London open: Stocks dip as US-China talks finish early
Stocks are trading only slightly lower despite reports that the first round of face-to-face trade talks between US and Chinese negotiators since the 28 June G20 leaders' summit in Japan had come to an early conclusion.
According to Bloomberg News, the talks appeared to have ended almost as quickly as they had begun.
For its part, the South China Morning Post said that Wednesday's planned talks had lasted just half a day (instead of a full day) "with not much on the table from either side".
Nonetheless, while there were no signs of a breakthrough, there was a "willingness to continue discussions".
On the other hand, no time frame was mentioned for resuming talks.
"For China, the urgency to end the tariff war has lessened, with the economic downturn not as serious as expected," the SCMP said.
"Beijing is also watching the US presidential race with interest, to see how it will affect trade policy, although it is not relying on a Democrat victory to end the conflict."
As of 0843 BST, the FTSE 100 was slipping by 0.34% to 7,620.74, while the pound was adding 0.15% to 1.0911.
In parallel, US futures were still pointing to a higher start to trading at the opening bell in New York, with sentiment boosted by better than expected quarterly numbers out of tech giant Apple.
Nonetheless, the market spotlight on Wednesday was expected be firmly on the US Federal Reserve, whose policymakers are widely expected to deliver a 25 basis point cut in the target range for official short-term interest rates as 'insurance' against the risk of a protracted downturn given the multiple headwinds from overseas.
Above all financial market participants are also keen to see to what extent Fed chairman Jerome Powell would vindicate, or not, expectations for several more interest rate cuts, with current market pricing in Fed funds futures pointing to at least two more reductions by the end of 2019.
Back on home turf, during a visit to farmers in Wales on Tuesday, Boris Johnson said that Britain might stay in the customs union and single market for a further two years and reportedly described the chance of a no-deal Brexit as "vanishingly small".
In economic news, consultancy GfK's UK consumer confidence index for July improved by two points from the month before to -11.0 (consensus: -13.0).
On the other hand, SMMT reported that only £90m of new investment was committed to automotive plants in Britain in the first half of 2019 as carmakers funneled at least £330m towards Brexit preparations.
Across the Channel meanwhile, recent soft data on German consumer prices and French second quarter gross domestic product growth mean that there are downside risks for releases due out on euro area CPI for July and on second quarter Eurozone GDP, both at 1000 BST.
Lloyds raises dividend despite hit from PPI charges
High Street lender Lloyds posted stronger than expected net income and lower costs at the half year stage, despite which statutory profits came in weaker than expected. For the first six months of 2019, Lloyds posted interim statutory profits of £2.2bn with underlying profits at £4.2bn on the back of net income of £8.8bn with a net interest marginof 2.90%. Earnings per share meanwhile came in at 2.7p.
BAE Systems improved its full year net debt guidance, now anticipating no change due to the favourable timing of a Qatari Typhoon order and the M109A7 programme. Meanwhile, the company reiterated the rest of its full-year guidance, including an anticipated mid-single digit improvement in underlying earnings per share, as the defence and aerospace company reported higher interim revenues, profits and order backlog than last year.
Smith & Nephew saw its revenue rise 1.8% on a reported basis in its half-year results, it said on Wednesday, coming in at $1.28bn. The FTSE 100 medical technology firm said its operating profit rose to $419m from $372m year-on-year for the six months ended 29 June, with earnings per share improving to 35.3 US cents from 31.4 cents. It said cash generated from operations totalled $543m, up from $418m at the same time 12 months ago.
Next reported an improvement in full-price sales in its first half on Wednesday, with the figure rising 4.3% year-on-year. The FTSE 100 fast fashion retailer said total sales, including markdown sales, were up 3.8% in the period. Of the improvement in full-price sales, the company said its physical retail stores saw a decline of 3.9% in the first half ended 27 July, while its online operation saw full-price sales surge 11.9% year-on-year.
Just Eat reported a leap in interim revenues on Wednesday following the rollout of its delivery service, though costs associated with the expansion almost wiped out profits. Revenue for the six month period ended 30 June came in at £464.5m, for an increase of 30% when compared to the same period last year, after the accelerated roll-out of its delivery services, which now covers in excess of 50% of the addressable population in the UK and Australia, helped the company add two million new customers.
British pub operator Mitchells & Butlers saw sales continue to grow despite strong comparatives stemming from last year's World Cup and extended period of sunny weather. Mitchells & Butlers revealed on Wednesday that like-for-like sales for the 10 week period since its last announcement had grown 2.8%, with its performance remaining "consistently ahead of the market".
Market Movers
FTSE 100 (UKX) 7,620.54 -0.34%
FTSE 250 (MCX) 19,738.06 -0.19%
techMARK (TASX) 3,886.82 -0.09%
FTSE 100 - Risers
Next (NXT) 6,100.00p 8.62%
Rentokil Initial (RTO) 428.10p 3.86%
Smith & Nephew (SN.) 1,903.50p 2.20%
Kingfisher (KGF) 227.20p 1.93%
Just Eat (JE.) 764.40p 1.92%
Smurfit Kappa Group (SKG) 2,652.00p 1.77%
BP (BP.) 551.80p 1.58%
CRH (CRH) 2,749.00p 1.55%
Associated British Foods (ABF) 2,452.00p 1.49%
Marks & Spencer Group (MKS) 212.40p 1.48%
FTSE 100 - Fallers
St James's Place (STJ) 982.20p -5.83%
Fresnillo (FRES) 618.80p -5.32%
Lloyds Banking Group (LLOY) 52.79p -4.16%
Taylor Wimpey (TW.) 170.25p -3.57%
Hargreaves Lansdown (HL.) 2,051.00p -3.35%
Royal Bank of Scotland Group (RBS) 216.10p -1.91%
Micro Focus International (MCRO) 1,724.80p -1.82%
Land Securities Group (LAND) 810.60p -1.79%
British Land Company (BLND) 516.40p -1.79%
Whitbread (WTB) 4,573.00p -1.57%
FTSE 250 - Risers
Computacenter (CCC) 1,502.01p 10.44%
Centamin (DI) (CEY) 128.57p 5.42%
4Imprint Group (FOUR) 2,946.32p 5.23%
Elementis (ELM) 153.00p 3.73%
Premier Oil (PMO) 82.82p 3.60%
Serco Group (SRP) 144.60p 3.43%
Travis Perkins (TPK) 1,364.50p 3.10%
Man Group (EMG) 171.90p 3.03%
Cairn Energy (CNE) 158.90p 1.99%
Mitchells & Butlers (MAB) 303.00p 1.85%
FTSE 250 - Fallers
Intu Properties (INTU) 57.00p -18.87%
Aston Martin Lagonda Global Holdings (AML) 466.00p -17.96%
Metro Bank (MTRO) 341.34p -7.79%
CYBG (CYBG) 171.72p -4.54%
Kainos Group (KNOS) 549.04p -4.01%
Funding Circle Holdings (FCH) 110.82p -3.80%
Hammerson (HMSO) 231.20p -3.67%
Games Workshop Group (GAW) 4,542.00p -3.65%
PayPoint (PAY) 931.00p -2.82%
Sanne Group (SNN) 552.50p -2.56%