LONDON MARKETS: London Markets Higher, Buoyed By Materials Stocks, Trade Optimism
August 20 2018 - 4:38AM
Dow Jones News
By Barbara Kollmeyer, MarketWatch
Sage tumbles on downgrade; Mulberry hit by profit warning
Led by banks and commodity-related companies, the U.K.'s main
stock index pushed higher on Monday as it tracked gains across
global markets driven in part by optimism over a coming U.S.-China
trade meeting.
Sage Group PLC fell sharply on a downgrade, while among smaller
companies, Mulberry Group PLC got crushed by a profit warning.
What are markets doing?
The U.K.'s FTSE 100 rose 0.6% to 7,606.73. The index rose less
than 0.1% on Friday, but last week recorded a 1.4% decline, its
biggest since the week ended March 23, according to FactSet
data.
The pound was buying $1.2733, a drop of less than 0.1% against
the dollar.
What is driving the market?
London tracked global equity markets higher on signs that the
U.S. and China are making efforts to resolve trade differences. A
report in The Wall Street Journal said negotiators on both sides
are mapping out talks
(http://www.marketwatch.com/story/stock-futures-inch-up-putting-indexes-near-records-2018-08-20)
aimed at resolving major differences by November. The issue has
proved an overhang for global stocks at times over the past several
months.
U.S. stock futures indicated major indexes could open near
multimonth highs
(http://www.marketwatch.com/story/stock-futures-inch-up-putting-indexes-near-records-2018-08-20).
Helped along by global trade optimism, commodity-related stocks
pushed higher, with heavily-weighted Glencore (GLEN.LN)(GLEN.LN)
and BHP Billiton PLC (BLT.LN) (BHP.AU) climbing around 3% each.
Royal Dutch Shell Group (RDSA.LN) rose nearly 1%.
Some relative calm over Turkey's currency crisis was also a
factor for optimism Monday. The U.S. rejected a bid by the country
to tie relief for a big Turkish bank to the release of a U.S.
pastor, but so far the lira was down just 1.4% against the dollar.
For the month of August, the emerging market currency has tumbled
24% against the greenback, amid fears the country will trigger a
wider emerging market crisis.
The U.K.'s negotiations to exit from the European Union will
swing into focus this week with the Brexit minister Dominic Raab
due in Brussels for talks Tuesday with the EU's chief negotiator
Michel Barnier.
What stocks are in focus?
Along with commodity-related stocks, heavyweight banking group
HSBC Group PLC (HSBA.LN) (HSBA.LN) was up 0.7%, also helping
support the main index.
Sage Group PLC (SGE.LN) led the losers for the FTSE 100,
tumbling 6.5% after the enterprise-software maker was downgraded to
sell from hold by Deutsche Bank, where analysts cited increasing
competition in its core midmarket business.
Persimmon PLC (PSN.LN) and Taylor Wimpey PLC (TW.LN) also were
on the losing side, down 1% and 0.5%, respectively. Rightmove
reported a 2.3% drop in average asking prices
(http://www.marketwatch.com/story/uk-house-prices-see-sharp-drop-in-august-rightmove-2018-08-20)of
newly listed homes on a seasonal basis in August, the biggest since
a similar decline in December.
Among smaller companies, Mulberry Group PLC (MUL.LN) slumped 21%
after the retailer warned earnings will take a hit
(http://www.marketwatch.com/story/mulberry-shares-sink-after-profit-warning-2018-08-20)
if sales from its concessions in the House of Fraser department
stores don't start to recover.
(END) Dow Jones Newswires
August 20, 2018 05:23 ET (09:23 GMT)
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