London midday: Stocks maintain gains despite Sino-US tensions
London stocks were higher by midday on Thursday despite escalating tensions between the US and China, as investors sifted through a raft of corporate news.
The FTSE 100 was up 0.5% at 6,238.43.
CMC Markets analyst David Madden said: "Equity markets in Europe are showing decent gains considering the US-China relationship has come under pressure in the past 24 hours. It was reported the Chinese government instructed the US consulate in Chengdu to close as a retaliation for the closure of the Chinese consulate in Houston. Tensions have ticked up between the two nations, which doesn’t bode well for geopolitics.
"It seems as if the ball is now in the US’s court, so it will be up to President Trump to make the next move, but he could easily choose to do nothing. The rebound in stocks today suggests that dealers are not overly concerned about the closure of a couple of consulates - as long as it ends there. If Beijing wanted to deliver a harsher response, they could have, but they chose not to go down that route."
On home shores, the latest survey from the Confederation of British Industry showed output volumes in the manufacturing sector fell sharply again in the three months to July amid the Covid-19 pandemic, but manufacturers were more optimistic about the outlook.
The total order book balance rose to -46 in July from -58 in June. This was below consensus expectations of -38.
The survey of 356 manufacturing firms saw total new orders fall at their fastest pace since October 1980, with domestic orders and export orders declining at record paces. This marked the third month in a row that new orders declined at a record pace. Output dropped in 14 out of 17 sub-sectors, with the headline fall led by the motor vehicles & transport, food, drink & tobacco, and mechanical engineering sub-sectors.
On the bright side and for the first time since February, manufacturers said they now expect output in the next quarter to begin to recover.
CBI chief economist Rain Newton-Smith said: "Manufacturers continue to face extreme hardship due to the Covid-19 crisis.
"There are tentative signs of gradual recovery on the horizon, with firms expecting output and orders to begin to pick up in the next three months. But demand still remains deeply depressed."
In equity markets, Unilever rallied after it reported a lower-than-expected fall in second-quarter sales as strong growth in North America helped to offset the impact of coronavirus lockdowns.
Software company Sage gained after saying that recurring revenues grew in the nine months to the end of June, while Polymetal shone as it posted a 30% increase in second-quarter revenue on the back of higher gold prices and sales volumes.
Petropavlovsk surged as the Russian gold miner said total gold production remains on track to meet its full-year target of 620koz - 720koz, including third-party concentrate processing, after a 42% rise in second quarter output.
Insurer Beazley advanced despite saying it swung to a loss in the first half due to coronavirus-related claims. In the six months to the end of June, it swung to a pre-tax loss of $13.8m from a profit of $166.4m in the first half of last year, pointing to high volumes of claims arising from Covid-19 impacted lines". Broker Shore Capital said it was a "resilient" set of earnings, with losses lower than estimates.
On the downside, SSE and Pennon were the worst performers on the FTSE 100 as their stock went ex-dividend.
Relx - formerly Reed Elsevier - was in the red after it reported a 10% fall in interim revenue as the pandemic weighed on its exhibitions business.
Countryside Properties was weaker after the housebuilder and urban regeneration company raised around £250m through a discounted placing and subscription to bolster its balance sheet amid the pandemic and fund further growth in the partnerships division.
IG Group was lower even as it posted a 36% jump in full-year net trading revenue and a 52% increase in pre-tax profit. Traders pointed noted that the shares had a good run into the numbers and highlighted the fact that medium-term targets were merely reiterated despite the big rise in annual profit.
Market Movers
FTSE 100 (UKX) 6,238.43 0.50%
FTSE 250 (MCX) 17,516.10 0.29%
techMARK (TASX) 3,836.40 0.46%
FTSE 100 - Risers
Unilever (ULVR) 4,668.00p 7.81%
Melrose Industries (MRO) 110.35p 6.82%
Fresnillo (FRES) 1,228.50p 4.87%
Sage Group (SGE) 739.60p 4.61%
Polymetal International (POLY) 1,772.00p 3.81%
Glencore (GLEN) 183.96p 2.87%
Diageo (DGE) 2,849.00p 2.48%
Antofagasta (ANTO) 1,057.50p 2.32%
WPP (WPP) 621.80p 2.24%
Evraz (EVR) 308.70p 1.95%
FTSE 100 - Fallers
SSE (SSE) 1,361.50p -4.62%
Pennon Group (PNN) 1,055.50p -3.61%
Relx plc (REL) 1,704.00p -3.43%
GVC Holdings (GVC) 753.60p -1.87%
British Land Company (BLND) 369.10p -1.70%
St James's Place (STJ) 973.80p -1.66%
Rolls-Royce Holdings (RR.) 277.20p -1.53%
Informa (INF) 422.70p -1.45%
International Consolidated Airlines Group SA (CDI) (IAG) 211.70p -1.44%
Standard Chartered (STAN) 439.10p -1.30%
FTSE 250 - Risers
Petropavlovsk (POG) 37.20p 18.85%
G4S (GFS) 145.35p 6.41%
Beazley (BEZ) 457.60p 6.17%
Hochschild Mining (HOC) 270.00p 4.90%
BMO Commercial Property Trust Limited (BCPT) 57.50p 4.55%
Future (FUTR) 1,312.00p 3.47%
Kaz Minerals (KAZ) 575.60p 3.34%
Clarkson (CKN) 2,115.00p 3.17%
Spirent Communications (SPT) 265.00p 3.11%
Scottish American Inv Company (SAIN) 431.00p 2.86%
FTSE 250 - Fallers
Countryside Properties (CSP) 334.60p -6.85%
TBC Bank Group (TBCG) 715.00p -6.78%
IG Group Holdings (IGG) 781.00p -6.35%
888 Holdings (888) 184.40p -3.05%
QinetiQ Group (QQ.) 308.40p -2.90%
Howden Joinery Group (HWDN) 541.00p -2.77%
Hill & Smith Holdings (HILS) 1,250.00p -2.50%
PureTech Health (PRTC) 275.50p -2.48%
Trainline (TRN) 424.60p -2.35%
Network International Holdings (NETW) 480.00p -2.24%