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London open: Stocks steady as investors eye trade talks; Dunelm surges on update
London stocks were steady in early trade on Monday as investors eyed the latest round of trade talks between the US and China, with Brexit also firmly in focus ahead of next week’s Commons vote on Theresa May’s deal.
At 0830 GMT, The FTSE 100 was flat at 6,840.42, while the pound was up 0.1% against the dollar at 1.2739 and 0.2% lower versus the euro at 1.1143.
Officials from the US and China were due to meet for talks in Beijing later in the day in what will be the first discussions since Trump and Xi Jinping agreed a temporary truce in December.
Mike van Dulken, head of research at Accendo Markets, said: “Hopes are high for a long-term deal after weeks of optimistic tweets from President Trump, although an existing three-month/early-March truce deadline could reduce the need for urgency and the two-day meeting in Beijing is relatively brief.”
On home turf, Brexit was at the forefront of investors’ minds ahead of next week’s Commons vote.
London Capital Group analyst Jasper Lawler said: “A failure by Theresa May to secure further reassurances from Brussels over the Irish border means the probability of the Brexit deal being voted through Parliament remains extremely slim.
“However, it is also becoming more apparent that ministers are against a no deal Brexit. A cross party group are urging May to guarantee that the UK won’t leave without a deal. Optimism of Parliament not accepting a no deal Brexit, or even a second referendum being on the cards, is offering the pound support as it begins what promises to be another turbulent week.”
In the US, meanwhile, the government shutdown entered its third week.
In corporate news, homewares group Dunelm surged as it struck a note of caution about full-year results due to “unprecedented” uncertainty caused by Brexit, but posted 9% growth in total like-for-like sales for the second quarter, with LFL store revenue up 5.7% year-on-year and online revenue 37.9% higher.
Equiniti was in the green as it won a contract to run the UK media and telecoms watchdog’s scheme to compensate users of radio spectrum that is being cleared for use in 5G mobile services.
ContourGlobal rallied after saying it has agreed to buy Alpek’s Mexico portfolio of two natural gas-fired combined heat and power plants, together with development rights and permits for a third plant, for $724m in cash.
In terms of sector, miners put in a solid performance as copper prices rose, with Anglo, Rio Tinto and Antofagasta all on the front foot.
In broker note action, Centrica was hit by a downgrade to ‘hold’ at Jefferies, while St James’s Place, Hargreaves Lansdown and Standard Life Aberdeen were lower after downgrades at Deutsche Bank.
HSBC was also in the red after a cut to ‘sell’ at Citi while Funding Circle was knocked lower by a downgrade to ‘neutral’ at Bank of America Merrill Lynch.
On the upside, Petrofac was boosted by an upgrade to ‘buy’ at Jefferies, while Mediclinic rose on the back of an upgrade to ‘overweight’ at JPMorgan and Hays gained as HSBC bumped it up to ‘buy’.
