ADVFN Morning London Market Report: Tuesday 14 January 2020

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London open: Stocks muted as investors mull trade deal details


London stocks were steady in early trade on Tuesday as details emerged of the ‘phase one’ Sino-US trade deal due to be signed this week, with investors cautious ahead of a slew of key US bank earnings.

At 0830 GMT, the FTSE 100 was up 0.1% at 7,624.30, while sterling was down 0.3% against the dollar and the euro at 1.2956 and 1.1637, respectively, following Monday’s weak growth figures and amid expectations of an interest rate cut by the Bank of England.

London Capital Group analyst Jasper Lawler noted that “some of the meat of the deal is starting to emerge”, with the US set to remove China’s status as a currency manipulator.

“For their part, China has agreed to buy $80bn extra manufacturing goods and $50bn more energy supplies from the US over the next two-years as part of the phase-one deal,” he noted. “Services and agricultural goods will also get multi-billion-dollar boosts. The purchases represent a direct increase in economic activity and a thawing of the US-China tensions, which it is hoped will open up international trade more generally.”

Investors were also mulling the latest trade data out of China, which showed that imports rebounded in December, up 16.3% and comfortably beating expectations of a 9.6% rise, with US imports of agricultural goods faring particularly well. Exports rose 7.6% following a 1.3% decline in November and versus expectations of a 3.2% jump.

Later in the session, attention will turn to the US, where fourth-quarter earnings are due from banking giants Citigroup, JP Morgan and Wells Fargo.

In UK equity markets, Land Securities was the standout gainer after an upgrade to ‘buy’ at Bank of America Merrill Lynch, while budget airline easyJet flew higher after an upgrade to ‘overweight’ at Morgan Stanley.

Dixons Carphone surged to the top of the FTSE 250 after an upgrade to ‘buy’ at Goldman Sachs.

Builders’ merchant Grafton rallied as it reported better-than-expected trading conditions in November and December despite a weaker UK market and said it now expects full-year adjusted operating profit of around £202m and £190m on a pre-IFRS 16 basis for its continuing operations.

Games Workshop advanced after the miniature wargames manufacturer posted record first-half profit and sales.

House builder Taylor Wimpey was little changed after saying that it expected full-year results to be in line with expectations despite economic and political uncertainties cause by Brexit.

Specialty chemicals company Elementis tumbled after it warned on profits following a “subdued” final quarter of the year.

WPP was the standout loser after a downgrade to ‘underperform’ at Bank of America Merrill Lynch.

888 Holdings was in the red as it announced that Aviad Kobrine was stepping down as chief financial officer this year after more than 15 years at the company. More broadly, gambling stocks were under the cosh, with Flutter, GVC and William Hill also trading lower after the Gambling Commission said it will ban people from using credit cards to place online bets to address the issue of problem gambling.

Recruiter PageGroup nudged lower after it backed its full-year guidance but said the outlook remains tough.


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