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London open: Stocks rise as Washington grants temporary reprieve from Huawei ban
London stocks rose in early trade on Tuesday, with banks pacing the advance, after Washington granted a temporary reprieve from the Huawei ban.
At 0845 BST, the FTSE 100 was up 0.3% to 7,332.66, while the pound was down 0.3% against the dollar at 1.2692 and 0.1% lower versus the euro at 1.1382, with Prime Minister Theresa May set to face a cabinet showdown as she attempts to get backing for her Brexit agreement.
Spreadex analyst Connor Campbell said: “The prospect of Thursday’s European elections, one set to by Nigel Farage’s Brexit party, combined with the latest vote on Theresa May’s deal at the start of June, left the currency saddled with a sense of helplessness.”
More broadly, investors welcomed news that the Trump administration has issued a licence allowing US companies to keep doing business with Huawei for the next three months.
Neil Wilson, chief market analyst at Markets.com, said: “It’s all rather like the way Trump slaps on tariffs but delays the execution to allow room for negotiation. Whether it’s Huawei or tariffs, I would see all of this in the broader context of giant tug-of-war between the two superpowers being played out in front our eyes. As such, the more this goes on the lower the chance of a meaningful resolution to any of it. Trade disputes ad infinitum, ad nauseum.
“China has vowed to retaliate but stocks in China rose overnight – the more damage the US tries to do the more the market expects stimulus from Beijing.”
In equity markets, banks were the standout gainers, with Standard Chartered, Lloyds and Barclays all higher, while Burberry was boosted by an upgrade to ‘market perform’ at Bernstein.
Elsewhere, government contractor Galliford Try surged as the construction group said it was cutting 350 jobs at its construction division following a strategic review.
In a trading statement, Galliford said it expected full year results to be in line with its own forecasts, adding that target construction revenues would fall to £1.3bn. The company forecast profit before tax after exceptional items for the year to June 30 of £112.7m – £123.3m based on forecasts at May 20.
Electrocomponents rallied as it posted a 23.9% jump in full-year profit thanks to “strong” market share gains in EMEA and the Americas.
Severn Trent ticked higher as it reported a 6.8% increase in annual profit but warned over the impact of nationalisation of the industry.
On the downside, British American Tobacco lost ground as it emerged overnight that US senators Mitch McConnell and Tim Kaine have introduced a bill that would raise the federal minimum age to buy tobacco to 21, in the hope of curbing the growing trend of teen vaping.
Entertainment One retreated as the Peppa Pig owner’s full-year revenue fell short of analysts’ expectations, while WH Smith was in the red as it announced the departure of chief executive officer Stephen Clarke and reported a 15% rise in third-quarter group sales.
Halfords nudged lower as the retailer posted an 18% drop in full-year underlying pre-tax profit due to “weakened” consumer confidence and mild winter temperatures.
