ADVFN Morning London Market Report: Friday 8 February 2019

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London open: Stocks little changed amid fresh trade war worries

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London stocks were a little higher in early trade on Friday despite fresh concerns about trade relations between the US and China as it emerged that Donald Trump won’t meet Chinese President Xi Jinping before the 1 March tariff deadline kicks in.

At 0850 GMT, the FTSE 100 was up 0.2% to 7,109.52, while the pound was down 0.1% against the dollar at 1.2941 and flat versus the euro at 1.1416.

Trump said on Thursday that he wasn’t planning on meeting Xi before the truce deadline, prompting concerns that the two nations won’t strike a deal before the end of the 90-day period.

“Whilst this is a bit of a blow, it’s not in itself a reason to think trade talks are not going anywhere,” said Neil Wilson, chief market analyst at Markets.com. “The key trigger for the selling was when White House economic advisor Larry Kudlow sounded a cautious note on trade talks, saying that there is a ‘pretty sizeable distance to go’.”

On the Brexit front, Prime Minister Theresa May was set to travel to Dublin later in the day for talks with her Irish counterpart, Leo Varadkar, following talks in Brussels on Thursday with European Commission President Jean-Claude Juncker.

Oanda analyst Craig Erlam said Thursday’s talks went “as well as she could have hoped for”, with both sides agreeing to worth together and meet again at the end of the month.

“Of course, this calls into question the point of the vote on 14 February in Parliament and will lead to further suggestions that May is simply running down the clock again and gambling on her deal being backed to avoid no deal,” Erlam said.

In corporate news, SSE was in the red as the energy company said full year adjusted EPS would be 6p lower as a result of the Capacity Market “standstill”, taking the forecast to 64p to 69p a share. The EU General Court ruled last November that Britain must halt payments under the scheme pending an investigation by European Union regulators. SSE said it was due £60m.

Elsewhere, ahead of what could be a quarrelsome annual shareholder meeting later in the day, property developer Shaftesbury slipped despite saying it had made some progress with its larger schemes at the start of its new financial year. The group, which owns a swathe of shopping streets in London’s West End, reported the total portfolio valuation increased 3.8% to £3.95bn with estimated rental value up £9.5m to £154m.

On the upside, Ocado was making some gains following several days of heavy losses after a large fire broke out at its high-tech warehouse in Andover earlier in the week.

Housebuilders were on the up, led by Barratt and Berkeley, as the National Audit Office put out a report saying that targets for new homes are likely to be missed by half of England’s local authorities. Barratt was also boosted by a report from Citi that said the stock still offers “multiple attractions of profitable growth”.

In other broker notes, Centrica was hit by a downgrade to ‘neutral’ at Citi, while Unite and Assura were downgraded to ‘hold’ at Liberum.

Citi also resumed coverage of DS Smith at ‘buy’, while Travis Perkins was upgraded to ‘outperform’ at RBC Capital Markets.

Outside the FTSE 350, Earthport racked up solid gains as Visa sweetened its bid for the payment solutions business, fending off a rival offer from Mastercard.

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