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London open: Stocks tick up as Trump approves China tariffs; Rolls and Tesco rise
London stocks ticked up in early trade on Friday as investors digested the latest developments between the US and China, with Rolls-Royce and Tesco both higher on the back of well-received updates.
At 0835 BST, the FTSE 100 was up 0.1% to 7,776.19 following news that US President Trump has approved $50bn worth of tariffs on the import of goods from China.
The approval followed a 90-minute meeting on Thursday of Senior White House officials, national-security officials and senior representatives of the Treasury, Commerce Department, and US Trade Representative’s Office. A formal announcement is expected to be made later in the day by the US Trade Representatives, with a notification in the Federal Register in the coming week.
Analyst Jasper Lawler of London Capital Group said: “The markets are relatively sanguine moving towards the announcement, suggesting that traders still do not believe that this will turn into a serious trade war or, alternatively, have had the story come around so many times over the past few weeks that they have simply moved on.”
On the corporate front, bookies were in focus following a report that the new £2m maximum stake on fix-odds betting machines will not be implemented until April 2020 after the Treasury struck a backroom deal with bookmakers. According to The Times, bookies have convinced the Treasury – which has always been worried about the hit to tax receipts from a lower stake – that they need more time to reprogram the terminals.
Rolls-Royce was the standout gainer after saying it should exceed £1bn of free cash flow by 2020 following its announcement a day earlier that it was cutting 4,600 jobs.
Tesco was also on the front foot as it reported solid but slightly slower UK and Irish sales in the first quarter of its new financial year but with wholesale acquisition Booker bedding down, group-wide growth accelerated to beat City forecasts. It was the supermarket giant’s tenth successive quarter of LFL growth.
Building materials group CRH edged up as it received regulatory approval for its $3.5bn acquisition of Kansas-based cement manufacturer Ash Grove.
Glencore advanced after it settled a dispute between its Mutanda Mining Sarl and Kamoto Copper Company SA subsidiaries and companies affiliated with mining magnate Dan Gertler in Congo.
Information and events group Ascential ticked down after announcing the acquisition of global digital subscription business WARC for up to £24m.
Stobart Group, the owner of Southend Airport, retreated as it called on its shareholders to stand behind chairman Ian Ferguson. The company wrote a letter to shareholders explaining why it sacked director and former chief executive Andrew Tinkler on Thursday.
Indivior tumbled as its main revenue-generating product, Suboxone film, came under pressure overnight as rival Dr Reddy’s Labs won regulatory approval to its generic version of the sublingual film.
BTG was also weaker after an advisory committee told US regulators to reject a pre-market approval application its severe emphysema treatment.
In broker note action, British Airways parent IAG was downgraded to ‘neutral’ by MainFirst, while InterContinental was lifted to ‘neutral’ at JPMorgan.
