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Only one FTSE 100 stock was in negative territory on Tuesday morning as markets swung from pessimism to optimism about the chances of a global trade war.
By 0845 GMT, the FTSE 100 was up 95.91 points or 1.39% to 6,984.60 after closing lower the previous day as a late bout of selling clipped the wings of what had been a mostly positive day.
Overnight US stocks enjoyed their best day since August 2015 on the back of what was their worst weekly performance since January 2016. The positive trigger was reports of progress in behind the scenes talks between China and the US, with US Treasury Secretary Steven Mnuchin saying talks were ongoing between US and Chinese officials in a bid to stop a trade war. Mnuchin said he was “hopeful” of a truce between the two sides.
The US was handing out so many exemptions on trade tariffs that markets were questioning whether President Trump ever had any intention of heading into a trade war with China, said Jasper Lawler at London Capital Group. “Whatever the intention, the Chinese offering to buy more semiconductors from the US, to help cut its trade surplus, not only eased trade war fears boosting sentiment, but also gave an injection of life into downbeat technology stocks and financials,” he said.
The Dow Jones Industrial Average finished up 2.84%, the S&P 500 added 2.72% thanks to technology stocks and financials, and the Nasdaq closed an impressive 3.3% higher.
“Shifts from extreme pessimism to wild optimism are driving markets today,” said Hussein Sayed, chief market strategist at FXTM. “With President Trump’s negotiation style, expect to see more of such action. Like traders, he uses a leveraged approach when making deals… Now urgent negotiations have opened, I won’t be surprised if it ends up with better trade deals between the world’s two biggest economies.”
In company news, Ferguson was top of the leaderboard after proposing to hike its interim dividend 10% to 57.4 cents per share and add a $4 per share special dividend as well as a share consolidation and ongoing share buybacks after selling its Nordic business. The FTSE 100 plumbing and heating products group, formerly known as Wolseley, reported headline EPS up 16.6% to 202.1 cents on profits up 15% and revenues up 10.3% in the half year ended 31 January. Ashtead, which has some read-across from the buoyant US construction market, was also higher.
Strong metal prices overnight saw the heavyweight miners performing well, led by Glencore and Anglo American.
GlaxoSmithKline was higher after agreeing to buy Novartis’ 36.5% stake in their consumer healthcare joint venture for $13bn (£9.2bn). The JV was formed as part of the three-part transaction between GSK and Novartis in 2014.
United Utilities said it was trading in line with management expectations for the year to the end of March. Underlying operating profit will be moderately higher than the year before after spending on infrastructure renewals rose slightly in the second half, the company said in a trading statement.
Fellow water company Severn Trent was the only FTSE 100 share in negative territory, possibly hit by a story in The Times that pointed to the rising pressure on Britain’s water companies as Labour wants to renationalise the sector, environment secretary Michael Gove has lambasted companies for failing to act in the public interest and the water regulator is threatening that its forthcoming price-setting review will be the toughest since privatisation.
IG Group and CMC Markets were higher even though the European financial regulator confirmed prohibitions on marketing, distribution and sale to retail clients of CFDs, rolling spot forex, financial spread bets, binary options.
Soft drinks maker AG Barr reported profit before tax bubbling up 4.2% to £44.9m on revenue which was ahead 8.0% to £277.7m. The maker of IRN-BRU, Rubicon and Strathmore lifted gross margin by 20 basis points to 47.1% but operating margin before exceptional items decreased by 60 basis points to 16.2%.
Transport operator Stagecoach maintained its full year earnings per share forecasts as rail revenues grew while those in bus operations fell. Bus services in London took a big hit from the recent snow storms, Stagecoach said, with revenues down 4.3% in the 44 weeks to March 3. Regional bus revenue fell 0.1% on a like-for-like basis.
Superdry founder Julian Dunkerton has informed the faux-Japanese fashion brand that he wants to leave the firm and devote more time to his other business and charitable interests.
