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FTSE 100 closes higher as Trump tweet lifts mood; optimism over Johnson, Varadkar Brexit meet

The UK's premier share index finished up 19.86 points at 7,186.36

Donald Trump
London and US stocks were boosted by optimism over US, China trade talks
  • FTSE 100 closes up nearly 20 points

  • Comments on "possible" Brexit deal boost pound

  • Markets rally following Trump meeting tweet

5.20pm: FTSE closes higher

FTSE 100 index closed in the green on Thursday as sentiment was boosted by positive noises on US, China trade.

The UK's premier share index finished up 19.86 points at 7,186.36.

Talks in a bid to resolve the dispute between the two economic giants kicked off today but the big driver in sentiment appeared to be a tweet from US president Donald Trump that he will meet Liu He, China’s vice premier, tomorrow.

"The fact Mr Trump will meet with Liu He sends a positive message, which is why we have seen an uptick in sentiment. The gulf between the two sides is wide, but a willingness to sit down and negotiate has injected some hope into the markets," suggested market analyst David Madden, at CMC Markets.

Elsewhere, Joshua Mahony, senior market analyst at IG Index, added: "Markets certainly perceive the meeting as an additional opportunity for the deadlock to be broken. Despite US rejection of Chinese plans for a partial deal, rumours that the US could consider a currency pact to stave off impending tariffs at least points to some form of de-escalation."

Meanwhile, the pound rose 1.43% against the US dollar on hopes of a possible Brexit deal after talks between the Irish prime minister Leo Varadkar and Boris Johnson, the UK Premier, about the way forward.

Miners were among the biggest Footsie gainers with copper giant Antofagasta (LON:ANTO) topping the bill, up 4.47% to 864p.

Barratt Developments (LON:BDEV),  the property developer, plunged 3.71% to 586.80p, and was the biggest laggard after new data emerged on the falling housing market in the UK, notably in London, where prices have saw shed 1.7% year on year, their worst performance since 2009, according to mortgage lender Halifax.

3.40pm: Sterling rallies as UK and Ireland see path to possible Brexit deal

Hot on the heels of the rally in equities, sterling was also enjoying a late-afternoon boost after prime minister Boris Johnson and Irish Taoiseach Leo Varadkar said in a joint statement that there was a “pathway to a possible [Brexit] deal”.

The two leaders had met for discussions earlier to try and hammer out a compromise to salvage a proposed Brexit deal that has been given a cold reception from Brussels, however, Brexit secretary Stephen Barclay is due to meet the EU’s chief negotiator, Michel Barnier, tomorrow for talks.

The joint statement lifted the pound 0.5% to US$1.2269 against the greenback at around 3.20pm.

Meanwhile, the FTSE 100 was up 19 points at 7,185.

3.20pm: FTSE 100 stages late rally as Trump tweets meeting with Chinese VP

The FTSE 100 appears to be staging a last-minute rally at the tail end of the session following a tweet from Donald Trump that he will be meeting Chinese vice-premier Liu He at the White House on Friday, which traders took as a positive sign that a trade deal could be agreed.

The US president’s tweets are no stranger to moving markets, and this one seemed no different as the FTSE 100 was up around 18 points at 7,185 shortly afterwards, while US markets were also on the rise.

The Dow rose 0.5% on the back of the news with the S&P 500 climbing 0.5% and the Nasdaq up 0.6%.

2.35pm: Wall Street sees flat open as trade talks begin

US markets had a neutral start to Thursday’s session as Chinese and American diplomats began the latest round of trade negotiations in Washington DC.

Shortly after the opening bell, the Dow Jones Industrial Average was flat at around 26,344, while the S&P 500 was up just 0.02% at 2,920 and the Nasdaq ticked up 0.07% to 7,909.

Meanwhile, new data showed that core US inflation slowed to 0.1% in September, down from 0.3% in August and below analyst estimates of 0.2% growth.

General inflation, meanwhile, remained flat, below expectations of a 0.1% rise which may provide more impetus for another interest rate cut from the Federal Reserve.

“This morning’s US data emphasised a couple key trends about the economy; inflation is firmly anchored and not necessarily a problem for the Fed, and the labour market is still showing signs of resilience.  The data-dependent Fed can still go ahead with delivering a third consecutive rate cut on October 30th, but will likely remain patient on committing to an easing cycle”, said Edward Moya, senior market analyst at OANDA.

“If we don’t see a complete collapse in trade talks, the bullish case for US stocks remains in place as the US economy is still likely to see modest growth and the Fed is unlikely to raise rates over the next couple of years as inflation will probably not rise above their target over the next year”, he added.

Separately, the latest weekly jobless claims data showed that less US workers filed for unemployment than previously expected at 210,000, down from 22,000 and less than estimated of 215,000.

The numbers suggest that the US labour market is remaining solid despite signs of a general slowdown in the economy, although the pace of hiring was beginning to cool.

In London, the FTSE 100 was 8 points higher at 7,175.

1.25pm: US markets to head lower amid trade tensions

Wall Street is expected to head lower on Thursday as investors continued to hold their breath ahead of tariff talks between the US and China in Washington DC later today.

“There are clearly many issues that can derail these talks but the concept of a “partial deal” has breathed new life into the idea of a pre-US election agreement”, said Jasper Lawler, head of research at London Capital Group.

"Even if a partial deal can be defined as something as simple as less tariffs and more agricultural purchases, the current situation would be much less antagonistic with better prospects of ending the trade war”, he added.

The prospect of a currency pact between the two nations has already caused some volatility in the forex markets, with some speculating that a specific exchange rate between the yuan and the dollar could strengthen the former and weaken the latter.

Elsewhere on the currency markets, sterling was on the rise once again, up 0.2% at US$1.2229, as Boris Johnson and his Irish counterpart Leo Varadkar began further talks to discuss the UK’s Brexit proposals.

The talks form a set of last-ditch efforts to secure a Brexit deal before an EU summit next week, however, the chances of securing one are slim and many are expecting Johnson to be compelled to request an extension of the UK’s departure date beyond 31 October.

Meanwhile, in London the FTSE 100 was still stuck in neutral by early afternoon, hovering around its starting level of 7,166.

While the index itself wasn’t making any moves in either direction, rising copper and iron ore prices were providing a boost to the Blue-chip miners, with Antofagasta PLC (LON:ANTO) up 2.9% to 851p, Anglo American plc (LON:AAL) rising 3.5% to 1,915p and Glencore PLC (LON:GLEN) climbing 2.9% to 231.4p.

11.35am: FTSE 100 seesaws into late-morning; Burberry lifted after bullish Credit Suisse comments 

In the last hour of the morning session, the FTSE 100 was seesawing around its starting point, hovering around 7,166 just after 11.30am.

Trade news is continuing to make markets jittery, however, others are taking optimism from the UK’s recent mixed bag of GDP data, which while reporting a worse than expected reading for August beat forecasts over the latest three-month period, reducing fears of a recession.

While most eyes are on the latest round of trade talks between the US and China, analysts at UBS are currently looking to impending US tariffs on EU imports as another potential headache for the world economy.

The US is due to impose US$7.5bn in tariffs on EU good from 18 October, however as this accounts for around 0.04% of the EU’s GDP, the Swiss bank said the impact would likely be “minimal”, however the prospect of retaliation, particularly in the case of a dispute between aircraft makers Airbus and Boeing, which the World Trade Organisation is due to rule on next year.

There is also the issue of US tariffs on EU car imports, expected in November, which UBS says could result in “downside risks” to its outlook for the eurozone.

On the company front, luxury fashion group Burberry Group plc (LON:BRBY) had posted healthy gains in late-morning, rising 1.8% to 2,071, after Credit Suisse said the firm had “one of the strongest brand momentums” in the sector.

“Burberry now shows the strongest increase in [year-to-date] and 3Q [Instagram] 'likes' among the group of luxury fashion brands with > Eu2bn revenue.” Credit Suisse said, adding that they expected like-for-like sales growth at the firm to accelerate to 5% in its 2020 financial year from 4% in the first quarter of that year.

10.20am: FTSE 100 inches into positive territory as UK set to avoid imminent recession

The FTSE 100 has just about returned to positive territory in mid-morning after the latest set of GDP figures provided relief that the UK is on track to avoid an imminent recession.

While the economy declined 0.1% in August, more than expected, growth of 0.3% in the latest three months, thanks partly to an upward revision of July’s growth figure to 0.4% from 0.3%, meant September’s reading will need to be very weak to push the UK into recession.

Phil Smeaton, chief investment officer at Sanlam UK, said that while there was a “creeping” likelihood of a recession and that the current weak growth was understandable given Brexit uncertainty, there was “solace” in the fact that investment and GDP were likely to improve after Brexit was delivered.

“At this point even a no deal Brexit will remove the uncertainty preventing business from doing its job and improve the short term economic outlook”, he added.

The stronger than expected 3-month reading also provided some strength for the pound, which was up around 0.2% at US$1.2228 against the dollar.

Meanwhile, at around 10.20am the FTSE 100 had eked out a small gain of 5 points to 7,171.

Key weights on the index in mid-morning were housebuilders, with Barratt Developments PLC (LON:BDEV) slumping 5.5% to 576.2p after new data showed declining sales in the UK’s housing market.

A survey by the Royal Institution of Chartered Surveyors showed the number of homes being put up for sale in the UK fell to its lowest level since 2016, while new buyer enquiries fell after four months of little movement.

“The fact that Brexit is eroding the UK housing sales is no longer news, but as it has been going on for close to three years now and as the current tensions between the Prime Minister and Europe are offering no clear end point to the situation, the damage to property businesses is beginning to assert itself more and more”, said Fiona Cincotta, senior market analyst at Cityindex.

Barratt is also down as it is one of the index's ex-dividend stocks, along with, Centrica PLC (LON:CNA), HSBC Holdings PLC (LON:HSBA) and Tesco PLC (LON:TSCO).

9.35am: UK GDP declines 0.1% in August

The UK’s gross domestic product (GDP) contracted by 0.1% month-on-month in August, lower than analyst expectations of flat growth.

However, there was a small silver lining to the data, which also showed the economy grew by 0.3% over the last three months which was better than forecast and could ease fears of a recession.

The news seemed to provide a boost for the FTSE 100, which had regained most of its lost ground and was down 5 points at 7,161 just after 9.30am.

Meanwhile, the reason for the market’s sudden swing into negative territory seems to be down to yet more trade tension as a Reuters report revealed that the Chinese Foreign Ministry had criticised US Secretary of State Mike Pompeo for accusing the People’s Republic of human rights violations at a briefing on Thursday.

The spat is unlikely to soothe nerves ahead of trade talks between the two economic giants, which are currently trying to broker some form of deal to avoid additional US tariffs on Chinese imports which are due to come into force next week.

8.45am: FTSE 100 slumps in early trading

The FTSE 100 began Thursday more or less as expected with some small gains, however, the index quickly dropped in the first hour of trading and was down 34 points at 7,132 at around 8.45am.

Miners Antofagasta PLC (LON:ANTO) and Anglo American plc (LON:AAL) were among the top blue-chip risers in early trading, up 1.9% to 842.8p and 2.1% to 1,888.6p respectively on hopes that a trade deal could be secured in the latest round of talks.

Meanwhile, packaging group Mondi PLC (LON:MNDI) was one of the biggest FTSE 100 fallers, down 2.8% at 1,503.5p after a less than impressive trading update.

The latest reading of the UK’s gross domestic product (GDP) later today may provide some catalysts for traders, however, analysts are expecting little joy out of the British economy.

“The UK economy is struggling with the uncertainties of pre-Brexit. Analysts are expecting a dreary 0.0% reading, a sharp comedown from the previous 0.3% – let’s just hope it doesn’t turn negative”, said Connor Campbell, an analyst at Spreadex.

He added that other UK data due out today, such as index of services data, “might not come to mean much” depending on any news that emerges from an impending meeting between Boris Johnson and Irish Taoiseach Leo Varadkar as the two sides attempt to hammer out a compromise on the Irish border ahead of Brexit.

Proactive news headlines

Custom electronics maker discoverIE Group PLC (LON:DSCV) said trading in the July-September quarter was good and the company is on track to meet full-year underlying earnings expectations.

Woodbois Limited (LON:WBI), the African forestry and timber trading company, notched up record quarterly revenues in the three months to the end of September.

Pharma company Avacta Group PLC (LON:AVCT) has signed a collaboration agreement with Swiss biotechnology firm ADC Therapeutics SA, developing new antibody alternatives to treat cancer. 

A new independent review has raised the estimate of the amount of tungsten and molybdenum at Thor Mining PLC’s (LON:THR) Molyhil deposit in Australia.

Europa Oil & Gas Holdings PLC (LON:EOG) chief executive Hugh Mackay used the explorer’s financial results for 2019 to highlight the plan for an ambitious growth strategy "to build a full cycle oil and gas company".

Caledonia Mining Corporation Plc (LON:CMCL) has commissioned a new oxygen plant at the Blanket Mine in Zimbabwe, designed to improve metallurgical recovery and reduce cyanide consumption, with gold recoveries expected to rise 94% from 93% this year.

Columbus Energy Resources PLC (LON:CERP) told investors it has formally lodged a claim with the Spanish Government to recover €919,192.96 in costs following the company’s exit from the La Lora Concession.

Immotion Group PLC (LON:IMMO) will install one of its virtual reality cinema pods at the Blue Planet Aquarium in Cheshire as part of a deal with Spanish leisure firm Aspro Parks.

Nektan PLC (LON:NKTN) will extend a share placing to raise £5mln following increased interest from investors.

Kibo Energy PLC (LON:KIBO) is to raise a minimum of £1.5mln through a placing at 0.45 pence per share to fund its work on power projects in southern Africa and the UK.

Motif Bio PLC (LON:MTFB) has received official confirmation of the parameters of a new trial to get US approval for its iclaprim antibiotic.

6.45am: FTSE 100 to make positive start

The FTSE 100 is expected to get off on the front foot on Thursday morning, albeit activity is somewhat muted ahead of US-vs-China trade talks due to start later today.

IG Markets calls the FTSE 100 up around 7 points at 7,164 to 7,167 with just over an hour to go until the open.

Trump vs China and Brexit are the day’s focal points (the Groundhog Day meter is currently set at ‘Bill Murray screaming manically whilst driving the wrong way down train tracks’).

Nonetheless, sentiments are evidently skewed slightly to the positive even if everyone acknowledges the uncertainty of it all.

“Yesterday we heard that China are interested in brokering a partial trade deal, which helped stocks in Europe as well as the US,” said David Madden, analyst at CMC Markets.

“The positive signals from China are all well and good, but hopes aren’t too high as certain topics are not up for discussion as far as China are concerned.

The analyst added: “Washington DC are not keen on China’s industrial policy or the government subsidies, but Being are not willing to compromise on those topics so major progress is unlikely.

“China requested that the US don’t impose tariffs later this month or in December as they are scheduled to do so, in exchange for an increase of agricultural purchases by Chinese firms.

“The Trump administration is keen to strike a broader trade deal, but if a small bit of progress is made in the next couple of days, it might just be a small component of the overall process.”

Wall Street last night was mostly pointing higher. The Dow Jones marked a positive close, rising 0.7% or 181 points to 26,346 whilst the S&P 500 added 0.9% to finish at 2,919 and the Nasdaq gained 1.02% end at 7,903.

In Asia, Japan’s Nikkei moved 0.34% higher to trade at 21,530 while Hong Kong’s Hang Seng added 0.46% to 25,801 and the Shanghai Composite notched 0.47% higher to 2,938.

Around the markets

The pound: US$1.2229, up 0.19%

Gold price: US$1,506, up 0.05%

Brent crude: US$58.25, up 0.1%

Bitcoin: US$8,568, up 5.15%

Significant announcements expected Thursday 10 October:

Interims: N Brown Group plc (LON:BWNG), Morses Club PLC (LON:MCL), OnTheMarket PLC (LON:OTMP)

Trading statement: Dunelm Group plc (LON:DNLM), Hargreaves Lansdown PLC (LON:HL.), Mondi PLC (LON:MNDI)

FTSE 100 ex-dividends: Barratt Developments PLC (LON:BDEV), Centrica PLC (LON:CAN), HSBC Holdings PLC (LON:PLC), Tesco PLC (LON:TSCO)

Economic data: RICS housing market survey, UK GDP, UK index of services, ECB policy minutes, US initial jobless claims, US consumer price inflation

Headlines

BA to offset domestic flight emissions from next year – The Guardian

Thomas Cook buyers pledge to save 555 shops and 2,500 jobs – BBC News

Wall Street gains on trade optimism, but Beijing tempers hopes – Reuters

Powell Repeats U.S. Economy Is in a ‘Good Place’ Despite Risks – Bloomberg

Goldman Sachs reviews role in Chinese tech firm Megvii – BBC News

Top energy traders bet on further falls for crude – Financial Times

Twitter admits it provided security phone numbers and emails for advertising – Techradar

English house builders report weakest demand since 2013 - Reuters

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