LONDON MARKETS: FTSE 100 Ends Higher, Rising From 6-week Low As Ocado, Tobacco Firms Rally
June 20 2018 - 11:17AM
Dow Jones News
By Carla Mozee and Sara Sjolin, MarketWatch
Ocado, tobacco stocks rise after analyst comments
U.K. stocks rose on Tuesday, with tobacco companies among
biggest gainers after a positive broker note, helping London's
blue-chip index bounce off a six-week low that it reached as trade
tensions between the U.S. and China escalated.
How markets are moving
The FTSE 100 index gained 0.3% to close at 7,627.40, partly
recovering from a 0.4% loss on Tuesday.
The pound traded at $1.3206, up from $1.3173 late Tuesday in New
York.
What's driving markets
Like Asian and continental European equity markets
(http://www.marketwatch.com/story/european-stocks-stage-recovery-but-us-china-trade-tensions-remain-2018-06-20),
U.K. stocks were recovering from Tuesday's slide, which came as
investors fled on worries about the deteriorating U.S.-China trade
relationship.
In Washington, the White House accused China of waging a
systematic campaign of "economic aggression" in a report released
Tuesday
(http://www.marketwatch.com/story/navarro-report-blasts-china-for-systematic-economic-aggression-2018-06-19).
That followed U.S. President Donald Trump's threat to impose more
tariffs on Chinese goods, adding up to levies on $450 billion in
imports, after Beijing threatened to retaliate against a first
round of U.S. tariffs
(http://www.marketwatch.com/story/china-threatens-further-tariffs-on-us-products-as-trade-conflict-escalates-2018-06-19).
But the trade-war concerns seemed to be subsiding somewhat after
the governor of the People's Bank of China, Yi Gang, reportedly
appealed
(http://www.scmp.com/business/markets/article/2151558/hong-kong-stocks-steady-early-trading-even-dow-wipes-out-gains-made)
for investors "not to lose confidence" in China's "strong economic
fundamentals." Fears that Beijing would use yuan devaluation as a
weapon in the trade hostilities eased, too, after China's central
bank set its reference rate for the currency
(http://www.marketwatch.com/story/yuan-move-by-chinas-central-bank-shows-no-effort-to-devalue-amid-trade-spat-2018-06-20)
at its lowest since January.
Read:China can't match Trump in a tariff fight, but it does have
other weapons
(http://www.marketwatch.com/story/china-cant-match-trump-in-a-tariff-fight-but-it-does-have-other-weapons-2018-06-19)
Also, lawmakers in the House of Commons voted against an
amendment to the Brexit bill that would have given parliament a
"meaningful vote" on the final divorce agreement. Wednesday's vote
was seen as an important victory for U.K. Prime Minister Theresa
May after the House of Lords on Monday voted in favor of giving
parliament more say on the final deal.
What strategists are saying
"Given the absence of any major news on the trade front, the
trigger for the shift in sentiment appears to have been some
market-friendly signals from the People's Bank of China. The
central bank said it is prepared for outside shocks and that China
has room to face all sorts of trade frictions, fueling speculation
for a loosening of policy should the trade outlook deteriorate,"
said Marios Hadjikyriacos, investment analyst at XM.com.
"Ironically, any further easing from the PBOC could lead to a
weaker yuan, thereby potentially exacerbating the U.S.-China trade
deficit that the U.S. administration is so desperately trying to
reduce," he said in a note.
Stock movers
Shares of British American Tobacco PLC (BATS.LN) (BATS.LN)
gained 2.4% and Imperial Brands PLC (IMBBY) (IMBBY) added 3.2%
after Liberum started coverage of both tobacco firms with buy
ratings.
Ocado PLC shares (OCDO.LN) rallied 5.6%. Peel Hunt analysts said
in a note that they believe the online grocery and technology
company "has potential to become the 'standard' platform for retail
logistics across all sectors as the operating system of
retail."
Berkeley Group Holdings PLC (BKG.LN) stumbled 5.9% after the
home builder said it expects profit to be around 30% lower in
fiscal 2019
(http://www.marketwatch.com/story/berkeley-group-foresees-lower-profit-2018-06-20)
and that pretax profit in fiscal 2018 represented a peak. Shares of
other home builders also lost ground, with Barratt Developments PLC
(BDEV.LN) down 1.5% and Persimmon PLC (PSN.LN) ending 0.6%
lower.
(END) Dow Jones Newswires
June 20, 2018 12:02 ET (16:02 GMT)
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