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London open: Stocks flat ahead of bank holiday weekend; Shire rallies on FDA approval
London stocks were flat as a pancake in early trade on Friday ahead of the bank holiday weekend, with all eyes still on US-China relations and Fed chairman Jerome Powell’s speech at the Jackson Hole symposium.
At 0825 BST, the FTSE 100 was steady at 7,563.20, while the pound was up 0.2% against the dollar at 1.2836 and 0.1% lower versus the euro at 1.1096.
There was no breakthrough in this week’s US-China trade talks, as both countries imposed 25% tariffs on $16n worth of each other’s goods, although the Chinese commerce ministry did say that discussions had been “constructive” and “candid”.
“With the US mulling $200bn in additional 25% tariffs, this is not going away,” said Neil Wilson, chief market analyst at Markets.com. “The real worry is what does China do then. While Beijing cannot match the US in terms of raw firepower as it imports far less from the US, it can respond with ‘qualitative’ measures, which could seriously impede US firms doing business in China.”
The main focus on Friday will be a speech by Jerome Powell at Jackson Hole, due at 1500 BST. Wilson said markets will be interested in anything he has to say on rates, with participants eyeing any potential signal that the FOMC could be prepared to take its foot off the gas in light of Trump’s warnings and concerns about yield curve inversion.
“But this year’s meeting is more about market structure than current monetary policy and so prepare for a non-event – hard to see Powell using this to signal a retreat.”
In corporate news, Shire was the standout gainer after the US Food and Drug Administration approved a first-of-its-kind drug, Takhzyro, to treat patients aged 12 plus suffering from a rare hereditary disease that causes swelling.
Computacenter ticked higher as the IT infrastructure and services provider posted a 24.3% jump in first-half pre-tax profit as revenue exceeded £2bn, marking the first time this milestone has been reached in the first half.
Petrofac rallied after saying it was selling Petrofac GSA Holdings to Ithaca Energy for up to $292m.
Mining stocks were on the front foot as copper and zinc prices rebounded, with Anglo American, BHP Billiton and Glencore all higher.
In broker note action, Antofagasta was upgraded to ‘outperform’ at RBC Capital Markets, while John Laing Group was cut to ‘sector perform’ by the same outfit. N Brown, Ted Baker and Henry Boot were all lifted to ‘add’ at Peel Hunt, while McBride was upgraded to ‘buy’ at Jefferies.
