ADVFN Morning London Market Report: Wednesday 15 May 2019

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London open: Stocks nudge up as Trump softens stance; Tui rallies on results

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London stocks nudged higher in early trade on Wednesday, taking their cue from positive sessions in the US and Asia as traders welcomed signs of a softening stance from US President Trump on trade relations with China.

At 0835 BST, the FTSE 100 was up 0.1% at 7,248.74, while the pound was flat against the dollar and the euro at 1.2908 and 1.1520, respectively.

Speaking to reporters at the White House on Tuesday, Trump said that trade talks with China had not collapsed and that the trade war between the two nations was “a little squabble”.

Neil Wilson, chief market analyst at Markets.com, said: “A series of comments and tweets from the President has markets behaving a little more sensibly, but risks still seem skewed to the downside until there is clarity and a ‘deal’. There is obviously still room for the US and China not to raise their tariffs. Mr Trump sought to play down the tariff hikes and talk up the prospect of a deal again.

“The problem right now is that this market is trading on the whimsy of Donald Trump all the time, which makes it a tough place to be. And yesterday’s rally has not wiped out the losses from Monday. One can only say that we should expect more volatility ahead and more shaking of the tree from Donald Trump. Still don’t discount the prospect later in the year of the Fed raising rates – markets are currently betting big on a cut and if a hike came it would be a major shock.”

In equity markets, travel company Tui was a high riser as it reported a widening of its losses for the first half, pointing to a weak demand environment in its markets and airlines segment, but reaffirmed its outlook for FY19. The group’s first-half underlying earnings before interest, tax and amortisation loss widened to €301m from €170m in H1 2018.

Compass Group was also on the front foot after it said first-half profit rose more than 5% as the catering company gained new business in North America and added UK defence contracts.

CYBG was the biggest gainer on the FTSE 250 as it said it swung to a first-half pre-tax profit following the acquisition of Virgin Money.

On the downside, DIY chain owner Kingfisher retreated even as it maintained full-year guidance and posted a 0.8% rise in first quarter sales on a like-for-like basis.

Credit-checking company Experian was weaker despite saying that full-year pre-tax profit edged up as revenue rose amid strong growth across all of its regions, particularly North America and EMEA/Asia Pacific.

Steve Clayton, manager of the HL Select UK Growth Shares fund, which holds a 4.3% position in Experian, said the results are “hard to fault” but after a 15% rally in the share price this year, the move lower is most likely “all about travelling and arriving”.

Vesuvius was also in the red as it said the slowdown in growth since the fourth quarter of 2018 continued throughout the first quarter of this year.

 

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