Hot Features
Premium
Trade smarter, not harder: Unleash your inner pro with our toolkit and live discussions.
London open: Stocks nudge lower as investors eye Sino-US trade relations
London stocks nudged lower in early trade on Monday as investors mulled the latest developments in Sino-US trade relations.
At 0830 BST, the FTSE 100 was down 0.1% at 7,420.26, while the pound was up 0.1% against the dollar and the euro at 1.2303 and 1.1242, respectively.
“Markets are focused on US-China relations at the start of the week following a report Friday that the US would consider banning Chinese listings on US markets as part of the trade war,” said Markets.com analyst Neil Wilson.
The report was later denied by a US Treasury official, who said: “The administration is not contemplating blocking Chinese companies from listing shares on US stock exchanges at this time.”
Wilson said the implicit warning from this statement is obvious.
“So we have another salvo on the US-China front. Yet more noise to contend with. This fits into the playbook of Trump negotiations – float something to ramp pressure and get a reaction. Always put the opposition on the back foot. Refuted or not, the implication of this is two-fold: first that the trade/tech war is spiralling ever wider in its scope; secondly it does not bode especially well for the high level talks due to restart Oct 10th.”
On home shores, all eyes will be on the Tory conference amid speculation of a vote of no confidence in Prime Minister Boris Johnson’s leadership this week.
“If that happens, the opposition have 14 days to come up with a workable administration,” said Wilson. “What are the chances of Corbyn, Swinson and Blackford all rallying round? Hard to say, but I feel there is too much division there to make it work.”
Market participants were also digesting the latest data releases out of China.
The official purchasing managers’ index for the manufacturing sector rose to 49.8 in September from 49.5 in August, beating expectations for an unchanged reading but remaining in contraction territory for the fifth month in a row.
Meanwhile, the non-manufacturing PMI fell to 53.7 in September from 53.8 the month before, while the composite PMI – which measures activity in both the services and manufacturing sectors – edged up to 53.1 from 53.0.
A private survey of the country’s manufacturing activity hit its highest level since January 2018. The Caixin/Markit factory PMI came in at 51.4 for September, up from 50.4 in August and ahead of expectations of 50.2.
Caixin/Markit said the improvement was mostly due to firmer domestic demand as foreign sales continued to be hit by the Sino-US trade spat.
TD Securities said: “Overall, China’s economy continues to lose momentum and in response China is continuing with targeted easing especially towards smaller firms. This may explain the outperformance of the Caixin PMI relative to the official PMI.
“As the August trade data showed, the impact of tariffs and slowing global activity is increasingly being felt on hard data in China, with exports and imports falling last month. Overall, we think growth continues to be on path to threaten the lower end of the 6-6.5% official target range.”
In London equity markets, GlaxoSmithKline was on the front after it said that a late-stage study in cancer patients showed that its maintenance therapy for a form of ovarian cancer reduced the risk of disease progression or death by 38%.
Rio Tinto gained ground following a report that it has scrapped plans for a sale or initial public offering of its Canadian iron-ore unit following a year-long attempt to offload the business. According to the Wall Street Journal, Rio has not been able to agree a price with any potential suitors for its 59% stake in Iron Ore Co. of Canada.
Iron ore miner Ferrexpo ticked higher as it denied allegations made on social media last week that its chief executive officer Kostyantin Zhevago is being investigated in relation to a business he owned in Ukraine until 2015.
