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FTSE 100 closes higher as optimism returns on US, China trade

Britain's blue-chip benchmark finished up around 69 points at 7,396 on Monday

Wall Street
FTSE 100 closed higher as China/US trade hopes increased
  • FTSE 100 index closes up 69 points

  • Stocks boosted by Hong Kong elections, China trade hopes

  • S&P 500 and Nasdaq reach new highs

5.10pm:FTSE 100 closes higher

FTSE 100 index joined global markets to head higher on Monday as optimism returned concerning China/US trade.

Britain's blue-chip benchmark finished up around 69 points at 7,396, while its midcap cousin FTSE 250 added over 217 points at 20,703.

"It was reported in China’s Global Times that both sides have reached a broad consensus on phase one of the agreement," noted David Madden,  market analyst at London-based CMC Markets.

"The same announcement claimed that some differences remain in relation to how much tariffs should be rolled back. The news gave traders some hope that things are heading in the right direction, which encouraged them to buy into stocks."

The pound added 0.41% against the US dollar, while on Wall Street, the S&P 500 added 19 points at 3,129 pushing the index above its last closing high of 3,122 on November 18.

The Dow Jones Industrial Average added 117 at 27,993, while the tech heavy Nasdaq also hit a new high, adding around 99 points to 8,618.

3.15pm: Tesla and TD Ameritrade lead Nasdaq to 8,600

US stocks opened on the front on Monday, driven to new record highs on the back of upbeat reports about a China trade talks.

The Dow Jones index added 122 points or 0.4% to 27,997.45 in the first half hour of trading, with the broader S&P 500 adding 0.5% and the Nasdaq Composite rising 0.9% above the 9,600 mark for the first time.

Tesla Inc (NASDAQ:TSLA) was a big early riser on the tech-heavy index, up 3% to US$342.5 after boss Elon Musk tweeted enigmatically “200k”, which was taken to mean the number of orders for the electric car-maker’s new Cybertruck model.

Honking past in the other directing was Uber Technologies Inc (NYSE:UBER) after London authorities refused the ride-hailing company a new licence. The stock was down 1% to US$29.23.

Dealmaking was also making headlines, with Charles Schwab Corp (NYSE:SCHW) announcing a US$26bn deal to buy rival discount broker TD Ameritrade Holding Corp (NASDAQ:AMTD) in an all-stock merger. Schwab's shares were down slightly, while TD's were up 4%.

Elsewhere, Wall Street’s crystal-ball gazers were making their 2020 predictions, with Goldman Sachs’s soothsayers generously handing out 10 market themes for 2020, including a “baby bear market” in bonds and a prediction that the S&P 500 will rise by 5% to 3250 in early 2020.

“However, rising political and policy uncertainty will keep the [S&P] index range-bound for most of next year,” the Goldman strategists said, alongside a prediction that the Federal Reserve will not cut interest rates in the coming year.

In another Manhattan room, the sages at JP Morgan – Mystic Morg maybe? – have predicted 2020 might be the year of the next “great rotation” away from bond funds into equity funds, last seen in 2013.

Back in Blighty, the Footsie has retreated slightly, now up 63 points at 7,390.

1.30pm: US stocks to join party, apart from Uber

US stocks are expected to join in the party when Wall Street begins trading on Monday morning, buoyed by encouraging sounds about trade.

The Dow Jones is seen rising 72 points or 0.3% to 27,933, according to the futures market, with the S&P 500 and Nasdaq Composite also expected to enjoy similar rises.

With China reported to be open to tightening rules on intellectual property violations and Chinese state media claiming a deal close, Asian and European stocks have marched higher.

Having seen so many similar headlines for many months, market analysts Craig Erlam said he was struggling to get particularly excited.

“Traders are very sensitive to these headlines though as we've seen over and over again throughout this process.

“Even if these reports turn out to be true, there will likely be a price for this concession in the form of tariff removals, something Trump has shown little appetite for so far,” Erlam said.

One stock not expected to start higher is Uber Technologies Inc (NYSE:UBER) after its licence to operate in London was withdrawn after Transport for London identified “a pattern of failures” and voiced concerns about passenger safety.

Meanwhile, the FTSE 100 is continuing to climb steadily higher, now up 70 points or 1% to 7,397.

12.45pm: Pound holds onto gains as Downing Street speaks

Sterling held its ground as comments emerged from Downing Street to suggest the government will not hang around if the Conservative party wins a majority at the 12 December general election.

If Boris Johnson wins the election a "slimmed down" or "fast-track" Queen’s speech will be held on 19 December, a Number 10 spokesman said.

This, politicos and commentators were speculating on Twitter, could pave the way for a Brexit vote on 23 December.

The pound is at 1.2868, with analysts noting that, for the first time since September, net short GBP positions have increased, even though opinion polls have been encouraging the view that Boris Johnson may have the necessary numbers in parliament to pass his Brexit deal after the December 12 election.

"The market has appeared to be betting that the chances of a no deal Brexit are small. However, these risks could increase again particularly if the trade talks with the EU falter next year," analysts at Rabobank said in a note to clients, with the increase in short bets suggesting that "confidence could be wavering" as the election nears.

The FTSE 100 is up 60 points or 0.8% at 7,387.41.

11.30am: UK retailers feeling more festive

A retail sector survey has hinted at a slight upturn in the industry’s mood ahead of the important festive period.

The CBI’s distributive trends survey for November showed a headline balance of -3 that represented an improvement on the -10 from the previous report and market expectations for a repeat of that number this time.

Retailers expect growth to return in the year to December, with an expected sales balance of +21 being the strongest in seven months.

This has led to sector employment stabilising after three years of decline, with the strongest growth in part-time employment in five years but coming alongside a further fall in full-time employment.

“Retailers are entering the festive season with a bit of hope that sales will head up, with the strongest expectations in half a year,” said Anna Leach, the CBI’s deputy chief economist.

She noted that actual sales stabilised and have nudged above the average for the time of year but that orders placed with suppliers fell for the seventh consecutive month and cited Brexit uncertainty as the main weight on investment plans, with retailers planning to spend less on investment in the coming year than they did this year

“As the election period gets into full swing, retailers will welcome the prominence being given to fixing the broken business rates system. But it will be up to the next Government to turn warm words into action.”

Retailers Kingfisher plc (LON:KGF), Ocado PLC (LON:OCDO), JD Sports Fashion PLC (LON:JD.) and Next PLC (LON:NXT) are among the risers on the blue chip index, all up at least 1%.

This is helping the FTSE 100 add to earlier gains, now standing 58 points or 0.8% higher at 7,385.

10.30am: China concessions boosts sentiment

Gains in UK stocks this morning are being mirrored across major European indices, with reports on China-US trade relations cited as the reason.

Positive sentiment at the start of the working week has seemingly built on reports that China had agreed to increase penalties on intellectual property rights violations, as a concession to address an important sticking point in talks between Beijing and Washington.

“If China is prepared to make compromises on intellectual property rights, one of the previous sticking points, then investors are right to be more optimistic about a deal,” said Chris Beauchamp, chief market analyst at IG.

“All this could be so much hot air, and will certainly exasperate those who have long bemoaned the sensitivity of markets to trade war headlines, but the removal of this macro concern would do wonders for sentiment, and perhaps for US earnings too.”

The Footsie is up 0.7% at 7,375.98, while Germany's Dax and France's CAC are both up 0.5%.

Earlier, Hong Kong's Hang Seng index finished up 1.5%, while the Shanghai Composite closed 0.7% higher.

9.35am: Pound rises on political polling

The FTSE 100 has plateaued after its initial gains, with an upswell in the pound taking some steam out of export-focused equities.

Sterling has spiked 0.4% against the dollar and the euro to US$1.884 and €1.1692, which some traders are putting down to the continued lead that Boris Johnson’s Conservative party after its manifesto was published on Sunday.

The latest polling analysis put the Tories on course for a majority of 40-60 seats, with a poll in Scotland pointing to the loss of just one seat for the Conservatives.

“That is despite their manifesto launch yesterday offering less than a tenth of the fiscal stimulus that Labour’s is,” said Rabobank strategist Michael Every.

“How very British to prefer a promise to fill in potholes and free hospital parking over a revolution.”

The FTSE is up 50 points or 0.7% to 7,377.13.

8.35am: Positive start to the week

The FTSE 100 made a positive start to proceedings, buoyed by Hong Kong and the mood music from China on trade.

The index of blue-chip shares advanced 44 points to 7,371.20 in opening deals.

No surprises then that the bulk metals giants, which are effectively a play on the economic health of the People’s Republic, were in demand early on.

Roman Abramovich’s iron and steel specialist Evraz (LON:EVR) led the Footsie pack with a 2% gain, followed by Glencore (LON:GLEN) and Rio Tinton (LON:RIO).

The weekend’s big corporate story was the move of the assets of National Grid (LON:NG.) and SSE (LON:SSE) into offshore companies to avoid re-nationalisation should a Labour government be elected.

The City appeared unsurprised by the move with stock in both utilities steady in morning trade.

Among the small-caps, SolGold (LON:SOLG) was given a 15% boost after BHP Group PLC (LON:BHP) agreed to invest an extra US$22mln in the company, becoming its largest shareholder.

This could be signalling a new investment trend from the big boys, following Glencore PLC's (LON:GLEN) investment in Ireland focused Group Eleven Resources Corp (CVE:ZNG) last month. (READ: Glencore’s arrival on the Group Eleven share register is likely to be a game-changer, in more ways than one.)

Proactive News Headlines:

Rainbow Rare Earths Ltd (LON:RBW) has released results from a historic drilling programme at Kiyenzi in Burundi. Two boreholes were analysed and among the highlights were 13.87 metres grading at an average of 4.85% total rare earth oxides and 11.64 metres at an average of 3.86% TREO. A further 1,000 metres of drill core has been sent for analysis to enable rapid evaluation and formulation of comprehensive resource statement.

Corero Network Security PLC (LON:CNS) has announced a placing and share subscription to raise up to £3.25mln, before expenses, to be used mainly for the development of its SmartWall product.

Arkle Resources PLC (LON:ARK) is examining options for its 23.44% stake in the Stonepark zinc project after it attracted interest from “other industry participants”. Last month, FTSE 100 giant Glencore PLC (LON:GLEN) invested C$1mln in Stonepark operator Group Eleven Resources Corp (CVE:ZNG).

MTI Wireless Edge Limited advanced on Monday as profits for the first nine months of its current year leapt by 44%. For the period ended 30 September, the radio frequency and communications group reported a pre-tax profit of US$2.4mln, up from US$1.7mln a year ago, while revenues climbed 12% to US$29mln.

Fund manager M&G has taken its stake in Bacanora Lithium PLC (LON:BCN) to just under 20% through a share placing at 25p. The US$10mln proceeds will support pre-construction works at the Sonora lithium project in Mexico, which will include bulk earthworks and an upgrade to the primary access road.

IronRidge Resources Ltd (LON:IRR) has returned multiple high-grade reverse circulation (RC) drilling intersections from the latest drilling programme at the Ewoyaa, Abonko and Kaampakrom projects in Ghana, West Africa. A total of 12,669 metres of RC drilling was completed in 97 drill holes for the third phase programme. Among the highlights from Ewoyaa and Abonko were 40 metres (m) grading 1.45% lithium oxide, 34m grading 1.43% Li2O, and 31m at 1.5% Li2O.

Kodal Minerals PLC (LON:KOD) has received its environmental and social impact permit (ESIA) for the development of the Bougouni lithium project in southern Mali. The country’s environment minister has signed off the ESIA, with the company working now on mining assessment and technical reports for a full licence application by the end of 2019.

Primary Health Properties PLC (LON:PHP) has agreed a £4.92mln funding deal for the construction of a new primary care centre at Mountain Ash in Wales. The FTSE 250-listed healthcare facility builder said the property, which will contain two GP practices and accommodate 11,500 patients, will be wholly-owned after completion and then let to the Cwm Taf Morgannwg University Local Health Board for an initial term of 25 years.

Open Orphan Plc (LON:ORPH) said it has signed five unnamed pharmaceutical and biotechnology companies as early adopters of its Genomic Health DataBANK platform that is planned for launch in the first quarter of next year. They will ensure it is “fit-for-purpose” ahead of the first patient upload. This builds on the previously-announced collaboration with Empiric Logic, which is working with Open Orphan to complete the product.

Ormonde Mining plc (LON:ORM) told investors that sales of 20-tonne shipments of tungsten concentrate produced from the Barruecopardo mine in Salamanca, Spain, have recently completed with international buyers. Further containers are presently being prepared for sale. These sales are described as important milestones as the Barruecopardo ramp-up continues.

ScotGold Resources Limited (LON:SGZ) has clarified the amounts it has to spend on the exploration of its permits in Scotland. What is in the accounts reflects the potential amount if it retains all 13 licences until 2024, said the junior, and is subject to change as exploration results come in and depending on cash resources.

Sativa Group PLC (LON:SATI) is exploring a potential listing on AIM next year following a number of significant developments for the medicinal cannabis group. Sativa’s possible move from NEX follows a number of senior appointments to the group as it focuses on consumer products containing cannabidiol (CBD), a medicinal chemical derived from cannabis plants.

Tlou Energy Ltd (LON:TLOU) has highlighted that gas flows continue at the Lesedi coal bed methane project, with recent short-term rates seen ‘significantly’ ahead of its previously reported performance. For context, the company has previously told investors that the initial gas flow rates were marked at 20,000 cubic feet per day, from each of the Lesedi-3 and Lesedi-4 production pods. “To date, the company is very pleased with the performance of both wells,” Tlou said in a statement.

Fund manager M&G has taken its stake in Bacanora Lithium PLC (LON:BCN) to just under 20% through a share placing at 25p. The US$10mln proceeds will support pre-construction works at the Sonora lithium project in Mexico, which will include bulk earthworks and an upgrade to the primary access road.  Orders will also be placed for the longer lead-time items in the concentrator, pyrometallurgy and hydrometallurgy sections of the lithium plant.

Mosman Oil And Gas Ltd (LON:MSMN) has told investors that production from the Stanley project is now “almost in line with expectations”. Gross production for the month of November to date averages at around 290 barrels of oil per day (bopd), up from 250 bopd at the start of the month. The new Stanley-4 well is planned for February 2020.

Pembridge Resources PLC (LON:PERE) is planning to raise between £3mln and £5mln via a share placing to fund development of the Minto mine in Canada. The placing will price the shares at 12.5p each and is expected to conclude in the next two weeks following a roadshow.

Savannah Resources PLC (LON:SAV) has become a sponsor to FST Lisboa, a team of engineering students from the University of Lisbon focused on the design and build of innovative, lithium-ion battery-powered formula race cars. The AIM-quoted resource development company, which is focused on becoming Europe's most significant producer of spodumene lithium from its Mina do Barroso Project in Portugal, noted that this season, FST Lisboa includes a team of 43 engineering students, working towards developing their next-generation electric vehicle (EV) prototypes: the 100% electric FST10e, and the driverless FST 10d.

Zoetic International PLC (LON:ZOE) is ready to launch a range of CBD sweets, capsules and cosmetics in the UK in time for Christmas, and is mulling expansion of manufacturing capacity in the US to cope with potential demand from new distribution deals. The beauty products being launching in the first week of December include a hand cream, night cream, facial serum and lip balm, with further product launches planned for next year alongside a broadening of the massage oil that has been on sale since October under the Zoetic brand.

NQ Minerals PLC (LON:NQMI) has doubled the estimate of nickel and cobalt resources in the area surrounding its Hellyer mine in Tasmania. Latest estimates are that the Barnes Hill project contains 14.3mln tonnes grading 0.72% nickel and 0.05% cobalt, which includes the first resources from the Scotts Hill and Mt Vulcan deposits.

In a separate statement, NQ Minerals chairman David Lenigas also said he “sees room for significant improvements through 2020” at the Hellyer base and precious metals project in Tasmania as the company reported that record lead and zinc concentrate production “continued”. In all 55,422 tonnes of ore were unearthed in from November 1 to 23, with grades averaging 2.9% lead, 2.02% zinc, 2.29 grams per tonne (g/t) of gold and 88 g/t of silver.

Shield Therapeutics PLC (LON:STX) said it will be adopting the Quoted Companies Alliance Corporate Governance Code. The QCA champions the interests of the 1,250 small- and medium-sized listed firms in the UK. Its code is described as a “practical, outcome-oriented" approach to corporate oversight.

LIVE Company (LON:LVCG) announced that it has reached agreement with the vendors of Bright Bricks Holdings Limited to settle the deferred element of the acquisition consideration, being £0.833m, in full, through the issue of 1,893,940 new ordinary shares at an issue price of 44.0p each.

Ferro-Alloy Resources Limited (LON:FAR), the vanadium mining and processing company with operations based in Southern Kazakhstan, announced that at the Annual General Meeting held on 22 November 2019, all resolutions were duly passed.

6.20am: FTSE 100 set for a bright start

The FTSE 100 looks set to get off to a positive start, taking its cue from the markets in Asia.

Buoying sentiment there was the surge to power of pro-democracy candidates in the Hong Kong district elections after weeks of civil unrest, with wins for all but one of the 18 districts.  

This propelled the Hang Seng index 1.8% higher and had a largely positive impact on the major regional bourses.

“However, before anyone gets too carried away it will be interesting to see whether the surge in support for pro-democracy candidates actually yields any long term results,” said Michael Hewson, analyst at CMC Markets.

Adding to the general note of positivity was the news China may be ready to clamp down on the infringers of overseas intellectual property – a potential olive branch to the Americans as trade talks continue their slow progress.

“While there is growing scepticism that the US and China will be able to agree anything tangible before year-end in terms of a phase one deal, there is some evidence of progress on the rather thorny question of intellectual property, which has been a significant US red line,” said CMC’s Hewson.

“The US wants China to crack down harder on the theft of IP, and stop forcing US companies to hand over commercial secrets in return for doing business in the country.”

Closer to home, it is expected to be another busy week for corporate news before the traditional pre-Christmas lull sets in.

Caterer Compass (LON:CPG) and cigarette giant British American (LON:BATS) join brewer Marstons (LON:MARS) and coach company Go Ahead (LON:GOG) in updating investors later this week.

Around the markets:

Pound worth US$128.50, up 0.12%

Gold down US$3.80 an ounce at US$1,466.70

Brent crude US$63.65 a barrel, up 26 cents     

Monday’s Main Corporate News:

Finals: Cerillion PLC (LON:CER)

Interims: Cake Box Holdings PLC (LON:CBOX), D4t4 Solutions PLC (LON:D4T4), Sirius Real Estate Limited (LON:SRE), Sysgroup PLC (LON:SYS)

Trading announcement: Restaurant Group PLC (LON:RTN)

Economic data: BBA Mortgage Lending Figures, CBI Distributive Trades Surveys

City news headlines:

Financial Times

  • Boris Johnson sets out vision for post-Brexit Britain
  • Uefa explores move into Champions League streaming
  • EY targets financial consultant cuts as fees dry up - Big Four firm places 100 London roles including several partners at risk of redundancy

Times

  • Aramco wants states to take a stake in oil float
  • Labour criticises National Grid over offshore move
  • Companies left in the lurch as auditors drop clients

Telegraph

  • Unilever mulls sale of PG Tips brand amid declining demand for tea
  • Tesla Cybertruck orders hit 187,000 in first three days, Elon Musk says
  • LVMH increases bid for US jeweller Tiffany to $16.7bn

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