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London open: Stocks edge up amid Sino-US trade hopes; corporate updates disappoint
London stocks edged higher in early trade on Thursday as trade hopes helped to offset a slew of disappointing corporate updates.
At 0840 BST, the FTSE 100 was up 0.3% at 7,314.32, while the pound was flat against the dollar and the euro at 1.2358 and 1.1288, respectively.
Optimism over Sino-US trade relations helped to underpin the mood after US President Donald Trump said on Wednesday that a trade deal with China could happen “sooner than you think” and that China was making big agricultural purchases from the US.
Trump told reporters in New York that China wants “to make a deal very badly”.
Oanda analyst Craig Erlam said: “Let’s face it, trade deals are what investors are really interested in, impeachment is just a political distraction from what is really unsettling investors and policy makers around the world. It may make for an interesting read and, who knows, maybe if it gains some traction it could make next year’s election more interesting but I think that’s about it.
“It amazes me that these soothing tones still draw investors in given how often we’ve heard them in the past but then, they can be a needy bunch, seeking constant reassurance that everything is going to be OK.”
Corporate news was mostly grim, but broker notes lent a hand, with building materials group Ferguson rallying as Deutsche Bank reinstated coverage of the stock at ‘buy’, while Centrica, United Utilities and Pennon were boosted by upgrades to ‘buy’ at Citi.
Pub group Mitchells & Butlers fizzed higher as it reported a rise in full-year sales and backed its guidance for operating profit margin guidance.
On the downside, education publisher Pearson was the worst performer on the FTSE 100 as it warned that full-year profit will be at the lower end of its guidance range due to weak trading in the US.
Shares of Imperial Brands slumped as it cut its full-year revenue guidance, pointing to a challenging next generation products market in the US. The tobacco giant also said it expects earnings per share to be broadly flat at constant currencies. Shares of rival British American Tobacco were also firmly in the red.
British Airways and Iberia parent IAG flew lower after saying it expects full-year operating profit before exceptional items to be €15m lower, reflecting flight cancellations caused by the BA pilots’ strike in September. It also said that further action would increase the fall.
Ex-dividend stocks also weighed, with Morrisons, Smurfit Kappa, Hargreaves Lansdown, Bovis Homes, John Laing, Renishaw, Essentra, Grafton and IG Group all in the frame.
