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London stocks were little changed in early trade on Wednesday despite a recovery on Wall Street overnight, amid ongoing concerns about a trade war.
At 0830 BST, the FTSE 100 was flat at 7,032.60, while the pound was steady against the dollar at 1.4057 and 0.1% firmer versus the euro at 1.1467.
The muted tone in London came after the Trump administration unveiled on Tuesday a list of around $50bn in Chinese electronics, aerospace and machinery products that it plans to target with steep tariffs.
Spreadex analyst Connor Campbell said: “With the US retaliating to China’s own retaliation by revealing 25% tariffs on around 1300 different industrial technology, transport and medical products, the markets weren’t allowed a post-Easter clean slate this Wednesday. Instead investors now have to fret about what China will do in response to Trump’s most recent bit of trade war manoeuvring, a concern that will likely outweigh any other economic news as the day goes on.”
On the data front, the UK construction purchasing managers’ index is at 0930 BST. Investors will also eye the release of the US ADP employment report at 1315 BST ahead of Friday’s non-farm payrolls release.
Analysts at TD Securities expects the March construction PMI to nudge back up toward its late-2017 levels, with a half-point gain to 51.9, versus market expectations of a decline 51.0.
As far as the ADP report is concerned, FxPro expects that an additional 205,000 jobs were added to the economy in March following a series of releases over the last three months showing strong additions.
In corporate news, advertising giant WPP was under pressure after saying it had appointed an independent counsel to investigate an allegation of personal misconduct against chief executive Martin Sorrell. The company said the allegation did not involve amounts material to WPP.
Smith & Nephew slipped as it appointed former Johnson & Johnson director Namal Nawana as its chief executive, replacing Olivier Bohuon after a seven-year stint at the head of the artificial shoulders and knees group.
Peppa Pig rights owner Entertainment One was little changed after it reported a “robust” profit performance in the year ended 31 March, with continued momentum in family and television, with an improved second half performance in film.
Budget airline Ryanair was a touch higher after it posted a 6% rise in March traffic as the load factor edged up, but Wizz Air flew a little lower even as it said traffic jumped 25.2% in March.
Morrisons and Tesco were both on the front foot as the latest data from Kantar Worldpanel showed they continued to outperform rival ‘big four’ supermarkets in the 12 weeks to 25 March, with both seeing sales growth of 2.4%.
FTSE 250 waste-to-product company Renewi edged up after saying that results for the year to the end of March 2018 are expected to be in line with the board’s expectations in terms of underlying trading and cash.
In broker note action, Vodafone was lifted to ‘buy’ at Citi, while Goldman Sachs initiated coverage of Vesuvius and Bodycote at ‘neutral’, and Renishaw at ‘buy’.
Meanwhile, RBC Capital Markets adjusted its ratings on a slew of mining stocks. The bank upgraded BHP Billiton and Fresnillo to ‘sector perform’ and Glencore to ‘top pick’. It also upped Polymetalto ‘outperform’ but downgraded Randgold Resources to ‘underperform’.
