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London open: Stocks recover from losses; Sky rallies as Comcast ups offer
London stocks edged higher in early trade on Thursday, bouncing back from the heavy losses seen in the previous session after tensions between the US and China escalated.
At 0840 BST, the FTSE 100 was up 0.3% to 7,613.58, having fallen 1.3% on Wednesday after US President Trump followed through with his threat to slap tariffs on an additional $200bn worth of Chinese imports.
The pound was flat against the euro at 1.1309 and 0.1% firmer versus the dollar at 1.3218 as the UK government was set to publish its 100-page Brexit White Paper, giving a full run-down of its proposal for divorce from the European Union.
Meanwhile, investors were digesting a Bloomberg report suggesting that Chinese and US officials have shown willingness to resume talks over trade between the two nations after.
Naaem Aslam, chief market analyst at Think Markets, said market participants still aren’t factoring in a full trade war.
“The hope is that China and US would be able to resolve this matter through bilateral agreement. But uncertainty around this matter has anchored up. The sad aspect is none of the parties are ready to throw in the towel yet which makes me think that there is no resolution in sight yet.
“Therefore, over the coming days, I would expect a tit-for-tat reaction from China-unless the bilateral discussions resume between the two parties.”
On the data front, the Bank of England credit conditions survey is at 0930 BST.
In corporate news, Sky rose as the battle for the London-listed broadcaster stepped up a notch after US media giant Comcast raised its bid late on Wednesday to £14.75 per share from £12.50, trumping the sweetened £14 per share bid from 21st Century Fox that was made just hours earlier.
Computacenter surged after saying that 2018 results are likely to be “comfortably in excess” of the expectations it set out in its first quarter trading update following a strong start to the year.
Outsourcer Capita gained as it said it expects to raise more than £400m from non-core asset disposals this year, £100m ahead of its previous target.
B&M European Value Retail nudged up after reporting a jump in first-quarter revenue despite challenging market conditions.
On the downside, Dunelm slid as it reported flat like-for-like revenues and squeezed profit margins in the fourth quarter, meaning the homewares retailer expects full year underlying profit to fall almost 7% to £102m.
Outside the FTSE 350, retailer DFS was also under the cosh as it warned on profits, saying the hot weather put off customers in the fourth quarter, while AIM-listed ASOS fell sharply after saying that its full-year sales would be “towards the lower end” of its previous 25% to 30% guidance.
Premier Oil gushed lower after a trading and operations update, while waste business Renewi slipped despite saying trading in the quarter from April 1 was in line with management’s expectations with merger synergy and integration projects progressing well.
Halma, Primary Health Properties, Safestore, Superdry, Telecom Plus and WH Smith were among the companies whose stock went ex-dividend.
On the broker note front, ITV was cut to ‘neutral’ by Goldman Sachs, while Pagegroup was downgraded to ‘hold’ at Kepler Cheuvreux and Intu was reduced to ‘sell’ at Deutsche Bank.
Sky was cut to ‘neutral’ at Macquarie, but Indivior got a boost as Bank of America Merrill Lynch upgraded the stock to ‘buy’ following recent share price weakness.
