London close: Stocks snap higher as trade tensions abate
London stocks snapped higher following news that the US would postpone a decision on imports of foreign cars by at least six months and some positive headlines around US-China trade talks, but analysts remained of a clearly cautious bent.
A decision on US auto imports had been expected by 18 May and had been weighing on investor sentiment alongside concerns around the trade talks between Washington and Beijing.
On top of that, according to US Treasury Secretary, Steve Mnuchin, an American trade delegation might be sent to China as early as during the following week and progress had been made in resolving the issue of tariffs on steel and aluminium imports from Canada and Mexico.
Just the day before, senior administration officials had told Axios that a deal with China was not "close" and that there was a risk of a long trade war.
The FTSE 100 was up 0.76% at 7,296.95, while the pound was down 0.3% against the US dollar and the euro at 1.2866 and 1.1483, respectively, as it emerged that Prime Minister Theresa May will give MPs another chance to vote on her Brexit plan in early June, regardless of whether the government and the Labour party manage to strike a deal by then.
Nonetheless, Brexit Secretary Steve Barclay appeared to indicate that plans for a series of indicative votes on various Brexit options had now been shelved.
Capturing the mood in markets, Michael Hewson at CMC Markets UK said: "The lack of any dip in the Japanese yen or gold suggests that, despite yesterday’s rebound, investors are yet to be convinced that the down move in equity markets of the last week or so is over.
"The fall in US and German bond yields, as well as some initial weakness early on in European equity trading today also bears out this line of thinking, with the underperformance in basic resource stocks and the Australian dollar reinforcing concerns about the health of the Chinese economy."
Regarding the latter, Chinese data out overnight covering retail sales, industrial production and investment during the month of April all came in below economists' forecasts, although somewhat ironically they were greeted by speculation that officials in Beijing might ramp up their stimulus in response.
Spreadex analyst Connor Campbell said: “Every key metric coming out of Beijing missed the mark. April’s fixed asset investment arrived at 6.1% against the 6.4% forecast; retail sales fell far faster than expected, at 7.2% against the previous month’s 8.7%; and industrial production limped in at a dismal 5.4%, well off the estimated 6.5%, and an alarming shift from March’s 8.5%.
"This latter figure caused a flurry of worry in the UK mining sector," he said.
In equity markets, miners initially retreated on the back of the China data, but the likes of Antofagasta, Anglo American and BHP finished the session little changed.
Travel company Tui gained even as it reported a widening of its losses for the first half, pointing to a weak demand environment in its markets and airlines segment. The group’s first-half underlying earnings before interest, tax and amortisation loss widened to €301m from €170m in H1 2018. However, it reaffirmed its outlook for FY19.
DIY chain owner Kingfisher retreated even as it maintained full-year guidance and posted a 0.8% rise in first quarter sales on a like-for-like basis.
Vesuvius was also in the red as it said the slowdown in growth since the fourth quarter of 2018 continued throughout the first quarter of this year.
Paper and packaging group DS Smith was knocked lower by a downgrade from Goodbody, which pointed to weak pricing. Peer Mondi was also on the back foot.
On the upside, Compass Group rallied after it said first-half profit rose more than 5% as the catering company gained new business in North America and added UK defence contracts.
CYBG advanced as it said it swung to a first-half pre-tax profit following the acquisition of Virgin Money.
FTSE 100 - Risers
Auto Trader Group (AUTO) 591.40p 3.83%
Compass Group (CPG) 1,778.50p 2.89%
DCC (DCC) 6,886.00p 2.47%
Rightmove (RMV) 561.10p 2.19%
Halma (HLMA) 1,779.50p 2.18%
Melrose Industries (MRO) 182.00p 2.13%
Micro Focus International (MCRO) 1,828.40p 2.11%
Coca-Cola HBC AG (CDI) (CCH) 2,795.00p 2.01%
Hiscox Limited (DI) (HSX) 1,602.00p 1.84%
TUI AG Reg Shs (DI) (TUI) 819.60p 1.79%
FTSE 100 - Fallers
Kingfisher (KGF) 233.00p -3.64%
SSE (SSE) 1,083.00p -2.52%
Smith (DS) (SMDS) 330.60p -2.22%
Smurfit Kappa Group (SKG) 2,164.00p -1.54%
National Grid (NG.) 842.40p -0.88%
Imperial Brands (IMB) 2,129.00p -0.82%
Severn Trent (SVT) 1,966.50p -0.76%
RSA Insurance Group (RSA) 551.40p -0.76%
BT Group (BT.A) 205.20p -0.73%
Paddy Power Betfair (PPB) 5,854.00p -0.68%
FTSE 250 - Risers
Indivior (INDV) 52.38p 16.60%
Metro Bank (MTRO) 584.00p 14.96%
Plus500 Ltd (DI) (PLUS) 605.40p 6.92%
CYBG (CYBG) 198.45p 3.29%
Millennium & Copthorne Hotels (MLC) 456.00p 3.15%
Saga (SAGA) 55.80p 2.67%
Spirent Communications (SPT) 156.60p 2.35%
Greene King (GNK) 626.40p 2.29%
Ascential (ASCL) 370.60p 2.26%
Aveva Group (AVV) 3,320.00p 2.15%
FTSE 250 - Fallers
Provident Financial (PFG) 450.00p -6.48%
International Public Partnerships Ltd. (INPP) 157.00p -3.92%
888 Holdings (888) 131.30p -3.24%
IP Group (IPO) 90.60p -3.23%
HICL Infrastructure (HICL) 160.20p -3.14%
Sirius Minerals (SXX) 17.10p -3.01%
Syncona Limited NPV (SYNC) 252.00p -2.89%
Stobart Group Ltd. (STOB) 122.80p -2.69%
William Hill (WMH) 134.65p -2.64%
Amigo Holdings (AMGO) 230.35p -2.58%