London midday: FTSE 100 pops higher as miners gain; Burberry slumps
London stocks had turned higher by midday on Thursday, boosted by strength in the mining sector as investors digested news that US President Trump has declared a national emergency to protect US computer networks from "foreign adversaries" - a move widely seen as targeting China’s Huawei.
The FTSE 100 was up 0.3% at 7,315.08, while the pound was down 0.1% against the dollar at 1.2827 and 0.2% weaker versus the euro 1.1443.
CMC Markets analyst Michael Hewson said Trump’s latest decision paves the way for a ban on China’s biggest telecoms provider.
"This executive order appears to have curbed some of the exuberance of the late rebound in stocks yesterday with Asia markets reacting much more cautiously," he said.
"While the suspension of auto tariffs is welcome it certainly doesn’t mean that President Trump can’t create ripples in other ways, and this is reflected in the more mixed reaction amongst Asia markets. This in turn is expected to translate into a lower European open later this morning."
China warned earlier that it could retaliate against the move. 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.
On home shores, Prime Minister Theresa May was set to meet members of the Conservative Party's powerful 1922 Committee who want a road map for her planned departure. May has promised to exit Downing Street if her much-maligned and thrice-defeated Brexit deal is approved by the House of Commons and will attempt to force it through again next month. However, she has failed to give any firm indication on precise dates, angering her own MPs.
In equity markets, 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 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 are 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.
"We continue with our ‘hold’ recommendation for investors who are seeking a balanced return and willing to accept a medium to higher level of risk."
National Grid retreated as it said full-year profit declined by nearly a third, while Just Group fell 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.
On the upside, miners advanced, with Anglo American, BHP, and Rio all trading higher. Anglo was also in focus after it won approval for the construction of a new custom-built diamond recovery vessel.
Engineer Spirax-Sarco got a boost from an initiation at ‘buy’’ by Berenberg, while Lloyds Bank edged up after saying it would start to pay quarterly dividends to its 2.4m shareholders from June 2020.
On the FTSE 250, 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.
FTSE 100 - Risers
Anglo American (AAL) 1,971.60p 3.01%
Spirax-Sarco Engineering (SPX) 8,775.00p 2.93%
BHP Group (BHP) 1,800.00p 2.86%
Rio Tinto (RIO) 4,636.00p 2.58%
Hargreaves Lansdown (HL.) 2,393.00p 2.13%
Admiral Group (ADM) 2,092.00p 1.95%
Antofagasta (ANTO) 840.20p 1.84%
Sage Group (SGE) 728.60p 1.70%
Experian (EXPN) 2,275.00p 1.61%
Croda International (CRDA) 5,185.00p 1.57%
FTSE 100 - Fallers
Burberry Group (BRBY) 1,832.00p -4.66%
TUI AG Reg Shs (DI) (TUI) 794.60p -3.05%
National Grid (NG.) 822.13p -2.45%
Tesco (TSCO) 237.86p -2.40%
Marks & Spencer Group (MKS) 268.60p -2.11%
United Utilities Group (UU.) 787.80p -1.77%
SSE (SSE) 1,065.53p -1.61%
Kingfisher (KGF) 229.60p -1.46%
Severn Trent (SVT) 1,939.00p -1.40%
Melrose Industries (MRO) 179.85p -1.18%
FTSE 250 - Risers
Genus (GNS) 2,910.00p 15.11%
Sophos Group (SOPH) 385.20p 13.29%
Indivior (INDV) 57.81p 9.58%
Funding Circle Holdings (FCH) 267.50p 8.52%
Premier Oil (PMO) 97.40p 7.79%
Cairn Energy (CNE) 167.91p 5.87%
Ferrexpo (FXPO) 228.20p 3.77%
Games Workshop Group (GAW) 4,439.12p 3.38%
Tullow Oil (TLW) 224.35p 2.91%
Kaz Minerals (KAZ) 573.20p 2.72%
FTSE 250 - Fallers
Just Group (JUST) 60.80p -6.32%
Metro Bank (MTRO) 550.13p -5.80%
Inchcape (INCH) 569.26p -4.00%
Vivo Energy (VVO) 116.00p -3.65%
Saga (SAGA) 53.94p -3.33%
Restaurant Group (RTN) 130.40p -3.26%
Clarkson (CKN) 2,225.00p -3.26%
CYBG (CYBG) 191.50p -3.06%
Capital & Counties Properties (CAPC) 229.30p -3.04%
Pets at Home Group (PETS) 147.26p -2.09%