forward to the application of the ‘lower’ tariffs and the market dives. The markets have tried hard to shrug off the implications of an escalating trade spat on global trade and growth but this is becoming harder with each fresh round of tariffs and will slowly but surely take its toll on investor sentiment."

Meanwhile, political instability in the US was also a concern following reports on Monday that Deputy Attorney General Rod Rosenstein was about to quit or be sacked. These reports were later dismissed by the White House, however, with Rosenstein due to meet President Trump on Thursday.

Closer to home, Brexit was still the main focus as PM Theresa May prepared to meet her US counterpart on Wednesday at the United Nations general assembly in New York to discuss trade post-Brexit.

In corporate news, Next was the standout gainer, surging 8% as it raised its guidance for annual profit after trading in August and early September was better than expected. Group pre-tax profit will be £727m in 2018, broadly in line with the year before, Next predicted. In May it estimated profit would fall to £717m.

Marks & Spencer and Primark owner Associated British Foods were also in the green.

Glencore was a high riser after saying it will buy back more of its shares worth up to $1bn, increasing the size of an existing buyback programme. It also benefited from a broker upgrade.

Imperial Brands gained ground after saying its tobacco business was enjoying "much stronger" second-half sales and announcing plans to launch its heat-not-burn tobacco product early in 2019.

Close Brothers nudged up after its final results were in line with expectations, but British American Tobacco lost ground as it promoted Jack Bowles, currently chief operating officer of its international business, to the role of chief executive, succeeding Nicandro Durante.

SSE nudged down as it announced the acquisition of Sea green Wind Energy and Irn Bru maker AG Barr fizzed lower even as it reported a rise in first-half revenue and profit.

Card Factory tumbled as it posted a drop in underlying pre-tax profit and like-for-like sales due to extreme weather and consumer caution, but said overall revenue rose and announced a special dividend.

In broker note action, Glencore was raised to ‘overweight’ at Morgan Stanley, while BHP Billiton was downgraded to ‘equalweight’.

Savills was lifted by an upgrade to 'buy' at Peel Hunt, but JD Wetherspoon was cut to ‘hold’. Spire Healthcare was resumed at ‘hold’ by Liberum and Auto Trader was cut to ‘equalweight’ at Barclays.

Sky was downgraded to ‘hold’ at Jefferies and Smiths was cut to ‘hold’ at Deutsche Bank.

Market Movers

FTSE 100 (UKX) 7,462.74 0.06%
FTSE 250 (MCX) 20,489.30 0.01%
techMARK (TASX) 3,494.41 0.14%

FTSE 100 - Risers

Next (NXT) 5,550.00p 8.31%
Glencore (GLEN) 336.70p 2.03%
Marks & Spencer Group (MKS) 289.40p 1.76%
Imperial Brands (IMB) 2,645.50p 1.38%
Associated British Foods (ABF) 2,281.00p 1.02%
Royal Dutch Shell 'A' (RDSA) 2,615.00p 0.79%
Shire Plc (SHP) 4,529.50p 0.76%
Royal Dutch Shell 'B' (RDSB) 2,650.50p 0.70%
BP (BP.) 573.90p 0.67%
Scottish Mortgage Inv Trust (SMT) 538.80p 0.60%

FTSE 100 - Fallers

Antofagasta (ANTO) 861.00p -1.26%
British American Tobacco (BATS) 3,504.00p -1.13%
Informa (INF) 739.20p -1.02%
United Utilities Group (UU.) 682.50p -0.89%
Pearson (PSON) 880.20p -0.88%
Relx plc (REL) 1,553.50p -0.86%
easyJet (EZJ) 1,369.50p -0.83%
International Consolidated Airlines Group SA (CDI) (IAG) 681.80p -0.70%
WPP (WPP) 1,135.50p -0.66%
Rolls-Royce Holdings (RR.) 991.00p -0.64%

FTSE 250 - Risers

Savills (SVS) 808.00p 4.26%
McCarthy & Stone (MCS) 126.40p 4.20%
Thomas Cook Group (TCG) 58.05p 3.66%
Ferrexpo (FXPO) 191.95p 3.03%
TBC Bank Group (TBCG) 1,644.00p 1.99%
Sophos Group (SOPH) 482.60p 1.77%
Centamin (DI) (CEY) 107.12p 1.63%
Tullow Oil (TLW) 258.10p 1.61%
Premier Oil (PMO) 131.31p 1.55%
Ultra Electronics Holdings (ULE) 1,642.42p 1.38%

FTSE 250 - Fallers

Card Factory (CARD) 167.60p -9.99%
Auto Trader Group (AUTO) 454.00p -2.64%
NewRiver REIT (NRR) 253.50p -2.12%
Wetherspoon (J.D.) (JDW) 1,291.00p -1.97%
Capita (CPI) 137.95p -1.92%
Spire Healthcare Group (SPI) 156.10p -1.64%
TalkTalk Telecom Group (TALK) 131.20p -1.43%
Mediclinic International (MDC) 445.60p -1.31%
Kaz Minerals (KAZ) 572.20p -1.24%
IG Group Holdings (IGG) 768.50p -1.09%