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London open: Stocks edge lower ahead of US-China trade talks; Trump in the spotlight
London stocks edged lower in early trade on Wednesday as investors eyed US-China trade talks, with US President Trump in focus after his longtime lawyer pleaded guilty to campaign finance violations.
At 0835 BST, the FTSE 100 was down 0.3% to 7,539.93, while the pound was flat against the dollar and the euro at 1.2896 and 1.1153.
The US-China trade talks are due to kick off in Washington later on Wednesday, with delegations from Beijing set to meet with US officials to try to find a resolution to the escalating tariff war between the two countries. Trump said in an interview with Reuters on Monday that he didn’t expect much of the talks and that there was no time frame for an end to the trade war.
Meanwhile, concerns were growing that Trump might be vulnerable to impeachment in the coming months after his former lawyer, Michael Cohen, pleaded guilty to violating campaign finance laws for the purpose of influencing the election and implicated the president, saying that he told him to arrange payments to silence women alleged to have had affairs with him.
In addition, Trump’s former campaign chairman, Paul Manafort, was found guilty on eight fraud charges. He was convicted of five counts of tax fraud, two counts of bank fraud and one count of failure to report a foreign bank account.
Neil Wilson, chief market analyst at Markets.com said: “Trump’s used to stormy sessions but this was probably the worst day yet for his presidency.
“This looks to have introduced an element of political risk to the USD which may be weighing on sentiment. The dollar index has retreated to just above the 95 handle having brushed 97 in recent days. Combined with the president’s swipe at the Fed, there are now some clear headwinds for the dollar bulls, but ultimately tariffs and yield differentials should support USD. US-China talks this week are not expected to produce much, but we could see it result in a date for a Trump-Jinping meeting.”
There are no major UK data releases due, but foreign secretary Jeremy Hunt is still in Washington and due to meet with Trump’s chief of staff John Kelly, son-in-law Jared Kushner and Secretary of State Mike Pompeo.
In corporate news, Intertek slipped as it replaced chief financial officer Ed Leigh with group financial controller Ross McCluskey in a management shakeup at the product testing company.
Diploma was a little weaker after announcing the acquisition of St Albans-based FS Cables for £18m in cash, in a deal that is expected to be immediately earnings-enhancing.
Elementis was little changed after the speciality chemicals group said it had agreed to sell a site in Jersey City for $17m (13m).
Miners retreated, with Antofagasta, Anglo American and Glencore all lower as copper prices fell.
On the upside, builders’ merchant Grafton Group rallied after it posted a 19% jump in first-half pre-tax profit to £90m, while transport operator Go-Ahead nudged up as it announced that chief financial officer Patrick Butcher would be leaving to join Capita as CFO there.
On the broker note front, Wood Group was upgraded to ‘equal-weight’ at Morgan Stanley, while Lancashire and Provident Financial were upgraded to ‘hold’ at Berenberg and Rio Tinto was lifted to ‘hold’ at Liberum.
