Monday 20 January 2020

London’s top-flight stocks in the red amid trade fears

Market volatility was low as the US markets took a break for Independence Day.

London’s top-flight stocks were in the red for the second time this week (PA)
London’s top-flight stocks were in the red for the second time this week (PA)

By Helen Cahill, Press Association City Reporter

London’s top-flight stocks were in the red on Wednesday as trade fears continued to weigh on sentiment.

Markets have been knocked after Brussels said it would retaliate in an escalating trade war with the US.

The EU has warned it will slap tariffs on 300 billion US dollars (£228.5 billion) of US imports if Donald Trump targets the bloc’s car industry.

The FTSE 100 closed the session down 0.27% or 20.2 points at 7,573.09.

The Cac 40 in France was flat, while the Dax in Germany was down 0.26%.

Fiona Cincotta, senior market analyst at City Index, said: “With US markets closed for Independence Day, the FTSE struggled for inspiration. The UK index looked lacklustre throughout the session, languishing around 0.3% lower.

“A slightly stronger pound and persistent trade concerns weighing on sentiment has prevented the FTSE from making any meaningful move higher.”

Sterling was boosted after data signalled that the services sector had rebounded following a slow start to the year.

The closely-watched Markit/CIPS services purchasing managers’ index (PMI) showed a reading of 55.1 in June, up from 54 in May, the strongest rise in activity for the services sector since October 2017.

Sterling turned positive on the news, and in afternoon trading the pound was up 0.18% against the dollar at 1.321. Against the euro, the pound was up 0.33% at 1.135.

Oil prices were steady, showing low volatility due to the Independence Day holiday in the US. Brent crude prices were flat at 77.890 US dollars a barrel.

In UK markets, Sainsbury’s jumped to the top of the FTSE 100 on the news that it had secured a £3.5 billion funding package for its mega-merger with Asda.

The supermarket posted a 0.2% rise in like-for-like sales for its first quarter to June 30, down from growth of 0.9% in the previous three months.

It said grocery sales rose 0.5%, while general merchandise grew by 1.7% and clothing lifted 0.8% in a “very challenging market”.

By the market close, Sainsbury’s shares were up 3% or 9.4p at 328p.

“The UK supermarket sector remains competitive, but Sainsbury’s believes the merger will create a new dynamic player in the UK retail sector,” said David Madden, market analyst at CMC Markets.

National Express’s shares were on the rise after the firm clinched a major deal in Morocco worth one billion euro (£883 million), helping it to become the country’s largest transport operator.

The 500-bus contract will cover the cities of Rabat, Sale and Temara, and is expected to carry 109 million passengers annually across 61 routes. Shares closed the session 7.4p higher at 404.4p.

SIG has appointed EY after its former auditor Deloitte was put under investigation for its work on the building supplies firm’s accounts. Shares were 0.7p higher at 139.1p.

The Financial Reporting Council last week confirmed it would probe Deloitte’s audit of SIG’s financial statements for 2015 and 2016 after a forensic review at the company revealed a string of accounting irregularities and misstated profits.

Topps Tiles’ shares were flat at 63p after the retailer blamed weak consumer demand for knocking sales in the third quarter.

The specialist tiles retailer said in a trading update that like-for-like revenue fell 2.3% in the 13 weeks to July 1 – its worst quarterly decline so far this year.

The biggest risers on the FTSE 100 were Sainsbury’s up 9.4p to 328p, BT Group up 6p to 229p, Anglo American up 34.6p to 1,674.4p, and Marks and Spencer up 5.6p to 305.5p

The biggest fallers on the FTSE 100 were Antofagasta down 26p to 944p, Evraz down 12.8p to 490.2p, BHP Billiton down 39.2p to 1,630.8p and Rio Tinto down 92.5p to 3,966p.

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