Britain

FTSE 100 closes in the green but Wall Street generally lower as trade deal hopes fade

  • FTSE 100 closes up 16 points
  • US benchmarks mixed
  • Oriole Resources flies high after good news from associate company Thani Stratex

5.05pm: FTSE 100 closes ahead

FTSE 100 index closed in the green on Tuesday, but across the board, were mixed, as traders adopted a risk-off attitude as any progress on US/China trade seemed to have ground to a halt.

The UK index of leading shares closed up around 16 points at 7,323, while its mid-cap cousin, the FTSE 250 added almost 88 points to stand at 20,528.

On Wall Street, shares were mixed with the Dow Jones Industrial Average plunging 124 points, and the S&P 500 lost around 1.5 points. The tech heavy Nasdaq index, however, added around 25 points to stand at 8,575.

"The US-China trade situation remains in centre stage, and there doesnt appear to be a clear way out of the deadlock. In the past 24 hours we have heard that Beijing are pessimistic about reaching a deal with the US," noted David Madden, analyst at CMC Markets.

"The Trump administration has granted permission to US companies to continue dealing with Huawei for another 90 days, which is a token gesture, but it shows goodwill nonetheless," he added.

"Traders have failed to get excited today as the trade spat seems to have reached a standstill."

Against the US dollar, the pound lagged around 0.19%.

3.50pm; FTSE swoons

The Footsie suffered a swoon in the afternoon as US benchmarks kicked into reverse.

Earlier gains on the Footsie had been reduced to 26 points (0.3%), with the index loitering around the 7,335 level.

“Earlier, reports from the day before suggesting scepticism in Beijing about a broad deal being reached anytime soon were shrugged off. Instead markets focused on word that the White House would extend a licence allowing US companies to do business with Huawei,” said Ken Odeluga at City Index.

“Markets then roughly halved gains soon after Wall Streets open. Chinas state-run Global Times noted that Big gaps remain in China-US trade talks. Two years after the trade dispute began, few reminders are needed that improved prospects can unravel in the time it takes to post a tweet,” he added.

Entering the final hour of trading, Oriole Resources PLC (LON:ORR) was the top performer on the back of news relating to Thani Stratex Resources, a company in which it has a 26.1% stake.

Orioles shares flew 44% higher to 0.49p after Thani reached an agreement with its joint venture partner Onyx for the funding of an exploration programme in Djibouti.

The top faller was Plutus PowerGen PLC (LON:PPG), which plunged 37% to 0.11p after the company revealed it has ceased to receive management fees from its six FlexGen sites and its management contract with Attune Energy.

2.45pm: US markets open marginally higher

US markets opened higher but not as ebulliently as previously expected following the release of housing starts data.

The Dow Jones and the S&P 500 both broke new ground, with the former up 20 points (0.1%) at 28,057 and the latter 1.6 points firmer (0.1%) at 3,122.

US housing starts rose to 1,314,000 in October from 1,266,000 in September, which was a tad below the consensus forecast of 1.32mln.

Housing permits climbed to 1,461,000 from 1,391,000, which was comfortably above the consensus forecast of 1,385,000 and was also the highest level since May 2007.

“Both single- and multi-family starts rose; the former are tracking permits with their usual one-month lag. A further increase is a decent bet for November. The multi-family numbers are very noisy and were well below trend in September; the October increase is just mean reversion, and the trend is about flat,” said Ian Shepherdson at Pantheon Macroeconomics.

In the UK, the FTSE 100 was up 79 points (1.1%) at 7,387.

1.30pm: FTSE 100 knocking on the door of 7,400

US indices are expected to open higher as traders ignore mounting concerns about progress in US-Sino trade talks.

Spread betting quotes suggest the Dow Jones will open 54 points higher at around 28,090 and the S&P 8 points to the good at a little above 3,130.

“Yesterday we heard that Beijing were pessimistic about the possibility of signing phase one the trade deal, and the story hasnt moved along,” said CMCs David Madden.

“Traders are buying back into the market despite the lack of progress on the trade front. The issue has dominated the headlines in recent weeks and is likely to stay at the forefront of dealers minds until mid-December – when the US are due to slap on new tariffs. The rally this morning underlines traders expectations of a deal being achieved,” he added.

That rally has taken the Footsie to the cusp of 7,400; the index currently lies a few points short of that milestone at 7,394, up 86 points on the day (1.2%).

With global equity markets generally on the rise, those companies that are heavily invested in equities – insurance companies, fund managers and the like – are in demand, with retail-focused funds supermarket Hargreaves Lansdown (LON:HL.) leading the way with a 3.7% rise to 1,841.5p.

A contract win for Meggitt PLC (LON:MGGT) sent shares in the supplier of widgets to the aerospace and defence sector 2% higher to 227p.

“2019 has seen defence contractor Meggitt finally overtake the FTSE 100 on a five-year performance time-frame, having lagged the index until mid-July this year. This restores the relationship, with the firm continuing to power ahead over the longer term,” noted Chris Beauchamp at IG Group.

“A recent revenue upgrade and todays contract win confirm the stronger outlook for the shares, which trade at 16.5 times forward earnings. While no longer in bargain territory, there seems ample reason to justify the current valuation,” he added.

12.15pm: CBI Industrial Trends Survey: miserable but better than expected

The Footsie did not quite manage a triple-digit gain, getting a nosebleed when on the cusp, but leading stocks remain buoyant.

Londons index of blue-chip stocks was up 85 points at 7,393, 11 points below its intra-day high.

The industrial trends survey for November by industry pressure group the CBI was a bit of a downer.

The survey of 307 manufacturers found that total order books improved on October (when they were at their weakest in nine years) but remained significantly below their long-run average, the CBI said.

The CBIs total orders balance improved to -26 in November, from -37 in October (a nine-year low), and above the consensus forecast of -30.

Export order books also strengthened on the previous month, albeit from their weakest level since the financial crisis of 2008) but also continued to be below the long-run average, the CBI reported.

Output volumes fell at a similar pace to October, with output expanding in only five out of 17 sub-sectors. The headline fall in output volumes was driven largely by the motor vehicles, metal products, and metal manufacture sub-sectors. Meanwhile, the main positive contributors to output were the mechanical engineering and plastic products sub-sectors, alongside a boost from the aerospace sector's output.

The CBI said the firms surveyed anticipate that output volumes will remain flat in the next three months.

“While the thick fog of uncertainty from a No Deal Brexit has lifted somewhat, the manufacturing sector remains under pressure from weak global trade and a subdued domestic economy,” declared Anna Leach, the CBIs deputy chief economist.

“Order books remain below average, and output volumes continue to fall. When taking into account the deteriorating outlook for manufacturing globally, its clear that the outlook for the sector remains precarious.

“The General Election is an opportunity for all parties to explain how they will shore up our economy. Ratifying a Brexit deal and moving on to build a vibrant future relationship with our biggest trading partner, based on frictionless trade, will be vital – both for UK manufacturers, and business as a whole,” she added.

Howard Archer, the chief economic advisor to the EY ITEM Club, said there was little in the CBI report to inspire confidence that better times might be just around the corner for the UK manufacturing sector.

“The November survey indicated that the manufacturing sector is having a difficult fourth quarter with both domestic and foreign demand under pressure. Domestic demand for manufactured goods has been hampered by businesses' caution over investment amid a myriad of uncertainties (Brexit, domestic economic and political, global economic) which is limiting expenditure on capital goods. There also appears to currently be increased consumer reluctance to spend on big-ticket manufactured items,” Archer said.

“Meanwhile, stock-building by manufacturers rose despite the date for the UK to leave the EU being extended to 31 January from 31 October and the risk of a no deal exit seemingly waning. Specifically, the balance for stocks of finished products rose to +17% in November after dipping to +11% in October from +28% in September (the highest level since May 2009); however, this was not that far above the long-term average of +13%.

“Manufacturing volumes were reported to have fallen over the past three months with a balance of -9% of manufacturers reporting a rise. This compared to balances of -10% in October, +1% in September and -3% in August. Only five of the 17 manufacturing sub-sectors were reported to have seen a rise in output over the three months to November,” Archer said.

11.00am: FTSE 100 eyeing a triple-digit gain

UK blue-chips were getting a wiggle on ahead of this evening's head-to-head televised debate between party leaders Boris Johnson and Jeremy Corbyn.

Helped by a slight softening of the pound against the dollar, the FTSE 100 was homing in on a triple-digit gain, up 96 points (1.3%) at 7.404.

“European markets are rallying and US futures are already pointing to solid gains, as risk appetite comes storming back following a mixed session yesterday. It is almost as if this is still a bull market,” quipped Chris Beauchampm the chief market analyst at IG.

“Today sees the first clash on TV between Jeremy Corbyn and Boris Johnson, a discussion likely to generate more heat than light. Both leaders know their polling has picked up of late, and will want to continue that move, while the poor Lib Dems will have to wait for another way of boosting their flagging position. There is still plenty of time to go, but one imagines Conservative Central Office will be very pleased with the overall position so far,” Beauchamp speculated.

The mid-cap FTSE 250 was clutching tightly to the Footsie's coat-tails, racking up a 218 point (1.1%) gain at 20,659, with Puretech Health PLC (LON:PRTC) leading the way with a 16% leap to 290p.

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Low-cost airline easyJet PLC (LON:EZJ), now skulking in the FTSE 250 tent after being ejected from the FTSE 100, was 4.2% higher at 1,330.5p on the back of its full-year headline profits that were towards the top end of the guidance range.

“All in all, these results reflect a difficult year however investors should look past these figures,” suggested Joe Healey, an investment research analyst at The Share Centre.

“With the budget airline boasting one of the strongest balance sheets, todays announcement of the revival of its package holiday business and plans to address carbon emissions are sure to please investors. In addition, with record customers flying this financial year, cost cutting making progress and improving revenue per seat throughout the second-half of the year, the future does not look as dreary as once seemed,” he added.

9.30am: Solid start with Halma leading the way

Despite doubts growing about progress on a US-Sino trade agreement, London's leading shares have made a positive start.

The FTSE 100 was up 30 points (0.4%) at 7,338, led by engineering conglomerate, Halma PLC (LON:HLMA).

Halma rose 8.7% to 2,064p after it said order intake in the second half of the current fiscal year has been ahead of the same period the year before.

Another conglomerate, Melrose Industries PLC (LON:MRO), was also wanted after its trading statement.

The shares rose 1.6% after the acquisitive firm, which swallowed up GKN last year, said it is trading in line with expectations for 2019.

“The improvements in the businesses are being delivered at pace and the Melrose board is confident this will unlock significant further shareholder value,” the company said.

#MRO Melrose Industries: Trading Statement

Trading in line…excellent performance given the GM strike & the ho um nature of many of their end markets???? https://t.co/FEUQBSLtPK

— Rhomboid1 (@rhomboid1MF) November 19, 2019

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