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London open: Stocks flat amid US-China tit-for-tat; CRH rallies on results
London stocks were flat in early trade on Thursday, with the US-China trade war very much in focus as they implemented 25% tariffs on $16bn worth of each other’s goods, as talks between the two in Washington were set to continue.
At 0840 BST, the FTSE 100 was steady at 7,575.22, while the pound was down 0.2% against the dollar at 1.2883 and flat against the euro at 1.1136.
Lee Wild, head of equity strategy at Interactive Investor, said: “There’s a real risk to global economic growth if the US slaps duties on another $200bn of Chinese goods, and especially if other countries get sucked into this dispute. At a time when other economies are beginning to struggle, a sharp slowdown in US expansion could have a significant impact worldwide.
“These developments come at a particularly sensitive time for a UK stock market range-bound for the past three months. September is statistically the worst month of the year for UK shares, but there have been wild swings either way in recent years, so don’t expect this stale period to last.”
Investors were also digesting the latest FOMC minutes released on Wednesday, which suggested that the Fed is likely to hike interest rates again next month and possibly in December.
In the UK, ministers are due to publish the first tranche of documents setting out Britain’s preparations for a no-deal Brexit shortly before lunchtime. Before that, Dominic Raab will make his first big speech as Brexit secretary, during which he is expected to say that Britain will take unilateral action in the event of a no-deal Brexit in order to keep trade and transport flowing freely.
On the data front, the CBI distributive trades survey is at 1100 BST.
In corporate news, CRH was the top gainer after it reported a 5% increase in first-half profit as the building materials group benefited from recovering construction markets. Pre-tax profit from continuing operations rose to €497m (£446m) from €475m in the six months to the end of June as revenue increased 1% to €11.9bn.
Playtech surged after it reported a drop in interim earnings but a rise in revenue as the gaming and casino software maker said Asian markets were increasingly competitive.
John Laing was also in the green as the infrastructure investor said first-half profit and net asset value increased, while Southend airport owner Stobart Group pushed up as it made a series of new board appointments.
Premier Oil gushed higher after well-received first-half numbers, while Phoenix Group also gained as its first-half operating profit beat expectations.
TalkTalk racked up strong gains after an upgrade to ‘overweight’ at Barclays.
On the downside, miners were in the red, with Antofagasta, Rio Tinto and BHP Billiton all lower as copper prices fell.
AstraZeneca slipped as it said a clinical trial of its Bevespi Aerosphere drug combination for lung disease showed that it is not superior to an existing inhaler treatment.
OneSavings Bank lost ground even as it upped its loan growth forecast and posted a jump in first-half profit, as it warned that competition is weighing on profit margins.
Meanwhile, ex-dividends took 4.26 points off the FTSE 100 and 22.37 points off the 250. These included Berkeley Group, Carnival, Croda International, Imperial Brands, LSE, Mondi, Paddy Power Betfair, Prudential, RBS, CLS Holdings, Dixons Carphone, FDM Group, Ferrexpo, HICL Infrastructure, Hikma Pharmaceuticals, Jardine Lloyd Thompson, Quilter, Rotork and Stagecoach.
