| The FTSE 100 bounced back on Tuesday but fell agonisingly short of regaining the 7,000 level as markets swung from pessimism to optimism that a global trade war can be averted, with the surging dollar helping many of London's multi-nationals. London's blue chip index closed 111.19 points or 1.61% higher at 6,999.88, having earlier topped 7,042, as the pound pared some of its initial losses to sit around 0.5% lower against the dollar at 1.4155. Traders in the Square Mile had been initially spurred on by Wall Street's best session since August 2015, rebounding from last week's worst 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, head of research at London Capital Group. "The extended gains on Tuesday go some way to unwind losses from one of the worst weeks in recent years for stock markets. We would caution investors not to get too excited," he said. "These price moves have all the hallmarks of a ‘dead cat bounce’. Huge up-days do not typically happen in a strong market. Short-covering rallies only occur when there are many short-sellers, something characteristic of a weak market." Chris Beauchamp, chief market analyst at IG, agreed that a resumption of 2017’s ‘easy money’ bull market is a very distant proposition. "Still, if the trade talks resolve over time with China and others making concessions in order to avoid further US tariffs, we may still think of the ‘tariff tantrum’ of early 2018 as just another scare that provided a buying opportunity for the patient. From a chart perspective, a ‘W’ bottom is much more encouraging for investors than the ‘V’ pattern that many had expected. If the selling subsides from here, it will be an indication that the bears have tried their hardest, but have been found wanting." In company news, financial stocks were among the big gainers around the world, especially multinational banks that are seen as the glue that sticks the system of international trade together, showed the benefit from receding trade war fears. Plumbing and heating products giant Ferguson was top of the leaderboard after confirming the news shareholders were hoping to hear: that it will pay a $1bn special dividend on the sale of its Nordic business and that trading in North America remains strong. Analysts at Barclays said the second-quarter result was better than expected in terms of both organic revenue growth and margins. "This leads us to upgrade our full year trading profit estimate by 3% and increase our price target to £62, 21% above the current level." GlaxoSmithKline galloped higher after agreeing to buy Novartis' 36.5% stake in their consumer healthcare joint venture for $13bn, only days after pulling out of the bidding process for Pfizer’s consumer business. The JV was formed as part of the three-part transaction between GSK and Novartis in 2014. Strong metal prices overnight saw the heavyweight miners performing well, led by Glencore and Anglo American. Glencore led its peers after Credit Suisse said the commodities giant stood out in a UK mining sector that was cheaper than the wider market and midcap sector peers, also increasing their target prices for Glencore, Anglo and KAZ Minerals as they predicted a “mid-cycle rerate” for mining shares, potentially in the second half of 2018. Rio Tinto was given an extra boost as it struck a deal to sell its 80% stake in the Kestrel underground coal mine in Queensland, Australia, for $2.25bn. 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. Shares in fellow water company Severn Trent were lower initially after 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. But the shares rallied strongly as the session wore on. IG Group and CMC Markets were higher as the European financial regulator confirmed prohibitions on marketing, distribution and sale to retail clients of CFDs, rolling spot forex, financial spread bets, binary options. This was pretty much as expected, with IG having already said that revenue in the year to May 2019 is likely now to be down on 2018, with little impact on the 2018 number. Soft drinks maker AG Barr reported profit before tax bubbling up 4.2% on revenue which was ahead 8.0%. The maker of IRN-BRU, Rubicon and Strathmore margin hit by increased input costs. "The key to success in the coming year is the performance of the lower sugar Irn-Bru recipe, both the new Irn-Bru XTRA variant and reformulation of the main line," said Nicholas Hyett, analyst at Hargreaves Lansdown. "The tonic that’s ‘made from girders’ is famously sugary, and would have fallen foul of the new sugar tax due to be introduced next month. The reformulation means it will no longer face the levy, and worries that a lower sugar content would dent demand from its legions of fans seem to have proven unfounded – so far at least." 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. Broker Canaccord Genuity maintained a positive view on the stock, saying it believed the company would maintain its dividends in the coming years "even in the absence of any meaningful rail contributions", given that dividend would be fully covered by bus operations. Superdry was down as it revealed that founder Julian Dunkerton will leave the faux-Japanese fashion brand in order to devote more time to his other business and charitable interests. Next was the biggest faller on the blue chip index as retailers were among the weakest performers on Tuesday amid news that the owner of fashion retailer Select had been put into a company voluntary agreement, while suit peddler Moss Bros said it was expecting an "extremely challenging" retail environment ahead. Gold miners Randgold and Fresnillo were also lower as the price of the yellow metal retreated alongside the rising US dollar. | 
No comments:
Post a Comment