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London open: Stocks creep higher as oil caps gains
London stocks made a tentative step higher on Tuesday morning as miners made gains but oil giants BP and Shell amid more sector angst.
The FTSE 100 hopped up just seven points to 7,662.55 after an hour’s trading. Sterling was up 0.1% against the dollar to 1.3112
Wall Street finished mixed overnight, as financials and tech stocks lifted the S&P into positive territory, whilst the Dow dipped a tad. The Asia session was led by China as Beijing said it would pursue a “more proactive” fiscal policy.
In an announcement posted overnight, the State Council said China will adopt “a combination of fiscal and financial measures in an effort to boost domestic demand and bolster support for real economy”, keeping the economy performing within a “reasonable range” with the more proactive fiscal policy including a focus on “introducing deeper tax and nontax fee cuts” and making more companies eligible for R&D spending tax cuts.
Pressure on China and its currency had forced Beijing to intervene, said analyst Mike van Dulken at Accendo Markets. Looking elsewhere, he said financials stocks were the sector to watch.
“Surging government bond yields (US, Japan), supported by Fed monetary policy tightening and BoJ tweaking are boosting Banks & Financials, while expectations of an upcoming meeting between US President Trump and European Commission President Juncker is smoothing some of the trade war concerns.”
Tuesday data includes the CBI Industrial Trends survey at 1100 BST, where the headline balance for July is expected to fall to 9 from 13. This will follow a swathe of preliminary purchasing managers’ surveys for euro area countries for the manufacturing and services sectors. The eurozone PMI results will be published at 0900 BST, with both indices forecast to retreat modestly.
Oil companies BP and Shell were lower, with Brent crude down 0.15% to $72.95.
Oversupply concerns have dominated market sentiment, said Jasper Lawler at London Capital Group. “The big fear for oil traders is that Saudi Arabia and other large oil producers are ramping up production ahead of the November deadline to comply with US sanctions on Iranian oil, this comes at a time when concerns over demand are starting to rise owing to increased global trade tension; over supply and falling demand is not a good combination for the oil bulls.”
In company news, fizzy drinks maker Britvic bubbled higher as it reported solid third-quarter sales growth of 3.4% despite being held back due to the UK shortage of carbon dioxide.
BT was a little higher as the telecoms group said it has offered discounts to encourage communication providers to upgrade customers to faster broadband over the next five years. The company said the offer, made by its Openreach infrastructure arm, should bring superfast and ultrafast broadband to most homes and businesses.
AstraZeneca has agreed to sell the commercial rights to Atacand and Atacand Plus in Europe to Cheplapharm Arzneimittel for $200m on completion of the agreement, plus a time-bound payment of $10m and sales-contingent milestones. The deal is expected to complete in the third quarter.
Sainsbury’s fell as its sales were shown to continue lagging behind its big supermarket rivals as all of the big four enjoyed their best period of growth so far this year.
Morrisons was higher but Tesco was down, while reported emerged from Sky News that it was examining plans to challenge German discounters Aldi and Lidl with a new retail format called Jack’s.
Superdry shares slid as the fashion chain founder Julian Dunkerton sold a 6.7% stake for £71m.
Drax tumbled even as it reported half-year pre-tax losses of £11.3m, an improvement on the previous year’s loss of £103.7m.
Spectris shares fell 7% despite half year results largely in line with expectations as like-for-like sales growth of 5% in the half-year. Analysts were disappointed that further details of management’s Uplift programme will not be forthcoming until later in the year.
