London close: Stocks flat as traders mull US-China trade talk news
London stocks were little changed by the end of the trading session as investors sifted through the latest reports around Sino-US trade talks against a backdrop of slightly less dovish signals from the Federal Reserve.
The FTSE 100 dipped 0.08% to 7,416.39, while the pound was essentially flat versus the US dollar at 1.26957 and barely 0.1% lower versus the euro to 1.1151.
Sentiment got a little boost mid-morning after US Treasury Secretary Steve Mnuchin told CNBC that progress in trade talks with China was possible, with Bloomberg reporting shortly afterwards that the US might be willing to suspend the next round of tariffs on an additional $300bn of Chinese imports.
Bloomberg cited people familiar with the matter as saying that the decision, which was still under consideration, may be announced after a meeting between Presidents Donald Trump and Xi Jinping at the G20 meeting in Japan on Saturday.
A few hours later, the US President told CNBC that failing progress on a trade deal following his meeting with Chinese President Xi Jinping the US administration would place tariffs on more Chinese goods.
Market participants were also mulling comments from Fed chairman Jerome Powell and St Louis Fed President James Bullard on Tuesday. Speaking at the Council of Foreign Relations, Powell said that while there is greater uncertainty about trade and the global economy, there is no indication of how serious this might be or how long it might last.
"The question my colleagues and I are grappling with is whether these uncertainties will continue to weigh on the outlook and thus call for additional policy accommodation,” Powell said.
Powell also explicitly said his message was meant to be exactly the same as that following the last Federal Open Market Commitee meeting.
For his part, Bullard said on Bloomberg TV that a 50 basis points rate cut at the July FOMC would be "overdone".
Oanda analyst Craig Erlam said: "Investors have been too keen to believe that the Fed has entered into full easing mode, even though policy makers have been very reluctant to confirm, the economy is still strong and trade war risks are yet to fully materialise. Powell and Bullard both sought to manage expectations on Tuesday, much to the disappointment of the markets and I'm sure, Trump."
On home shores, comments by Bank of England governor Mark Carney were in focus after he told the Treasury Select Committee that the BoE would likely back a stimulus package in the event of a no-deal Brexit.
Investors were also sifting through the latest figures from UK Finance, which showed that house purchase mortgage approvals fell to 42,384 in May from a more than two-year high of 42,898 in April, coming in above consensus expectations of 41,000.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The modest decline in mortgage approvals in May does little to change the record of surprising strength in the face of elevated economic and political uncertainty. Approvals for house purchases - i.e. excluding remortgaging- conformably exceeded their 39.9K average of the previous 12 months."
In equity markets, steelmaker Evraz rallied after the largest steelmaker in the US, Nucor, hiked its prices.
Wood Group advanced as it said its performance in the first half was up on the prior year, while BCA Marketplace gained as private equity firm TDR Capital confirmed that it has made a £1.9bn offer for the car auctioneer and WeBuyAnyCar.com owner. The company also posted a jump in full-year revenue and profit.
Bus and rail operator Stagecoach pushed higher as it reported a 30% increase in full-year pre-tax profit and said it has no plans to bid for any new UK rail franchises after operations end in November. The company also announced that deputy chairman Will Whitehorn will step down in June 2020 after nine years in the job.
Distribution and outsourcing group Bunzl fell as as it said expectations for 2019 remain unchanged, with overall trading consistent with the slowing underlying revenue growth indicated at the first-quarter trading update.
In broker note action, Ted Baker was hit by a downgrade to 'sector perform' at RBC Capital Markets.
Hargreaves Lansdown was upgraded to 'hold' at Deutsche Bank and Jupiter Fund Management was upgraded to 'buy' at Peel Hunt.
Elementis was initiated at 'hold' by Stifel. United Utilities and Pennon were started at 'hold' by Jefferies, while Severn Trent was initiated at 'buy'.
FTSE 100 - Risers
Evraz (EVR) 664.40p 3.97%
International Consolidated Airlines Group SA (CDI) (IAG) 449.40p 2.25%
Carnival (CCL) 3,475.00p 1.85%
Barclays (BARC) 149.30p 1.63%
Phoenix Group Holdings (PHNX) 700.00p 1.52%
Johnson Matthey (JMAT) 3,244.00p 1.50%
Kingfisher (KGF) 205.80p 1.48%
Flutter Entertainment (FLTR) 5,674.00p 1.35%
Vodafone Group (VOD) 125.76p 1.22%
Rio Tinto (RIO) 4,828.00p 1.15%
FTSE 100 - Fallers
Rolls-Royce Holdings (RR.) 850.20p -2.75%
Schroders (SDR) 3,006.00p -2.18%
Micro Focus International (MCRO) 2,055.50p -2.05%
Fresnillo (FRES) 874.80p -2.04%
Tesco (TSCO) 224.20p -1.75%
Hargreaves Lansdown (HL.) 1,892.00p -1.67%
Smith & Nephew (SN.) 1,679.50p -1.67%
Bunzl (BNZL) 2,112.00p -1.58%
Severn Trent (SVT) 2,063.00p -1.57%
SEGRO (SGRO) 733.00p -1.53%
FTSE 250 - Risers
Petrofac Ltd. (PFC) 465.20p 14.86%
Wood Group (John) (WG.) 445.40p 6.58%
Premier Oil (PMO) 78.24p 4.85%
Jupiter Fund Management (JUP) 424.80p 3.52%
Provident Financial (PFG) 418.40p 3.03%
Stagecoach Group (SGC) 121.10p 2.89%
RHI Magnesita N.V. (DI) (RHIM) 4,840.00p 2.85%
Equiniti Group (EQN) 220.80p 2.70%
Tullow Oil (TLW) 213.00p 2.55%
BCA Marketplace (BCA) 241.00p 2.38%
FTSE 250 - Fallers
Funding Circle Holdings (FCH) 194.80p -9.18%
Plus500 Ltd (DI) (PLUS) 572.80p -5.32%
Amigo Holdings (AMGO) 210.50p -4.32%
Acacia Mining (ACA) 179.40p -3.70%
Hays (HAS) 156.60p -3.69%
PayPoint (PAY) 1,020.00p -3.59%
Intu Properties (INTU) 75.00p -3.40%
Safestore Holdings (SAFE) 615.00p -3.15%
Euromoney Institutional Investor (ERM) 1,270.00p -2.91%
Dixons Carphone (DC.) 109.95p -2.68%