| London stocks rallied in early trade on Monday, taking their cue from an upbeat Asian session as investors welcomed a temporary trade truce between the US and China. At 0830 GMT, the FTSE 100 was up 1.9% to 7,114.43, with miners and energy shares pacing the advance, while the pound was up 0.5% against the dollar at 1.2810 as demand for riskier assets weighed on the greenback. Against the euro, sterling was flat at 1.1271. At the G20 summit over the weekend, US President Trump and China's Xi Jinping said they would put off the introduction of any further tariffs for the time being as they attempt to settle their difference through talks. The US said it will now hold fire on raising tariffs on $200bn worth of Chinese goods from 10% to 25% on 1 January. Meanwhile, China said it was willing to buy a "very substantial" amount of agriculture, energy and other goods from the US to reduce the trade imbalance. Hussein Sayed, chief market strategist at FXTM, said: "What was delivered over the dinner was not a breakthrough, neither a long-term solution for the ongoing trade war between the largest two economies, but a 90-day window to improve relations. Introduction of new tariffs are now shelved, and trade talks will intensify over the next three months. "This outcome seems to be an optimistic one from the two leaders and more than what was priced into markets beforehand, meaning that this is enough to boost sentiment and risk-on trade." Spreadex analyst Connor Campbell cautioned that there's "still a lot to fret over", highlighting the lack of a detail-filled joint statement from the two superpowers and the threat of even more aggression if an agreement isn’t reached by next March. "At least, according to China’s foreign ministry anyway, the presidential pair have instructed their economic teams to work towards removing all tariffs," he said, citing a Reuters report. Back on home turf, Labour warned that Prime Minister Theresa May was facing a constitutional crisis if she does not publish the full legal advice on her Brexit deal. Opposition parties are threatening to launch contempt of parliament proceedings against Downing Street over the issue, with MPs voting last month to ensure the government would be required to lay before parliament "any legal advice in full". As risk appetite was boosted by news of the trade truce, miners were the standout gainers, with Anglo, Glencore, Antofagasta, BHP and Rio Tinto all trading higher. The weaker greenback also helped, as it makes dollar-denominated commodities cheaper for holders of other currencies. Energy-related stocks also racked up strong gains, with BP, Shell, Premier Oil and Tullow all firmer as oil prices surged on the back of improving US-China relations. West Texas Intermediate was up 4.9% to $53.55 a barrel and Brent crude was 4.6% higher at $62.33. In corporate news, Spirax-Sarco Engineering rallied as it said it had sold its German HygroMatik unit to Carel Industries for €59m (£52.m). Engineer Babcock was in the green as it said that its joint venture with UGL, Naval Ship Management, has been awarded a new contract by the Australian Defence Force, worth around AUD $1.5bn (£860m) for up to 15 years. Power generator Drax gained after saying it has revised the terms of its £702m purchase of Scottish Power assets after an EU court ruled Britain must stop a back-up power scheme aimed at avoiding electricity shortages. Syncona pushed higher after saying that its portfolio company, Autolus Therapeutics has dosed the first patient in a trial of a new therapy for treating lymphoma. On the downside, plastic packaging supplier RPC Group was in the red as it said that one of the two US private equity giants in buyout talks with the company has walked away, but negotiations continue with the other. RPC said it has ended discussions with Bain Capital but that the deadline for Apollo Global Management to make an offer has been pushed back to 21 December as talks continue. Southend airport owner Stobart Group was under pressure as it said it was cutting its fourth-quarter dividend to focus on future investments. In broker note action, Dunelm was lifted by an upgrade to 'buy' at Peel Hunt, while Wizz Air flew higher after an upgrade to 'buy' at HSBC. Bodycote was cut to 'neutral' at JPMorgan. | 
No comments:
Post a Comment