London close: Hope springs eternal as shares recoup losses
London stocks recouped most of the prior day's downdraft as investors digested UK jobs data and somewhat constructive comments from the US President on the Sino-US trade spat.
The FTSE 100 was up 1.09% at 7,241.60 as data from the Office for National Statistics showed that the UK unemployment rate ticked down to 3.8% in the three months to March from 3.9%, marking its lowest level since the end of 1974. Meanwhile, wages continued to grow, but at a slightly slower pace.
In parallel, front month Brent crude futures rose 1.64% to $71.40 a barrel on the ICE following reports of drone attacks against a Saudi pipeline.
Ben Brettell, senior economist at Hargreaves Lansdown, called the UK labour market “remarkably resilient” given the uncertainty over Brexit.
Speaking of which, in the afternoon the Cabinet backed Theresa May continuing with cross-party Brexit talks, with the aim now being to pass the legislation needed to leave the European Union before Parliament's summer recess. The pound was little changed, drifting down by 0.18% against the euro to 1.1526.
From across the Pond, commenting on US Treasury Secretary Steven Mnuchin's return from trade talks in China, overnight Donald Trump said: "He just got back from China. We’ll let you know in about three or four weeks whether or not it was successful […] But I have a feeling it’s going to be very successful."
Also helping to prop up sentiment was news that Trump is prepared to meet his Chinese counterpart Xi Jinping at a G20 summit in Japan next month.
Investors still appeared to be betting that a deal will be struck; nonetheless, according to the latest survey from Bank of America-Merrill Lynch, roughly a third of fund managers canvassed globally had already taken out protection against a possible drop in share prices.
In the words of IG's Josh Mahony "there is clearly a substantial degree of anxiety inherent within markets over the possibility that US-China trade talks return to square one.
"Today's gains are as much a reflection of the fact while both sides appear to be moving further apart, Trump's apparent willingness to resume talks highlights that there is a chance that talks could suddenly get back on track."
On a sombre note, albeit somewhat positive, strategists at Credit Suisse noted that unlike a year ago, the US central bank was no longer tightening nor China deleveraging.
Hence, any 'shock' to the economy from the trade spat would be less severe than in 2018, they said.
In equity markets, Spirax-Sarco rallied ahead of its inclusion in an MSCI index series, while DCC gained after it said annual pre-tax profit rose 3.3% as acquisitions helped the sales and support services group overcome mild weather that affected its heating businesses.
FTSE 250 baker Greggs saw its shares rally as it said sales and underlying profits for 2019 will be "materially higher" than it had expected, helped by strong demand for its vegan sausage rolls. In an update for the first 19 weeks of the year, the group said total sales were up 15.1% versus 4.7% growth in 2018, while company-managed shop like-for-like sales were 11.1% higher compared to 1% growth in 2018.
Vodafone surrendered early gains after it cut its full-year dividend to 9 eurocents a share from 15 and its boss told journalists that: "There could be further downsides ahead of us [...] on that basis you want to make sure you have sufficient headroom."
Richard Hunter, head of markets at Interactive Investor, argued that while there is "a long list of reasons to be uncheerful" about the results, there are also grounds for optimism over Vodafone's ambitions.
"The reduction to the dividend is prudent, given the enormous constraints on cash flow, not to mention that dividend cover had slipped to unsustainable levels. Even after the cut, the yield will remain punchy and the group has committed to returning to a progressive policy."
EI Group fizzed higher after the pub operator reported a rise in interim underlying pre-tax profit, while Standard Life Aberdeen gained ground as it posted a 3% increase in assets under management and administration as at 31 March 2019 to £568.9bn, helped by positive market movements.
On the downside, shares in Renishaw tumbled as the metrology and healthcare technology group said pre-tax profits for the nine months to-end March 2019 fell 18.8%, while Landsec retreated as it said a "significant" drop in the value of its retail assets led to wider full-year pre-tax losses.
FTSE 100 - Risers
Spirax-Sarco Engineering (SPX) 8,415.00p 4.40%
Evraz (EVR) 580.40p 4.31%
DCC (DCC) 6,714.00p 3.61%
Rio Tinto (RIO) 4,505.00p 3.14%
TUI AG Reg Shs (DI) (TUI) 805.20p 3.10%
Antofagasta (ANTO) 825.40p 2.76%
Burberry Group (BRBY) 1,908.50p 2.66%
Micro Focus International (MCRO) 1,790.60p 2.52%
Anglo American (AAL) 1,910.20p 2.48%
Hargreaves Lansdown (HL.) 2,311.00p 2.44%
FTSE 100 - Fallers
Ocado Group (OCDO) 1,263.00p -4.17%
Vodafone Group (VOD) 126.84p -3.75%
easyJet (EZJ) 999.20p -1.57%
Land Securities Group (LAND) 876.00p -1.41%
Imperial Brands (IMB) 2,149.00p -1.15%
British Land Company (BLND) 560.40p -0.57%
Centrica (CNA) 94.88p -0.44%
SSE (SSE) 1,111.50p -0.36%
Bunzl (BNZL) 2,095.00p -0.33%
Unilever (ULVR) 4,640.50p -0.19%
FTSE 250 - Risers
Greggs (GRG) 2,060.00p 15.08%
Euromoney Institutional Investor (ERM) 1,390.00p 8.42%
Metro Bank (MTRO) 508.00p 6.95%
EI Group (EIG) 223.60p 6.48%
Kier Group (KIE) 339.60p 5.53%
Indivior (INDV) 45.00p 4.84%
Hunting (HTG) 565.50p 4.63%
Ferrexpo (FXPO) 218.00p 4.58%
Intu Properties (INTU) 97.76p 4.38%
G4S (GFS) 219.00p 4.19%
FTSE 250 - Fallers
Renishaw (RSW) 3,880.00p -6.43%
AJ Bell (AJB) 420.00p -5.62%
IG Group Holdings (IGG) 478.00p -3.57%
Daejan Holdings (DJAN) 5,660.00p -2.08%
Aston Martin Lagonda Global Holdings (AML) 818.80p -1.94%
Bank of Georgia Group (BGEO) 1,658.00p -1.54%
Vivo Energy (VVO) 123.00p -1.44%
Rank Group (RNK) 157.20p -1.40%
Go-Ahead Group (GOG) 1,871.00p -1.37%
Contour Global (GLO) 202.00p -1.23%