London open: Stocks up amid trade hopes; banks up ahead of stress test results
London stocks rose in early trade on Wednesday, taking their cue from positive US and Asian sessions amid trade optimism.
At 0840 GMT, the FTSE 100 was up 0.3% to 7,039.82, while the pound was down 0.1% against the dollar at 1.2739 and 0.1% firmer versus the euro at 1.1300.
Investors were reacting positively to comments from White House economic advisor Larry Kudlow, who said on Tuesday that US officials were having "a lot of communication" with the Chinese government at all levels ahead of the G20 meeting in Argentina this week. Kudlow said US President Trump had told advisers that "in his view, there is a good possibility that a deal can be made and that he is open to that".
However, China would need to do more for an agreement to be reached, with certain conditions needing to be met, Kudlow said.
Analyst Michael Hewson at CMC Markets said: "This would suggest that for all the optimism and Trump’s comments earlier this week that the best we can hope for is that any additional tariffs are delayed, and the current ones are left at their current levels.
"Nonetheless equity markets have chosen to focus on the positive with Asia markets also pushing higher ahead of the key meeting on Saturday with Presidents Trump and Xi."
Back on home turf, the government was expected to publish its assessment of the impact of different Brexit outcomes on Wednesday morning, including a comparison with remaining in the EU.
In addition, the Bank of England's Brexit analysis, its regular Financial Stability Report and results of its 2018 bank stress tests are due at 1630 GMT, after a last-minute change saw the release pushed back from a morning publication. The Financial Conduct Authority will also publish its own Brexit impact report at the same time.
Banks were doing pretty well ahead of the test results, with Lloyds Banking Group and Standard Chartered among the top FTSE 100 risers.
"Brexit survival aside, the bottom line is that investors will be looking at the stress test results as an early indication of each bank’s ability to return capital to shareholders by ways of higher dividends and share buyback programmes," Hewson said.
IT services company Softcat rallied after saying that first quarter customer demand had remained strong across all segments, helping to deliver year-on-year growth in revenue, gross profit and operating profit without specifying numbers.
On the Beach was the standout gainer on the FTSE 250 after the online travel agent delivered final results ahead of market expectations, as it reined in marketing spending after the summer heatwave put Brits and Scandinavians off overseas holidays.
Aerospace parts maker Senior nudged up after saying that trading in the year to end-October had been in line with expectations as production of new model large commercial airliners ramped up.
Experian was down but just a touch and faring quite well as it emerged that its agreed takeover of start-up credit scoring rival Clearscore could be blocked by UK competition authorities. An investigation by the Competition and Markets Authority has found that the deal is "likely to result in less intense competition" and potentially harming digital developments in the personal finance market.
Wealth manager Brewin Dolphin fell even as it posted a rise in full-year profit as total funds increased amid positive net inflows, while packing company RPC Group slipped as it reported a drop in half-year pre-tax profit.
Marks & Spencer was hit by a downgrade to 'sector perform' at RBC Capital Markets, while Thomas Cook was sharply lower again after a downgrade to 'equalweight' at Morgan Stanley following another profit warning on Tuesday. EasyJet flew lower as Kepler Cheuvreux cut the airline's stock to 'hold'.
AstraZeneca was downgraded to 'hold' at New Street Research, while Compass was cut to 'market perform' by Bernstein.
Market Movers
FTSE 100 (UKX) 7,039.82 0.33%
FTSE 250 (MCX) 18,687.71 0.14%
techMARK (TASX) 3,463.18 0.34%
FTSE 100 - Risers
Centrica (CNA) 137.00p 1.71%
Lloyds Banking Group (LLOY) 57.11p 1.28%
Glencore (GLEN) 286.20p 1.27%
Admiral Group (ADM) 2,080.00p 1.22%
Standard Chartered (STAN) 616.80p 1.00%
AstraZeneca (AZN) 6,150.00p 0.97%
Sainsbury (J) (SBRY) 318.30p 0.92%
Vodafone Group (VOD) 169.34p 0.92%
BHP Group (BHP) 1,511.80p 0.87%
Aviva (AV.) 418.15p 0.86%
FTSE 100 - Fallers
GVC Holdings (GVC) 758.50p -2.57%
NMC Health (NMC) 3,482.00p -2.25%
Marks & Spencer Group (MKS) 304.80p -1.55%
Just Eat (JE.) 570.00p -1.38%
Fresnillo (FRES) 747.20p -1.37%
TUI AG Reg Shs (DI) (TUI) 1,205.00p -1.15%
Royal Mail (RMG) 329.40p -0.96%
easyJet (EZJ) 1,208.00p -0.90%
SSE (SSE) 1,117.00p -0.84%
Johnson Matthey (JMAT) 2,925.41p -0.83%
FTSE 250 - Risers
On The Beach Group (OTB) 419.50p 4.35%
UDG Healthcare Public Limited Company (UDG) 616.50p 3.44%
Just Group (JUST) 89.40p 2.94%
NewRiver REIT (NRR) 239.00p 2.58%
QinetiQ Group (QQ.) 290.70p 2.40%
IP Group (IPO) 115.00p 2.31%
Fidelity China Special Situations (FCSS) 198.60p 2.16%
LondonMetric Property (LMP) 190.10p 1.93%
Daejan Holdings (DJAN) 5,980.00p 1.87%
Mediclinic International (MDC) 355.00p 1.81%
FTSE 250 - Fallers
Thomas Cook Group (TCG) 34.78p -7.40%
Shaftesbury (SHB) 901.50p -2.01%
Victrex plc (VCT) 2,484.00p -1.97%
FirstGroup (FGP) 89.95p -1.48%
Rathbone Brothers (RAT) 2,432.00p -1.38%
Paragon Banking Group (PAG) 429.60p -1.24%
Spirent Communications (SPT) 128.40p -1.23%
Dunelm Group (DNLM) 566.00p -1.14%
Marshalls (MSLH) 437.00p -1.13%
Wetherspoon (J.D.) (JDW) 1,158.00p -1.03%