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London open: Stocks rally amid US-China optimism; Vodafone gains after results
London stocks rose in early trade on Tuesday, shrugging off a downbeat session on Wall Street thanks to some well-received corporate news and optimism over Sino-US relations.
At 0915 GMT, the FTSE 100 was up 0.5% to 7,087.49, firmly in the green despite heavy losses in the US on Monday, which saw Dow lose more than 600 points and the Nasdaq close down just over 200 points as Apple led tech shares lower after a number of chip suppliers warned on their future earnings outlook, citing weaker mobile phone demand.
Still, a recovery in Asian shares helped to lift the tone for European trading amid hopes of a de-escalation of trade tensions between the US and China ahead of the G20 summit later this month following a report that China’s top trade negotiator was preparing to visit the US.
On home shores, Brexit was firmly in focus as Theresa May insisted that talks are at the “endgame” stage. The pound underwent a see-saw session on Monday as Brexit-related news saw the currency hit a one-week low against the US dollar before some afternoon strength saw it finish higher on the day against the euro.
The pound was up 0.3% against the dollar at 1.2881 and 0.2% firmer versus the euro at 1.1478, with the upcoming jobs data likely to determine the currency’s next move.
“The unemployment rate is set to hold at 4.0%, with the claimant count change forecast to fall from 18.5k to 4.3k. More importantly, the average earnings index is expected to jump from last month’s shock 2.7% to an even healthier 3.0%; if it manages to do so, it’ll be the best reading in around three years,” said Spreadex analyst Connor Campbell.
The ILO unemployment rate, average earnings and the claimant count are all due at 0930 GMT.
In corporate news, Vodafone rallied after saying underlying earnings are still on track for the full year, as it swung to a massive loss at the half-year stage after it restructured its business in India due to competitive pressures.
Richard Hunter, head of markets at Interactive Investor, said: “Vodafone is not out of the woods, but it has established a positive direction of travel. This should come as some relief to long-suffering investors who have had a torrid time, with the share price having dropped 34% over the last year, as compared to a 5% dip for the wider FTSE100, with a decline of 19% in the last three months alone.
“The positive initial reaction to the numbers calms some of the turbulence and underpins a resolutely optimistic view on the company’s prospects, where the general market view of the shares as a buy remains intact.”
Consumer credit reporting agency Experian gained ground as it posted a jump in half-year revenue amid growth across regions, but a drop in pre-tax profit.
Melrose Industries racked up solid gains after a reassuring trading statement that highlighted strong revenue growth in the aerospace business.
FirstGroup advanced as it appointed a new chief executive officer and posted a widening of its first-half pre-tax loss.
Aggreko powered ahead after it said underlying revenue rose 11% in the nine months to 30 September, while BTG surged 15% as it posted a rise in interim revenue and upgraded sales guidance for its pharmaceuticals arm.
Builders’ merchant Grafton pushed higher after saying that like-for-like revenue for the four months to the end of October rose 5.5% as its Irish and Netherlands business performed well.
Housebuilder Taylor Wimpey was in the red as it said it was on track to meet full-year expectations following a “strong” second half, but warned that volumes would be flat next year as customers in the South East grow cautious amid heightened political and economic uncertainty
International support services group DCC was on the back foot even as it said interim pre-tax profits rose 17.2% to £85.9m as three of its divisions reported higher earnings and offset a seasonally weaker performance in its LPG unit.
B&M European Value Retail slumped as it reported a rise interim profit but sounded a cautious note on the outlook.
On the broker note front, Sophos was hit by a downgrade to ‘hold’ at Shore Capital.
