London close: Stocks track gains on Wall Street
London stocks moved higher on Monday, tracking a record close on Wall Street at the end of last week, even as investors mulled a downgrade to UK growth forecasts and eyed more Brexit talks and the resumption of trade discussions between the US and China.
On a bullish note on the outlook for stocks in the US, last Friday strategists at Bank of America-Merrill Lynch told clients "don't sell in May", explaining that as debt markets continued to find a bid, so too would shares, predicting that the S&P 500 would "blow" past the 3,000 point mark.
For the Nasdaq Composite, BofA-ML said, the "only thing" that could stand in the way of a 'melt up' was a similar move in the US dollar and while the Greenback might break higher, they did not expect it to reach anything close to like a level that might jeopardise gains in tech stocks.
The FTSE 100 was up 0.17% at 7,440.66, while the pound was up 0.08% against the dollar at 1.29252 and 0.17% weaker versus the euro at 1.1567 ahead of the expected restart of Brexit talks between the government and the Labour Party.
Commenting on what lay in store for the next few days, IG market analyst Chris Beauchamp said: "The UK government faces a tough week as local elections take place. Both the Conservatives and Labour will view these as a test of sentiment ahead of European elections later in the month, and thus there will be little incentive to make progress in the never-ending cross-party Brexit talks.
"Cable continues to rally off last week’s lows but the market is clearly fretting about the lack of progress, given the drop in GBPUSD over the past six weeks."
Investors were also digesting the latest report from the EY Item Club, which cut its UK growth forecast for this year to 1.3% from a previous estimate of 1.5% growth, while its forecast for growth in 2020 was cut to 1.5% from 1.7%. EY said the downward revision for this year primarily reflects prolonged Brexit uncertainty following the decision to delay the UK’s exit from the EU to a flexible 31 October deadline.
Adding to the downbeat tone, data released by the European Commission showed economic sentiment in the UK deteriorated in April. The EC's economic sentiment indicator for the UK slipped to 99.3 this month from 100.8 in March.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The decision to delay the UK's departure from the European Union by six months has done little to revive confidence among business or consumers."
More broadly, relations between the US and China were in focus after US Treasury Secretary Steve Mnuchin said discussions between the two were entering a critical point as an American delegation heads to Beijing this week to finalise a deal.
As well as trade relations and Brexit talks, market participants were looking ahead to the Bank of England rate announcement on Thursday.
In equity markets, Ocado was the worst performer on the FTSE 100 throughout much of the session as it emerged that the fire that destroyed its warehouse this year was sparked by an electrical fault which caused a robot to catch fire.
Tesco nudged lower as it said IFRS16, the new financial accounting reporting standard on accounting for leases, for its 2019/20 financial year, increased group operating profit and margin, but reduced pre-tax profit and diluted earnings per share.
Steelmaker and miner Evraz retreated even as it first-quarter consolidated crude steel output climbed by 12.4% quarter on quarter to 3.5m tonnes.
Auto Trader fell as it appointed chief operating officer Nathan Coe as chief executive-designate after current boss Trevor Mather announced his intention to retire in 2020, while Homeserve was hit by a downgrade to 'reduce' from 'hold' at HSBC.
On the upside, shares in advertising giant WPP rose following an upgrade to 'overweight' from 'equalweight' at Barclays, which pointed to the stock's valuation, the Kantar disposal and "some confidence" in management's strategy to turn the business around. In addition, both Deutsche Bank and Credit Suisse hiked their price targets on the stock.
British Airways and Iberia parent IAG was also given a leg up by an upgrade, as UBS bumped the stock up to 'buy' from 'neutral'.
Ferrexpo was a high riser following heavy losses at the end of last week, as it rejected Deloitte's assertion that it delayed a review into donations to the Blooming Land charity in Ukraine in the latest exchange between the company and its former auditor over the affair.
AstraZeneca edged up as it said the EU's medicines regulator has recommended that the use of its ovarian cancer drug Lynparza be expanded.
Doorstep lender Provident Financial was also in the green as Non-Standard Finance extended the deadline for its £1.3bn hostile offer to 15 May and urged the company's shareholders to accept it.
Market Movers
FTSE 100 (UKX) 7,440.66 0.17%
FTSE 250 (MCX) 19,911.20 0.27%
techMARK (TASX) 3,625.20 0.62%
FTSE 100 - Risers
NMC Health (NMC) 2,915.00p 5.64%
TUI AG Reg Shs (DI) (TUI) 866.60p 2.65%
Barclays (BARC) 164.70p 2.27%
Melrose Industries (MRO) 205.30p 2.09%
International Consolidated Airlines Group SA (CDI) (IAG) 545.00p 1.98%
CRH (CRH) 2,568.00p 1.78%
Hikma Pharmaceuticals (HIK) 1,727.00p 1.74%
Smith (DS) (SMDS) 372.70p 1.66%
Aviva (AV.) 432.25p 1.63%
Scottish Mortgage Inv Trust (SMT) 532.50p 1.43%
FTSE 100 - Fallers
Croda International (CRDA) 5,153.00p -2.32%
Fresnillo (FRES) 741.40p -2.06%
Whitbread (WTB) 4,754.00p -2.02%
Pearson (PSON) 842.40p -1.89%
Auto Trader Group (AUTO) 570.20p -1.69%
Informa (INF) 777.60p -1.50%
Rightmove (RMV) 547.90p -1.33%
Compass Group (CPG) 1,745.00p -1.13%
Direct Line Insurance Group (DLG) 334.30p -1.09%
United Utilities Group (UU.) 838.40p -1.02%
FTSE 250 - Risers
Kier Group (KIE) 374.60p 5.82%
Galliford Try (GFRD) 541.50p 5.47%
Ferrexpo (FXPO) 201.90p 5.09%
Rank Group (RNK) 159.80p 3.90%
Provident Financial (PFG) 519.40p 3.84%
Spirent Communications (SPT) 157.00p 3.84%
Contour Global (GLO) 209.00p 3.42%
Genus (GNS) 2,388.00p 3.36%
CYBG (CYBG) 210.90p 2.98%
TI Fluid Systems (TIFS) 212.00p 2.91%
FTSE 250 - Fallers
Computacenter (CCC) 1,197.00p -6.12%
Acacia Mining (ACA) 140.10p -5.47%
Indivior (INDV) 39.00p -3.87%
Entertainment One Limited (ETO) 466.60p -3.57%
Homeserve (HSV) 1,095.00p -3.18%
CLS Holdings (CLI) 237.50p -3.06%
Centamin (DI) (CEY) 89.10p -2.30%
Stagecoach Group (SGC) 131.00p -1.80%
Hill & Smith Holdings (HILS) 1,282.00p -1.69%
Greene King (GNK) 692.60p -1.68%