London close: Stocks push higher as US-China trade tensions ease
London stocks reversed early loses as investors after the US administration dialed back on some of its trade tariff threats against Chinese goods and digested the latest batch of UK jobs data showing wage growth rising at its fastest clip since 2008.
"This has boosted sentiment – but can it last? When do we get the next bearish signal on trade? We’re only ever a tweet away from the next market downturn or massive rally. It only shows how tough it is out there and how susceptible the market is to unpredictable news flow about trade," said Markets.com's Neil Wilson.
By the end of trading, the FTSE 100 was up by 0.33% at 7,250.90, having earlier hit an intra-session low of 7,166,86, while the pound was drifting 0.07% lower against the US dollar at 1.20658 but 0.19% firmer versus the euro at 1.0789.
Late in the afternoon, the US Trade Representative announced that Washington would postpone some of the new tariffs that had been set to kick-in on 1 September until 15 December and take some types of goods off its tariff list, although levies on some other classes of imports would still go ahead as planned.
In parallel, China's Ministry of Commerce announced that vice premier Liu He had talked with the USTR, Robert Lighhizer, and US Treasury Secretary, Steven Mnuchin, and that another conference call had been scheduled for in two weeks' time.
Earlier, consumer price data published in the US had revealed that trade tariffs were beginning to feed through into inflation.
On home shores, the latest set of jobs data from the Office for National Statistics showed the unemployment rate ticked a little higher in June, but wages picked up to their best level in more than decade.
Total earnings growth rose to 3.7% on the year in the three months to June from 3.5% in May, in line with analysts' expectations. This marked the best level since June 2008. Excluding bonuses, earnings growth rose to 3.9% from 3.6%, beating consensus expectations for growth of 3.8%.
The data revealed that Britain created 115,000 jobs in the second quarter, taking employment to a record level of 32.811 million. Analysts were expecting a 60,000 increase.
Meanwhile, the unemployment rate rose to 3.9%, missing expectations for it to remain unchanged at 3.8%. The number of people out of work declined by 33,000 to 1.33 million.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the labour market remained "remarkable resilient" in the second quarter, despite the economy’s slowdown and poor visibility on the outlook due to Brexit uncertainty. He said this was "another robust report", which undermines the case for a rate cut.
ING economist James Smith also said the figures suggest that any policy easing from the Bank of England is unlikely in the near term. "A lot depends on Brexit of course, but for the time being, we think markets may be slightly overestimating the chances of BoE easing - investors are now pricing in a rate cut by early 2020," he said.
In equity markets, InterContinental Hotels was under the cosh after a downgrade to 'hold' at Berenberg, while Croda was hit by a downgrade to 'sell' at Goldman Sachs.
Elsewhere, Aston Martin Lagonda shares fell after a downgrade to 'neutral' at Credit Suisse, which also slashed its price target to 529p from 1,630p. The bank said it was cutting its volume and pricing assumptions and its EBIT forecast for 2019 following the company's profit warning last month.
Precious metals miner Fresnillo fell afoul of the US administration's decision to dial back on its fresh threat of more tariffs against China, giving up earlier gains as gold prices reversed course, with Centamin, Hochschild and Polymetal all followuing suit
Travel and tourism operator TUI finished little changed even after it reported a sharp fall in third-quarter earnings but maintained its outlook for the full year. Underlying third-quarter core earnings fell 46% year-on-year to €100.9m (£93.7m), with a charge of €144m relating to costs from groundings of Boeing's 737 MAX jet after two fatal crashes this year.
The company said it expected the full year impact of the groundings would be €300m.
Richard Hunter, head of markets at Interactive Investor, said that "set against a raft of challenges, TUI was making valiant efforts to regain its previous growth".
"TUI had the kitchen-sink experience earlier in the year with two profit warnings, so the fact that there are no further shocks has resulted in a warm share price reaction to these numbers," he said.
He added: "The overall picture is one which shows the benefits of a diversified business model. Its significant other income streams, most notably Holiday Experiences, Cruises and Destination Experiences have performed strongly in the year to date. In terms of the summer so far, bookings are virtually flat as compared to last year, which is some achievement given the circumstances and the outlook for the remainder of the summer is upbeat."
Online trading platform Plus500 bolted ahead after its first-half numbers came in as expected. The company posted a 59% slump in pre-tax profit to $63.9m as it took a hit from regulatory changes and a lack of volatility, and announced a share buyback of up to $50m.
FTSE 100 - Risers
Anglo American (AAL) 1,864.00p 2.56%
Antofagasta (ANTO) 845.80p 2.55%
Glencore (GLEN) 236.15p 2.30%
Mondi (MNDI) 1,627.00p 2.20%
Melrose Industries (MRO) 172.90p 2.16%
Scottish Mortgage Inv Trust (SMT) 540.00p 2.08%
Rio Tinto (RIO) 4,117.50p 1.91%
CRH (CRH) 2,699.00p 1.81%
Just Eat (JE.) 812.00p 1.45%
Smith (DS) (SMDS) 333.00p 1.40%
FTSE 100 - Fallers
Auto Trader Group (AUTO) 524.00p -2.60%
Marks & Spencer Group (MKS) 183.85p -2.13%
Hargreaves Lansdown (HL.) 1,955.00p -2.05%
Next (NXT) 5,848.00p -1.98%
Schroders (SDR) 2,738.00p -1.76%
Coca-Cola HBC AG (CDI) (CCH) 2,709.00p -1.67%
Micro Focus International (MCRO) 1,615.00p -1.62%
Ocado Group (OCDO) 1,173.50p -1.59%
RSA Insurance Group (RSA) 523.20p -1.32%
InterContinental Hotels Group (IHG) 5,311.00p -1.25%
FTSE 250 - Risers
Plus500 Ltd (DI) (PLUS) 690.00p 20.76%
Sirius Minerals (SXX) 9.50p 17.00%
Grafton Group Units (GFTU) 695.50p 7.75%
Cairn Energy (CNE) 170.60p 6.69%
Premier Oil (PMO) 74.38p 6.01%
Intu Properties (INTU) 36.30p 5.58%
RHI Magnesita N.V. (DI) (RHIM) 4,114.00p 5.11%
Hunting (HTG) 442.00p 4.29%
Galliford Try (GFRD) 565.00p 4.05%
Renishaw (RSW) 3,722.00p 3.91%
FTSE 250 - Fallers
Syncona Limited NPV (SYNC) 220.00p -4.97%
Savills (SVS) 840.00p -4.60%
Funding Circle Holdings (FCH) 115.20p -4.00%
Aston Martin Lagonda Global Holdings (AML) 490.80p -3.95%
Card Factory (CARD) 155.70p -3.83%
TI Fluid Systems (TIFS) 160.00p -3.26%
Greggs (GRG) 2,040.00p -3.23%
Woodford Patient Capital Trust (WPCT) 43.90p -2.44%
Cineworld Group (CINE) 232.40p -2.39%
William Hill (WMH) 155.30p -1.71%