London close: Stocks end up as sterling drops; Burberry slumps
London stocks ended in the green on Thursday, boosted by a weaker pound, as investors shrugged off heightening trade tensions between the US and China.
The FTSE 100 closed up 0.8% at 7,353.51 as sterling neared a four-month low, dropping 0.4% against the dollar to 1.2793 and 0.2% versus the euro to 1.1446 after Prime Minister Theresa May agreed to set a timetable for the election of her successor following the Brexit vote next month.
Chris Beauchamp, chief market analyst at IG, said: "For markets this is ramping up the likeliness of a hard Brexit, as pushes for a more hardline Brexiteer to take over is raising fears that we could see the UK leave the EU without a deal in October.
"Today’s decision will drive a wedge between those who seek a hardline Brexit and everyone else, for moderates will know that a new conservative leader could lead the country out of the EU irrespective of whether a deal is in place."
Away from Brexit, investors were largely brushing off US President Trump's declaration of a national emergency to protect US computer networks from "foreign adversaries" - a move widely seen as targeting China’s Huawei.
CMC Markets analyst Michael Hewson said Trump’s latest decision paves the way for a ban on China’s biggest telecoms provider.
China hit back by warning that it could retaliate. Gao Feng, the country’s commerce ministry spokesman, accused the US of acting unfairly by using security laws to restrict Huawei from buying components from US companies.
"China has emphasised many times that the concept of national security should not be abused, and that it should not be used as a tool for trade protectionism. China will take all the necessary measures to resolutely safeguard the legitimate rights of Chinese firms," he said.
In equity markets, 3i Group gained as it reported a total return of 18% for last year, while Anglo American advanced after it won approval for the construction of a new custom-built diamond recovery vessel.
Anglo was also up as Morgan Stanley said it was remaining 'overweight' the stock as it sees "material" upside again following the pull-back. It said Anglo offers a balanced commodity exposure, reasonable growth, technology leadership, strategic assets, the ability to offset inflation and an attractive valuation.
Shares in Genus surged as the animal genetics company announced a strategic porcine collaboration in China, the world's largest pork market, while Sophos rallied as the cyber security group’s full-year results beat expectations following a string of disappointing updates.
On the downside, ex-dividends took their toll, with Tesco, GlaxoSmithKline, HSBC, Intertek, Royal Dutch Shell, Ascential, Balfour Beatty, Hochschild Mining, Inchcape, PageGroup, Renewables Infrastructure, Saga, Ted Baker and Vivo Energy all in the frame.
Burberry was under the cosh as it said underlying profit was unchanged last year as cost cuts offset a decline in revenue at the luxury clothing brand. Adjusted operating profit for the year to the end of March fell 6% to £438m but excluding currency movements profit was flat. Revenue at constant exchange rates fell 1% to £2.72bn and operating costs fell 1% to £1.42bn.
Ian Forrest, investment research analyst at The Share Centre, said the results were being seen as "disappointing", with weaker sales growth, especially in its key growth markets in Asia. However, he said investors should not overlook the positives in the statement.
"The company confirmed its previous full-year guidance, raised its target for cost savings and announced a £150mn share buyback along with an increase in the dividend. The increased use of social media such as Instagram should also help to drive sales with younger consumers."
National Grid retreated as it said full-year profit declined by nearly a third, while Metro Bank tumbled after the Financial Times said it was likely to price its £350m share placement at a discount of up to 10% to the current market price. After the close, Metro confirmed that the new shares would be sold at 500p each.
Utilities were under pressure with United Utilities, Severn Trent and SSE all trading lower as Deutsche Bank said it was worried that political risks were rising in the UK, while Just Group slid as it reported a 55% drop in first-quarter new business sales as retirement income slumped.
TUI was in the red as small-cap peer Thomas Cook tanked after saying that losses widened in the first half of the year to £1.5bn from £303m. It highlighted challenging" trading conditions and confirmed that several bids had been received for all and part of its airline.
FTSE 100 - Risers
Hiscox Limited (DI) (HSX) 1,666.90p 3.92%
Admiral Group (ADM) 2,125.00p 3.56%
Experian (EXPN) 2,315.00p 3.39%
Hargreaves Lansdown (HL.) 2,421.00p 3.33%
3i Group (III) 1,086.50p 3.08%
Prudential (PRU) 1,678.50p 3.04%
Anglo American (AAL) 1,972.00p 3.03%
St James's Place (STJ) 1,143.00p 2.97%
Standard Chartered (STAN) 694.80p 2.54%
Phoenix Group Holdings (PHNX) 697.20p 2.53%
FTSE 100 - Fallers
Burberry Group (BRBY) 1,816.50p -5.46%
United Utilities Group (UU.) 773.40p -3.57%
Marks & Spencer Group (MKS) 264.90p -3.46%
National Grid (NG.) 814.50p -3.36%
Severn Trent (SVT) 1,901.50p -3.31%
TUI AG Reg Shs (DI) (TUI) 799.00p -2.51%
Fresnillo (FRES) 726.40p -2.47%
SSE (SSE) 1,059.00p -2.22%
easyJet (EZJ) 973.00p -2.09%
Kingfisher (KGF) 228.70p -1.85%
FTSE 250 - Risers
Genus (GNS) 2,898.00p 14.64%
Sophos Group (SOPH) 389.20p 14.47%
Premier Oil (PMO) 98.52p 9.03%
Cairn Energy (CNE) 168.10p 5.99%
Aston Martin Lagonda Global Holdings (AML) 880.00p 5.65%
Investec (INVP) 506.00p 5.13%
Tullow Oil (TLW) 227.10p 4.17%
Aveva Group (AVV) 3,446.00p 3.80%
Ascential (ASCL) 384.00p 3.62%
Funding Circle Holdings (FCH) 255.00p 3.45%
FTSE 250 - Fallers
Metro Bank (MTRO) 537.50p -7.96%
Just Group (JUST) 59.95p -7.63%
Clarkson (CKN) 2,200.00p -4.35%
Inchcape (INCH) 568.00p -4.22%
Restaurant Group (RTN) 129.40p -4.01%
Vivo Energy (VVO) 115.60p -3.99%
Saga (SAGA) 53.60p -3.94%
Pennon Group (PNN) 701.80p -3.39%
Euromoney Institutional Investor (ERM) 1,372.00p -2.83%
Civitas Social Housing (CSH) 85.90p -2.50%