London midday: FTSE turns up as investors eye US-China talks; Trump suffers double blow
London stocks had reversed earlier losses to trade up by midday on Wednesday as investors eyed US-China trade talks, with US President Trump in the headlines yet again after his long-time lawyer pleaded guilty to campaign finance violations.
The FTSE 100 was up 0.4% to 7,593.29, while the pound was down 0.1% against the dollar to 1.2885 and 0.3% lower versus the euro at 1.1121.
The US-China trade talks are due to kick off in Washington later on Wednesday, with delegations from Beijing set to meet with US officials to try to find a resolution to the escalating tariff war between the two countries. Trump said in an interview with Reuters on Monday that he didn't expect much from the talks and that there was no time frame for an end to the trade war.
Meanwhile, concerns were growing that Trump might be vulnerable to impeachment in the coming months after his former lawyer, Michael Cohen, pleaded guilty to violating campaign finance laws for the purpose of influencing the election and implicated the president, saying that he told him to arrange payments to silence women alleged to have had affairs with him.
In addition, Trump's former campaign chairman, Paul Manafort, was found guilty on eight fraud charges. He was convicted of five counts of tax fraud, two counts of bank fraud and one count of failure to report a foreign bank account.
IG analyst Joshua Mahony said: "Donald Trump’s previous criticism of Jerome Powell was a key driver of dollar weakness and stock strength. However, this time around we are seeing the dollar and stocks fall as markets fear potential negative repercussions for Donald Trump after his former lawyer pleaded guilty to several campaign violations, implicating the President in the process.
"While Trump is one of the most divisive presidents in history, markets have certainly taken to his economic expansionary policies and any threat to his second term will likely hit markets. With US midterms coming up in November, the continued scandal surrounding Trump’s presidency will dent confidence even though a Republican win is near-enough nailed on due to gerrymandering."
There are no major UK data releases due, but foreign secretary Jeremy Hunt is still in Washington and due to meet with Trump’s chief of staff John Kelly, son-in-law Jared Kushner and Secretary of State Mike Pompeo.
Investors will also be eyeing the release of the latest FOMC minutes after the UK close. CMC Markets analyst Michael Hewson said: "A September rate rise still seems a done deal given that US policymakers upgraded their outlook for the US economy earlier this month. With GDP forecasts already towards the higher end of forecasts markets will be looking for any evidence that policymakers are becoming uncomfortable with rising inflation expectations and whether there is any anxiety amongst US policymakers about events in emerging markets and trade."
In corporate news, builders' merchant Grafton Group rallied after it posted a 19% jump in first-half pre-tax profit to £90m, while housebuilder Persimmon was still on the rise following its first-half numbers on Tuesday, lifting peer Barratt Developments.
Transport operator Go-Ahead Group nudged up as it announced that group chief financial officer Patrick Butcher would be leaving to join Capita as CFO there.
Sainsbury's was on the front foot as it emerged that leading shareholder Invesco Perpetual has backed its proposed £12bn merger with Asda.
DS Smith was boosted as Jefferies kept its 'hold' rating on the stock but said it sees a supportive pricing opportunity and further sector consolidation, while Mondi was in the green as Jefferies said it was a "long-term quality play".
Intertek slipped as it replaced chief financial officer Ed Leigh with group financial controller Ross McCluskey in a management shakeup at the product testing company.
Diploma was a little firmer after announcing the acquisition of St Albans-based FS Cables for up to £18m in cash, in a deal that is expected to be immediately earnings-enhancing.
Elementis was little changed after the speciality chemicals group said it had agreed to sell a site in Jersey City for $17m (13m).
John Wood was upgraded to 'equal-weight' at Morgan Stanley, while Lancashire and Provident Financial were upgraded to 'hold' at Berenberg and Rio Tinto was lifted to 'hold' at Liberum.
Market Movers
FTSE 100 (UKX) 7,593.29 0.36%
FTSE 250 (MCX) 20,675.71 0.16%
techMARK (TASX) 3,566.31 0.34%
FTSE 100 - Risers
Mondi (MNDI) 2,160.00p 1.98%
Smith (DS) (SMDS) 506.20p 1.91%
BHP Billiton (BLT) 1,636.00p 1.58%
Ocado Group (OCDO) 1,096.00p 1.53%
Persimmon (PSN) 2,475.00p 1.43%
Barratt Developments (BDEV) 549.40p 1.14%
Fresnillo (FRES) 940.80p 1.14%
BT Group (BT.A) 229.10p 1.06%
Sage Group (SGE) 635.80p 1.05%
CRH (CRH) 2,608.00p 1.05%
FTSE 100 - Fallers
easyJet (EZJ) 1,568.50p -2.70%
Johnson Matthey (JMAT) 3,545.00p -2.66%
Evraz (EVR) 473.60p -2.57%
Associated British Foods (ABF) 2,320.50p -1.63%
Antofagasta (ANTO) 810.60p -1.24%
GVC Holdings (GVC) 1,079.00p -1.19%
NMC Health (NMC) 4,018.00p -0.99%
Centrica (CNA) 144.30p -0.82%
Kingfisher (KGF) 274.90p -0.72%
Royal Mail (RMG) 465.10p -0.68%
FTSE 250 - Risers
Grafton Group Units (GFTU) 815.50p 5.02%
Wood Group (John) (WG.) 744.40p 4.55%
Keller Group (KLR) 1,090.00p 3.81%
Mediclinic International (MDC) 492.30p 3.62%
Indivior (INDV) 271.20p 3.16%
AA (AA.) 118.00p 3.15%
SIG (SHI) 130.90p 3.07%
Clarkson (CKN) 2,826.63p 2.79%
Contour Global (GLO) 233.41p 2.19%
Inmarsat (ISAT) 562.80p 2.18%
FTSE 250 - Fallers
Syncona Limited NPV (SYNC) 260.61p -4.36%
Rank Group (RNK) 169.57p -2.99%
Kaz Minerals (KAZ) 460.54p -2.72%
Euromoney Institutional Investor (ERM) 1,354.60p -2.12%
IntegraFin Holding (IHP) 368.00p -1.60%
Playtech (PTEC) 516.40p -1.60%
JD Sports Fashion (JD.) 486.20p -1.48%
Senior (SNR) 319.20p -1.42%
Wizz Air Holdings (WIZZ) 3,269.00p -1.39%
Millennium & Copthorne Hotels (MLC) 517.00p -1.34%