London open: Stocks fall amid conflicting China-US trade news
London stocks fell in early trade on Friday as optimism over a trade deal between the US and China faded, with British Airways parent IAG among the losers after a disappointing update.
At 0830 GMT, the FTSE 100 was down 0.4% at 7,379.92, while sterling was flat against the dollar and the euro at 1.2819 and 1.1602, respectively.
Sentiment got a boost on Thursday from news that the US and China had agreed to roll back tariffs as part of a 'phase one' trade deal. However, reports earlier on Friday suggested the Trump administration was divided over the move.
Reuters cited sources familiar with the talks as saying that the agreement between the US and China to roll back tariffs faces "fierce" internal opposition in the White House and from outside advisers. Sources said the idea of a tariff rollback was not part of the original October 'handshake' deal between Chinese Vice-Premier Liu He and US President Trump.
Neil Wilson, chief market analyst at Markets.com, was understandably cynical.
"Stocks rally on trade optimism, dip on trade fears - rinse, repeat," he said. "Yesterday, US equities pushed the record highs again and bonds tumbled, while European stocks firmed around four-year peaks on hopes and perhaps signs of real progress on trade following remarks, just before the London open, that the US and China were in agreement on rolling back tariffs as part of a managed ceasefire.
"There was confusion over exactly what the Chinese official said, but seemed to be clarified by the US saying the phase one deal would include tariff rollback. White House ‘sources’ reports later talked of ‘fierce internal opposition’ with no final decision made.
"There is a strong sense of the ‘if’ about this. If a first phase trade deal is done, there is agreement to roll back some existing tariffs, but only if the deal is agreed. Usual story - mixed reports really all just noise."
In equity markets, miners took a hit on the trade deal headlines, with Anglo American, Glencore, Rio and Antofagasta all lower.
British Airways and Iberia parent IAG flew lower after cutting its capacity growth forecasts for the next three years and lowering its average earnings per share growth forecast to 10%+ per year from 12%+.
Insurer Phoenix Group was down after announcing that chief executive officer Clive Bannister will retire on 10 March 2020 after the company’s full-year results and be succeeded by former Aviva executive Andy Briggs.
Royal Mail was in the red after saying it was seeking an injunction at the High Court to stop workers from striking. The company said there were "irregularities" in the ballot of Communications Workers Union members that meant the vote for industrial action was unlawful.
Spirent Communications was a little weaker as it said it experienced some delays in order intake in the third quarter but still expects orders to show good growth in the full year compared to 2018.
On the upside, Games Workshop surged after the maker of miniature wargames said trading since its update in September had continued "well", with profit and sales ahead of the previous year, and that royalties receivable were "significantly" ahead of the prior year.
Beazley racked up solid gains after the Lloyd's insurer posted 12% growth in gross written premiums for the nine months to the end of September.
Morgan Advanced Materials ticked higher as it backed its expectations for the full year after reporting a 0.2% increase in sales for the nine months to September.
FTSE 100 - Risers
British American Tobacco (BATS) 2,881.00p 0.56%
Associated British Foods (ABF) 2,441.00p 0.41%
London Stock Exchange Group (LSE) 6,756.00p 0.15%
Unilever (ULVR) 4,660.50p 0.13%
Severn Trent (SVT) 2,201.09p 0.10%
Just Eat (JE.) 739.00p 0.08%
Bunzl (BNZL) 2,099.70p 0.03%
Relx plc (REL) 1,846.00p 0.03%
ITV (ITV) 135.15p 0.00%
National Grid (NG.) 886.30p 0.00%
FTSE 100 - Fallers
Anglo American (AAL) 2,062.00p -2.14%
International Consolidated Airlines Group SA (CDI) (IAG) 533.60p -2.02%
Hiscox Limited (DI) (HSX) 1,233.00p -1.67%
Johnson Matthey (JMAT) 3,229.75p -1.26%
Phoenix Group Holdings (PHNX) 710.20p -1.17%
Glencore (GLEN) 256.03p -1.03%
Rio Tinto (RIO) 4,288.00p -1.03%
Schroders (SDR) 3,230.00p -0.98%
Auto Trader Group (AUTO) 542.00p -0.91%
Antofagasta (ANTO) 934.60p -0.91%
FTSE 250 - Risers
Sirius Minerals (SXX) 3.13p 5.10%
Dunelm Group (DNLM) 790.18p 3.22%
Beazley (BEZ) 553.50p 2.69%
Savills (SVS) 931.00p 1.86%
Worldwide Healthcare Trust (WWH) 2,724.40p 0.72%
Pets at Home Group (PETS) 203.92p 0.65%
Polypipe Group (PLP) 470.00p 0.64%
Morgan Advanced Materials (MGAM) 262.62p 0.62%
Virgin Money UK (VMUK) 146.00p 0.62%
Ferrexpo (FXPO) 138.60p 0.40%
FTSE 250 - Fallers
Investec (INVP) 454.50p -3.42%
AJ Bell (AJB) 395.82p -2.99%
Bovis Homes Group (BVS) 1,130.00p -2.16%
Premier Oil (PMO) 85.88p -2.10%
IMI (IMI) 1,113.50p -1.98%
Kaz Minerals (KAZ) 514.80p -1.94%
John Laing Group (JLG) 360.32p -1.66%
Mediclinic International (MDC) 374.20p -1.45%
Weir Group (WEIR) 1,484.00p -1.30%
Cairn Energy (CNE) 176.00p -1.29%