London close: Stocks edge higher on US-China trade talk hopes
London stocks managed to eke out a small bounce on Wednesday, even as investors sifted through disappointing updates from the likes of ITV, Imperial Brands and JD Wetherspoon, after the White House said it had received "an indication" from China that it wants to reach a trade deal.
"Our teams are in continued negotiations. They're going to sit down tomorrow. We'll see what happens from there," White House spokeswoman Sarah Sanders said.
At the close, the FTSE 100 was up 0.15% at 7,271.0, while the pound was 0.45% lower against the US dollar to 1.30184 and 0.62% weaker versus the euro at 1.1611 amid reports that cross-party talks on Brexit aren't going well.
Ironically, Spreadex analyst Connor Campbell said the FTSE would have potentially been in worse shape if sterling weren’t struggling with its own political migraine.
"The hopes of a cross-party Brexit compromise have dwindled to the point of non-existence, especially with both Labour and the Tories forced to turn their attentions to protecting themselves ahead of the month’s European elections following their respective local election losses."
He said the currency was taking a hit as investors have "little idea as to what the next steps would be if the talks have indeed completely collapsed".
Indeed, the Prime Minister was reportedly to meet 1922 Committee chairman Graham Brady later in the evening.
In the background meanwhile, according to a sourced report from Reuters, on the previous Friday China had backtracked on nearly all aspects of the trade deal with the US. Officials in Beijing had deleted their commitments to changing laws to resolve core complaints that caused the US to launch a trade war from each of the seven chapters of the draft agreement.
Market participants were also digesting data out of China earlier which painted a mixed picture on trade. China’s exports dropped 2.7% in April, while imports grew by 4%, leaving a trade surplus of $13.84bn. Economists had pencilled in a 3% uptick in exports and a 2.1% drop in imports.
"Export figures would likely fall further should Trump following through on threats to raise tariffs this week," Wilson said.
On home shores, the latest figures from lender Halifax showed that UK house prices rose 1.1% on the month in April compared to a 1.3% drop in March, comfortably beating expectations for a 1.6% decline.
On the year, house prices were up 5% in the three months to April versus expectations for a 4.5% increase and following a 2.6% jump in the three months to March.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the surge in house prices reported by Halifax cannot be reconciled with any other evidence from the housing market.
"Less volatile measures paint a far more subdued picture. For instance, Rightmove’s measure of online asking prices fell by 0.1% year-over-year in April, while Nationwide’s measure rose by a mere 0.9%," he said.
Elsewhere, the latest figures from the British Retail Consortium and KPMG showed that retail sales rose by 3.7% on a like-for-like basis in April compared with a 4.2% drop in the same month last year. On a total basis, sales were up 4.1% in April following a 3.1% fall in April 2018. However, the two-year average growth, which corrects for the Easter distortion, was 0.4% per year, which is a slowdown from March's equivalent of 0.9%.
In equity markets, broadcaster ITV was the worst performer after it said total external revenue declined 4% in the three months to the end of March to £743m.
Imperial Brands retreated as it reported a 3.8% rise in net revenues for the first half of its fiscal year to £3.66bn, but a 0.2% dip in total adjusted operating profits to £1.62bn and a 6.9% decline in tobacco volumes.
Direct Line fell as the insurer posted a 2.1% dip in first-quarter gross written premiums as a reduction in the motor and home partnerships divisions offset increases elsewhere.
JD Wetherspoon was on the back foot as it said LFL sales rose 7.6% in the third quarter, while total sales were up 8.4%. The LFL sales growth was a slowdown from the 9.6% rate reported for the six weeks to 10 March and some analysts also pointed out that net debt of £746m was slightly higher than expected.
On the upside, builders' merchants were having a good day, with Grafton and Travis Perkins both higher after trading updates. Grafton reported a 6.1% increase in group revenue for the four months to 30 April and Travis Perkins said first-quarter group like-for-like sales jumped 7.3%.
Restaurant Group fell as Peel Hunt analysts downgraded the stock from 'add' to 'hold' as they argued that the shares are now fairly valued amid concern over the company's reliance on its Wagamama chain, while Victrex was lower after being cut to 'neutral' at UBS ahead of its interim results release on Monday
AJ Bell led the risers, with Sirius Minerals also on the way up even as analysts at Berenberg cut the stock's price target from 40p to 35p and warned that shareholders may face some dilution in the short term. Nevertheless, the same analysts reiterated a 'buy' rating and stated that they remain positive on the fertiliser developer's longer-term credentials.
Market Movers
FTSE 100 (UKX) 7,271.00 0.15%
FTSE 250 (MCX) 19,531.91 0.34%
techMARK (TASX) 3,571.39 0.03%
FTSE 100 - Risers
Micro Focus International (MCRO) 1,812.00p 3.86%
Informa (INF) 786.00p 3.42%
Hargreaves Lansdown (HL.) 2,321.00p 2.16%
Reckitt Benckiser Group (RB.) 6,112.00p 1.88%
Croda International (CRDA) 5,125.00p 1.79%
Rightmove (RMV) 556.30p 1.76%
Sage Group (SGE) 719.80p 1.75%
Royal Dutch Shell 'B' (RDSB) 2,418.00p 1.75%
Intertek Group (ITRK) 5,214.00p 1.72%
Relx plc (REL) 1,743.50p 1.60%
FTSE 100 - Fallers
ITV (ITV) 123.60p -6.08%
Imperial Brands (IMB) 2,197.00p -5.61%
TUI AG Reg Shs (DI) (TUI) 820.20p -3.69%
easyJet (EZJ) 1,052.50p -2.82%
SSE (SSE) 1,124.00p -2.77%
International Consolidated Airlines Group SA (CDI) (IAG) 502.00p -2.60%
BT Group (BT.A) 219.25p -2.51%
Persimmon (PSN) 2,101.00p -2.46%
Sainsbury (J) (SBRY) 208.90p -2.34%
United Utilities Group (UU.) 791.60p -2.27%
FTSE 250 - Risers
Indivior (INDV) 41.33p 6.30%
Sirius Minerals (SXX) 16.11p 5.92%
Sabre Insurance Group (SBRE) 282.71p 5.29%
Cairn Energy (CNE) 162.70p 5.10%
TBC Bank Group (TBCG) 1,702.00p 4.93%
Galliford Try (GFRD) 573.00p 4.18%
AJ Bell (AJB) 466.00p 4.02%
Syncona Limited NPV (SYNC) 249.90p 3.69%
Grafton Group Units (GFTU) 900.00p 3.45%
Travis Perkins (TPK) 1,451.00p 3.35%
FTSE 250 - Fallers
Metro Bank (MTRO) 584.00p -7.74%
Wetherspoon (J.D.) (JDW) 1,286.00p -4.39%
Kier Group (KIE) 346.00p -3.46%
Hammerson (HMSO) 291.70p -3.38%
Saga (SAGA) 57.20p -3.05%
Pennon Group (PNN) 715.80p -3.01%
Just Group (JUST) 65.35p -2.83%
Wizz Air Holdings (WIZZ) 3,339.00p -2.62%
Rank Group (RNK) 155.80p -2.38%
Playtech (PTEC) 395.60p -2.18%