UK Politics

FTSE 100 closes higher midweek as equities rebound on trade deal hopes

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  • FTSE 100 index ends day higher
  • US stocks gain
  • Sterling reaches seven-month high
  • US ADP jobs data disappoints

5pm: Footsie closes up

FTSE 100 index closed higher on Wednesday as equity traders were buoyed by trade headlines rather than put off.

Britain's blue chip benchmark closed almost 30 points higher, or 0.41% at 7,188.

The more UK company focused FTSE 250 also sped higher, up almost 146 points on the day, to finish at 20,646.

On Wall Street, stocks also gained ground, with the Dow Jones Industrial Average up over 214 points. The oil price also gushed higher, with US benchmark crude adding 3.74% to US$58.19 a barrel on hopes of US, China trade deal progress and expectations of further OPEC output cuts.

"Stock markets are busily engaged in the process of clawing back the losses from the first two days of the week," noted Chris Beauchamp, chief market analyst at online trading group IG.

"It was a busy day anyway, with PMI and ADP readings, but as ever trade headlines have stolen the show. This time around they have been of the positive kind, a marked contrast to the fall out with everyone approach of the president on Monday, and for the moment they seem to have provided a shot in the arm for buyers.

"It is still too early to declare the great market correction of December 2019 over, but if it is, it will mark a triumph for this ongoing bull market and an indication of more to come as December grinds on towards Christmas."

4pm: Domestic stocks stronger than big-caps over election hopes

The FTSE 100 was staring at its feet in the afternoon, with the outlook falling as sterling stayed strong after being buoyed by trade optimism.

Londons blue-chip index dipped 12 points to 7,171, below the morning peak of 7,190 points.

Exerting pressure on the multinationals, the pound gained ground throughout the day, rising to $1.309 where it has since stayed, with positive noises made by President Trump over a US-China trade deal.

Sterling's best levels against the euro since May 2017 were the chief cause of the Footsie's underperformance versys European peers, said Michael Hewson, chief market analyst at CMC Markets.

“It has been notable though that UK focussed stocks have outperformed with the FTSE 250 posting decent gains on rising optimism that the Conservatives may well be able to eke out a majority at next weeks election.”

Among the FTSE 250s top risers were banking firms Lloyds (LON:LLOY) and RBS (LON:RBS), as well as housebuilders Taylor Wimpey (LON:TW.) and Barratt Developments (LON:BDEV), and energy companies United Utilities (LON:UU.) and SSE (LON:SSE).

The companies are gaining as the chances of a Labour government taking power continued to look less likely in the run-up to next weeks UK election.

Earlier today, a survey by pollsters ICM reckoned the Conservative party are ahead of Labour by seven percentage points on 42% to 35%.

Across the pond, Wall Street continued to look upbeat, cresting up 186.8 points to 27,689.6, although Hewson cautioned that traders should watch out before getting too excited about Trumps latest trade comments:

“Gut feeling suggests that this is a false narrative, however until we get past 15th December markets have to pay attention to it, despite many previous false dawns.”

Post for Londons blue-chip index, with the results due of the latest three-month FTSE indices review determining who stays and who goes.

3pm: Trump says trade negotiations with China are “going very well”

Traders went into a flurry of excitement as President Trump said trade negotiations with China are “going very well”, raising market hopes for a phase one trade deal to roll back tariffs,

The FTSE 100 bounced 15 points higher to 7,173.2 on renewed optimism, and across the pond in the US, the Dow Jones Industrial Index went soaring more than 200 points to 27,702.8.

“Discussions are going very well and well see what happens,” Trump told reporters at a meeting of NATO leaders near London.

The President changed tack after yesterday saying that a deal might have to wait until after next years US election in 2020, sending stocks plummeting.

“It still baffles me that investors hang on every Trump statement and tweet,” said Craig Erlam, senior market analyst at OANDA.

“His trade deal optimism changes on a near-daily basis and yet, investors are very sensitive to it. It's probably a reflection of the relative lack of other talking points.”

2pm: US employment "signals no relief" over next couple of months

The FTSE 100 lost most of its morning advances as the pound kept up its strongest rally in months.

The blue chip index shuffled lower to 7,163 points, chasing a return to morning highs of 7,188 points.

Sterling continued to rally towards $1.31, its highest value since May, based on reports that US and China are closing in on a trade deal to roll back tariffs.

Nevertheless, US stock market futures kept climbing towards Wall Street open, despite poor employment data coming out from the US.

The ADF reported that in November, private companies hired 67,000 new workers, under half the expected figure of 135,000, which is a bad omen for the weekly jobless figures and non-farm payrolls looming on Friday.

Ian Shepherdson, chief economist at Pantheon Macroeconomics said: “This is not about supply-side constraints, with firms unable to find all the people they want; labor demand clearly has weakened as the trade war has dampened activity, both directly via the cost of the tariffs and indirectly by creating great uncertainty for businesses.”

“One bad month is not a trend, but the forward-looking surveys signal no relief over the next couple of months, at least.”

Shepherdson also warned that “the consensus for Friday, 190K, now looks much too high; were at 120K.”

“Fridays official payroll number likely will be stronger than ADP, because it will be boosted by the return to work of the 46K GM strikers; this had no direct effect on ADPs measure because GM does not use their payroll processing services.”

12.10pm: US looking for a rebound

The FTSE 100 index held gains at lunchtime with Wall Street is looking to rebound higher on Wednesday as hope that US-China phase one trade deal could be reached returned.

The UK blue-chip index was up around 16 points at 7,175, though that was below the morning peak of 7,190.04.

Market watchers are expecting US indices to open in the green today, with the Dow Jones Industrial Average seen ringing in 110 points higher at 27,612 as the trade talks pendulum swung back into positive territory.

The Dow ended 1% lower yesterday after President Trump said at a news conference in London that he had “no deadline” for ending US-China trade talks, which have rumbled on for two years but have reportedly been picking up pace recently.

Jasper Lawler, head of research at LCG, said Trumps latest comments have been “ominous for the phase one deal that markets had been pinning their hopes on”.

“We hadnt expected any kind of deal to be completed in 2019, but Trumps suggestion of “late 2020” is much later than the first quarter of 2020 we had pencilled in. China, for their part seems politically less able to strike a trade deal given the US bills on Hong Kong and now the Uighurs in Xinjiang,”

But, he added: “We tend to think Trump is talking tough and that phase one can still be done sooner than the end of 2020. There is a 'happy place' where China offers enough that Trump feels able to rollback some tariffs but we are not there yet."

11.20am: Footsie up and down on sterling frenzy

The FTSE 100 didn't know where to go as sterling enjoyed a rally late morning on renewed confidence in a Conservative victory in the UK general election.

The blue-chip index was up 22 points at 7,181, after dipping almost back to the value at open, based on strong gains in the pound.

Sterling reached its highest price since May this morning, at $1.306 this morning before falling back slightly.

Pollsters reckon the Conservative party are ahead of Labour by seven points on 42% to 35%, according to a survey by ICM.

Many investors favour Boris Johnsons party because it ups the chances of “getting Brexit done” with a deal, which would bring some certainty back to the economy.

Rupert Thompson, head of research at Kingswood, cautioned that there is still no certainty yet, saying: “While Johnsons Brexit deal would almost certainly be ratified in short order if the Conservatives win, doubts will remain over whether the UK will be able to finalise a trade deal with the EU by the end of the transition period in December 2020.”

“The risk of a no-deal exit may be much reduced but it has not been eliminated altogether.”

He added: “If market hopes of a Conservatives victory are vindicated, the pound will very likely strengthen further from $1.30 currently to maybe $1.35 or so. Even at $1.35, the pound would remain below the levels seen prior to the 2016 Brexit referendum.

President Trump commented on the current Prime Minister while in London yesterday at a meeting of NATO leaders: “I think Boris is very capable and I think hell do a good job”.

10.45am: Markets hopeful for US-China trade deal

The FTSE 100 was holding steady as the trade talks pendulum swung to positive, continuing to whip up markets.

The UK benchmark index rose 18 points to 7,176.3, just a point below where it was an hour ago.

Miners Evraz, (LON:EVR) Antofagasta Holdings (LON:ANTO), and Glencore PLC (LON:GLEN) led the FTSE 100 risers.

Traders jumped into action after it was now reported that Washington and Beijing were close to agreeing a phase-one trade deal to roll back tariffs, despite choppy waters between the two nations recently after the US enacted a pro-Hong Kong protests bill.

This goes some way to reversing yesterdays losses which came after President Trump said that a trade agreement with Beijing might have to wait until after the US presidential election in November 2020. He had, earlier in the day, also threatened tariffs on France and the European Union.

Josh Mahony, a senior market analyst at IG warned that Trumps words “should be taken with a pinch of salt, as his comments are typically a negotiating tool to help push discussions in his favour”.

“Neither the US nor China are interested in overseeing another year of economic uncertainty, and with the impeachment hearing ongoing, there is no doubt Trump will be desperate to get a deal across the line to shift the focus ahead of the 2020 election.”

“Worryingly, with both Johnson and Corbyn promising to impose a tax on tech giants, it seems the US threats of tariffs on French goods could soon be levied on UK interests too,” he added.

9.45am: UK services not as bad as feared

The FTSE 100 made up lost ground after opening in the red this morning, gaining as the all-important UK services sector PMI contracted at a slower pace than expected.

Around mid-morning, Londons blue-chip index was up 19 points at 7,178.

Good and bad news came from the UKs services purchasing managers index for November, which arrived ahead of expectations for the second month running.

The reading nudged up to 49.3 from a reading of 48.6 previously, but nevertheless a reading below 50 still signals a contraction.

“As the last of 3 keenly viewed industry surveys in the past 3 days this rounds of the latest batch of leading indicators on the UK economy, leaving an overall impression of a slight improvement against a pessimistic backdrop, with activity on the whole remaining at subdued levels, “ commented David Cheetham, chief market analyst at XTB.

“The pound has made a break higher above the $1.30 handle, running up to levels not seen since May,” he added, saying that the election lead for the Conservatives “seems to be holding at around 10 percentage points and unless this narrows in the next week then it is looking increasingly likely that we will get a Tory majority”.

8.30am: Dull early progress

The FTSE 100 made a fairly flat start after Tuesdays blood-letting which was prompted by an unpredictable President Trump opening multiple new fronts in the US trade wars.

The index of blue-chips nosed 8 points lower to 7,147.94 in the first half-hour of trade

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Against the recent rather volatile backdrop, Michael Hewson, analyst at CMC Markets, is worried how the remainder of the month might play out.

“Last year December also saw a sharp sell-off before we get a strong rebound in the New Year,” he pointed out. “Could something similar play out here, given that the same problems facing investors werent that much different to the ones being faced now?”

More immediately, services sector data for November should tell us whether the UK is edging closer to recession or moving further from the economic precipice.

Looking at the market movers, Vodafone (LON:VOD) was given no credit for its link-up with Amazon Web Services as the shares fell 1.3% in the wake of the news.

Proactive news headlines:

MaxCyte Inc. (LON:MXCT) has inked a new development and commercialization agreement with KSQ Therapeutics, a biotechnology company using its proprietary CRISPRomics discovery platform to achieve higher probabilities of success in drug development. The terms of the agreement will see KSQ obtain non-exclusive clinical and commercial use rights to MaxCyte's cell engineering platform to develop multiple adoptive cell therapies. In return, MaxCyte is eligible to receive certain milestone payments in addition to other licensing fees.

IXICO PLC (LON:IXI) has achieved its first year of profitability since its admission to AIM in 2013. For the year ended 30 September, the neuroscience analytics firm swung to an underlying (EBITDA) profit of £500,000 from a £600,000 loss in the prior year, while revenues rose 40% to a record level of £7.6mln.

VR Education Holdings PLC (LON:VRE) is to launch a new 5G virtual reality (VR) device in partnership with Deutsche Telekom, US conglomerate Qualcomm Inc (NASDAQ:QCOM) and Taiwanese tech group XRSPACE. The VR technology firm said its ENGAGE platform, which allows users to construct virtual classrooms and other environments, has been selected as a launch application for the new VR headset, which is scheduled for release in the middle of next year.

Advanced Oncotherapy PLC (LON:AVO) is teaming up with one of Americas premier medical centres to assess the potential of the companys proton beam technology. The two-year collaboration with the Cleveland Clinic will evaluate “the target conformity of proton mini-beams compared with x-ray stereotactic body radiation therapy”.

Supermarket Income Reit PLC (LON:SUPR) shares nudged higher on Wednesday as the group saw increased rents for two properties in its portfolio. The firm said a retail price index (RPI) rent review for its Sainsburys supermarket in Ashford, Kent, had resulted in the annual lease payment rising to £4.04mln from £3.93mln per annum. Meanwhile, a similar review for its Tesco superstore in Thetford, Norfolk, will see rents rise to £2.72mln from £2.64mln per annum.

OptiBiotix Health PLC (LON:OPTI) has announced the appointment of Mikkel Hvid-Hansen as European Sales Leader of its wholly-owned subsidiary, ProBiotix Health Ltd. The life sciences business – which is developing compounds to tackle obesity, high cholesterol, diabetes and skincare – noted that Hvid-Hansen is joining ProBiotix Health from a position as International Sales Manager from Cell Biotech Int., a Korean probiotic company selling bulk ingredients and finished products internationally.

Primary Health Properties PLC (LON:PHP) has inked an £8.4mln deal to providing funding for the construction of a medical centre in Eastbourne, England, as the property investor continues to grow its portfolio. In a statement, the FTSE 250-listed healthcare facility builder said that over 18,000 patients will benefit from primary care facilities to be built for two merged GP practices, and the property will be wholly-owned by PHP after completion.

PCF Group Plc (LON:PCG) has its sights set on a £1bn loan book after the specialist lender posted record numbers in its latest year. Loans outstanding rose 55% to £339mln with profits for the twelve months to September climbing by 54% to £8mln.

Alien Metals Ltd (LON:UFO) is buying a formerly producing Western Australia silver mine in a low-cost, all-share deal. The group is acquiring the Elizabeth Hill Silver Project from Karratha Metals Group. Alien is handing over 200mln shares valued at 0.14p each, or £280,000 in total. The stock comes with 50mln warrants attached that are in the money above 0.25p.

NQ Minerals PLC (LON:NQMI) made record profits from its Hellyer mine in Tasmania last month. Unaudited net profit before tax in November was A$2.44mln (£1.29mln) on revenues of A$5.64mln.

Premier African Minerals Limited (LON:PREM) has taken a 10% stake in a manganese mine MN Holdings after converting a loan into shares. MN owns the Otjozondu mine in Namibia, which is currently exporting 5,000 tonnes lump ore per month at better than 35% manganese with production set to increase, Premier said in a statement. The mine also has an exploration target of 30-50mln tonnes grading at 23%-27% Mn and in the year to June generated revenues of N$21mln (US$1.43mln).

Impax Asset Management Group PLC (LON:IPX) said it is “in good stead” to keep growing as widespread commitment towards a more sustainable economy “has never been stronger”. The AIM-listed company, which invests in projects focused on the transition to a more sustainable global economy, saw its assets under management (AUM) rise to a total of £15.7bn in the two months to 30 November, thanks to net inflows of £500mln.

Pembridge Resources PLCs (LON:PERE) subsidiary, Minto Explorations Ltd, has received a US$3.7mln revenue payment as part of an offtake agreement with Japanese firm Sumitomo. The payment is for 1,793 dry metric tonnes of copper, gold and silver concentrate mined in November from the firms Minto project in Canada.

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