London open: Stocks rise as US-China tensions ease, pound drops

London stocks rose in early trade on Monday, helped along by a weaker pound as the dollar rallied on the back of an easing of tensions between the US and China, which also helped to boost broader market sentiment.

At 0835 BST, the FTSE 100 was up 0.5% to 7,815.61, breaking through the 7,800 mark to a fresh all-time high, as the pound fell 0.4% versus the dollar to 1.3415 and was flat against the euro at 1.1442. A weaker pound tends to lift the top-flight index as around 70% of its constituents derive most of their earnings from overseas.

Investors breathed a sigh of relief after US Treasury Secretary Steve Mnuchin said over the weekend that the US would hold off from imposing tariffs on China, which had originally sparked fears of a trade war between the two.

Mnuchin said that a trade war was "on hold" as both countries agree to work on a wider trade agreement.

Neil Wilson, chief market analyst at Markets.com, said: "The FTSE 100 notched up a fresh record high, rising clear of 7800 for the first time as the feel-good factor from the trade war truce bolstered risk sentiment and a weaker pound delivered the usual shot of adrenalin for the blue chips. It looks like progress on talks between China and the US means we are not about to descend into a punitive trade war. Whilst there is still long way to go and nothing is agreed until everything is agreed, there has undoubtedly been solid progress and the sense of relief in equity markets is palpable."

Wilson added that the FTSE's recent gains are probably more attributable to a weaker pound as the dollar rallies across the board.

"Cable sank as low as 1.341, its weakest level since December as the dollar index jumped towards the 94 level. If support at 1.34 goes, 1.33 comes into view pretty quickly. It's this slide in sterling which seems to be buoying the FTSE as much as the broader risk-on sentiment."

Elsewhere, the latest house price update from Rightmove showed that asking prices for newly marketed properties climbed 0.8% on the month in May to a new record high of £308,075, up from £305,732.

However, asking prices in London subsided 0.2% on last year and across the South East as a whole dropped 0.1% - the first fall since 2011.

In corporate news, pharmaceuticals giant AstraZeneca rallied after saying it has received US regulatory approval for its Lokelma treatment for hyperkalaemia, an increased level of potassium levels in the blood suffered by many people with chronic kidney disease and heart disease. It also announced that it had submitted a new drug application in Japan for a diabetes treatment, following recent approval in Europe.

Budget airline Ryanair flew a little lower as it posted a 10% jump in full-year pre-tax profit but said its outlook for FY19 was on the "pessimistic side of cautious" due to rising costs and flat fare growth as it cut its full-year guidance.

NewRiver gained ground after confirming that it has entered a period of exclusivity with Hawthorn Leisure Holdings and its major shareholder regarding a potential acquisition of the business on Monday, following press comment.

Bank of Georgia was in focus after posting an 18.8% increase in first-quarter profit.

In broker note action, G4S was lifted by an initiation at ‘buy’ at Kepler Cheuvreux, while Tesco was up as Citi resumed its coverage at ‘buy’ and Ocado advanced after an upgrade to ‘add’ at AlphaValue.

Rotork was knocked lower by a downgrade to ‘underperform’ at Credit Suisse, while IWG was managing to hold its head above water despite a downgrade to ‘hold’ at Stifel.

Market Movers

FTSE 100 (UKX) 7,815.61 0.47%
FTSE 250 (MCX) 21,047.15 0.27%
techMARK (TASX) 3,520.13 0.44%

FTSE 100 - Risers

G4S (GFS) 272.40p 1.83%
AstraZeneca (AZN) 5,326.00p 1.62%
Smurfit Kappa Group (SKG) 3,004.00p 1.21%
Johnson Matthey (JMAT) 3,520.00p 1.15%
Sainsbury (J) (SBRY) 308.90p 1.11%
Tesco (TSCO) 248.20p 0.98%
Coca-Cola HBC AG (CDI) (CCH) 2,608.00p 0.93%
Barclays (BARC) 209.35p 0.89%
Direct Line Insurance Group (DLG) 375.10p 0.89%
Standard Chartered (STAN) 756.80p 0.87%

FTSE 100 - Fallers

Micro Focus International (MCRO) 1,351.00p -0.88%
Mediclinic International (MDC) 658.60p -0.87%
Rio Tinto (RIO) 4,309.50p -0.70%
Evraz (EVR) 499.00p -0.64%
Fresnillo (FRES) 1,267.00p -0.59%
Randgold Resources Ltd. (RRS) 5,782.00p -0.55%
easyJet (EZJ) 1,739.00p -0.32%
BHP Billiton (BLT) 1,734.80p -0.18%
Smiths Group (SMIN) 1,698.50p -0.09%
Antofagasta (ANTO) 1,082.63p -0.08%

FTSE 250 - Risers

Drax Group (DRX) 358.00p 2.23%
Marshalls (MSLH) 447.40p 2.15%
Computacenter (CCC) 1,330.00p 1.84%
Shaftesbury (SHB) 999.00p 1.32%
Synthomer (SYNT) 511.00p 1.29%
Senior (SNR) 314.60p 1.29%
BCA Marketplace (BCA) 191.40p 1.16%
Stobart Group Ltd. (STOB) 249.82p 1.14%
Fidelity European Values (FEV) 225.50p 1.12%
Bodycote (BOY) 950.50p 1.06%

FTSE 250 - Fallers

Rotork (ROR) 346.40p -2.28%
Assura (AGR) 58.70p -1.01%
OneSavings Bank (OSB) 415.20p -0.95%
Sirius Minerals (SXX) 32.63p -0.93%
Fisher (James) & Sons (FSJ) 1,732.00p -0.92%
Petrofac Ltd. (PFC) 596.00p -0.83%
Hastings Group Holdings (HSTG) 268.00p -0.81%
Sports Direct International (SPD) 418.40p -0.55%
GVC Holdings (GVC) 967.00p -0.51%
Capita (CPI) 139.70p -0.50%