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London open: Stocks recover but trade war concerns remain
London stocks edged higher in early trade on Tuesday following heavy losses in the previous session, but trade war concerns were expected to remain firmly on investors’ minds.
At 0820 BST, the FTSE 100 was up 0.3% to 7,529.97, after suffering its worst day of losses since February on Monday amid escalating tensions between the US and China. The pound was up 0.1% against the euro at 1.1353 and flat against the dollar at 1.3283.
London Capital Group analyst Jasper Lawler said: “With no change to fundamentals, there is little hope that this is anything more than a mere dead cat bounce.
“As it starts to dawn on the market that this is not just another Trump tactic and the US President is in fact serious about initiating a damaging global trade war with potentially catastrophic economic consequences, traders are jumping out of risky assets and fast. With deteriorating US-Sino relations quickly approaching a point of no return, Wall Street tumbled lower following the trend set earlier in the day in Europe.”
On the data front, UK mortgage approvals numbers are due at 0930 BST.
In corporate news, cruise operator Carnival was the standout gainer, bouncing back from a sharp selloff on Monday when it cut its full-year earnings outlook due to higher fuel prices and a strong US dollar.
Sainsbury’s shares were down as industry data from Kantar Worldpanel showed it lagging well behind its rivals, with sales down 0.2% in the past 12 weeks. Morrisons, where sales grew 1.9%, was the only one to see its shares not in the red, while Tesco’s sales were up 1.4%. Ocado’s sales grew 10.1%.
BHP Billiton rose after saying that its Samarco joint venture has agreed to settle a 20bn reais (£4bn) deal with Brazilian authorities relating to the bursting of a tailings dam that killed 19 people in the Minais Gerais region in 2015.
AstraZeneca ticked higher as it announced a series of board committee changes including appointing Nazneen Rahman as the chair of the drug company’s science committee.
Anglo American advanced after saying that the value of rough diamond sales at De Beers rose to $575min the fifth cycle of this year from $554m in the fourth and $541m in the fifth cycle of 2017.
Polymetal edged up as it said it has started up its new Kyzyl mine in Kazakhstan ahead of schedule and below budget, while brick maker Ibstock gained after agreeing to sell a former quarry near Bristol for £9.3m in cash.
On the downside, specialist building products supplier SIG fell after agreeing to sell VJ Technology to UK private equity investment firm Primary Capital following a competitive disposal process. Consideration from the sale was expected to be around £29.7m, resulting in a gain on sale of £7.4m, with the proceeds set to reduce net debt.
Petrofac gushed lower as it said it has taken $1.8bn of new orders since the start of the year, which is slightly more than at this stage last year but that the order backlog of $9.7bn was down from £10.2bn at the end of December and $13bn a year ago.
Outside the FTSE 350, beleaguered flooring retailer Carpetright was trading lower after saying it swung to a full-year statutory pre-tax loss of £70.5m from a profit of £900,000 in 2017.
In broker note action, Royal Mail rallied after an upgrade to ‘sector perform’ from ‘underperform’ at RBC Capital Markets, while Cairn Energy was boosted by an upgrade to ‘buy’ from Bank of America Merrill Lynch.
However, ASOS and Ocado were hit by downgrades at Redburn and Exane, respectively.
