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ADVFN Morning London Market Report: Wednesday 25 July 2018

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London open: Stocks nudge lower amid deluge of corporate news; Trump-Juncker meeting eyed

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London stocks nudged a touch lower in early trade on Wednesday as investors waded through a deluge of corporate news and broker notes and eyed a meeting between US President Trump and EU Commission President Jean-Claude Juncker.

At 0830 BST, the FTSE 100 was down 0.1% to 7,699.45, while the pound was up 0.2% against the dollar at 1.3167 and 0.1% firmer versus the euro at 1.1262.

The meeting between Trump and Juncker, due to take place at the White House, comes after the US administration decided to impose tariffs on all imported European cars.

Tweets from Trump ahead of the meeting were doing little to calm nerves. “Tariffs are the greatest!” was one of his gems, while he also tweeted that the US and the EU should drop all tariffs, barriers and subsidies. “That would finally be called Free Market and Fair Trade!” he said.

London Capital Group analyst Jasper Lawler said: “The unnerving headlines centred around trade tensions, which are showing no signs of evaporating anytime soon. In fact, Trump declaring that ‘tariffs are the greatest’ paints a picture of these levies becoming a permanent fixture to his administration, a point which was backed by a pledge of $12bn in aid for US farmers hit by Chinese retaliatory trade tariffs; showing that Trump has no intention of removing pressure.”

“Today the focus will switch to the more worrying scenario of a US-EU trade war, which, under a worst case scenario has the potential to spark a crisis, if not a full blown recession.”

On the UK data front, BBA mortgage approvals are at 0930 BST while the CBI distributive trades survey is at 1100 BST.

Ahead of that, there was no shortage of news flow for investors to sink their teeth into.

ITV ticked just a touch higher after unveiling a plan to focus on production and expand direct-to-consumer activities as the broadcaster announced a reduction in first-half earnings caused by the cost of the World Cup.

Croda International was in the green as it posted a small rise in reported half-year profit even as sales dipped on the back of a stronger pound.

3i Group was higher as the private equity fund said net asset value for the quarter ending in June came in at 760p from 724p in the year to the end of March.

Rathbone Brothers was on the front foot as it posted a 64% increase in first-half profits, while Metro Bank advanced after raising gross proceeds of around £303m in a share placing and reporting a four-fold jump in first-half profit.

Tullow Oil gushed higher after saying it swung to a first-half pre-tax profit of $55m from a loss of $348m the year before.

Capital & Counties edged up on the back of in-line interim results, while Brewin Dolphin gained ground as it reported a 6.5% increase in total funds under management for the quarter to 30 June.

Qinetiq traded up as it maintained its expectations for the current year and said underlying trading for the group was as expected in the first quarter, while Victrex rallied after saying it has performed well since the end of the first half and that it remains on track for a strong full-year 2018.

On the downside, budget carrier Wizz Air hit turbulence as it posted a 14% drop in first-quarter pre-tax profit, while Indivior tumbled after saying that the launch of a generic version of its opioid addiction treatment could have a much bigger impact on its 2018 results than it originally expected.

Fresnillo was in the red even as it said gold production in the second quarter rose and slightly lifted its output guidance for the year, while Antofagasta fell as it said second-quarter copper production rose 6.1% to 163,200 tonnes compared with the previous three months that it expects it to increase throughout the year as grades improve.

Things were just as busy on the broker note front, with Berenberg initiating coverage of a host of housebuilders. Taylor Wimpey, Redrow, Bovis and Bellway were started a ‘buy’, while Persimmon, McCarthy & Stone, Crest Nicholson and Berkeley were started at ‘hold’.

UBS initiated coverage of Thomas Cook at ‘sell’, while BT and Rio Tinto were cut to ‘sector perform’ and ‘underperform’, respectively, at RBC Capital Markets. B&M European Value Retail was lifted by an upgrade to ‘buy’ at Citi.

Fast fashion retailer Boohoo was downgraded to ‘neutral’ at Citi, Kingfisher was lifted to ‘neutral’ at Citi and budget airline Ryanair was downgraded to ‘reduce’ at AlphaValue.

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