ADVFN Morning London Market Report: Wednesday 13 February 2019

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London open: Stocks rise amid trade truce hopes; UK inflation data eyed

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London stocks edged up in early trade on Wednesday, taking their cue from upbeat sessions in the US and Asia as investors grew hopeful of a trade truce extension between the US and China, with all eyes on the release of the latest UK inflation data.

At 0825 GMT, the FTSE 100 was up 0.3% at 7,153.69, while the pound was flat against the dollar at 1.2894 and 0.1% firmer versus the euro at 1.1395.

Sentiment was boosted after US President Trump said he could extend the 1 March deadline to reach a trade deal with China if the two sides are making good progress.

London Capital Group analyst Jasper Lawler said this was “music to the ears of the market”.

“Whilst there have been positive reports regarding the trade talks investors were getting nervous of the nearing deadline and no solid evidence of progress. Negative sentiment is unwinding, and investors are showing that they are prepared to put risk back on the table. For sentiment to remain positive we will need to see evidence of a deal in March. However, for now markets are willing to let this pass.”

Talks between US Treasury Secretary Steven Mnuchin and Chinese Vice Premier Liu He are due to start on Thursday.

On home shores, investors will turn their attention to the release of the retail price index, producer price index and consumer price index, all due at 0930 GMT.

In corporate news, corrugated packaging group Smurfit Kappa was on the front foot as it said it saw growth slow in the final few months of last year but still delivered strong growth in profits and cash flow. The company’s calendar year revenue of €8.95bn was up 4% on the previous year, with profit before tax and exceptional items up 56% to €938m.

Rolls-Royce was the standout gainer on the top-flight index after an upgrade to ‘outperform’ from Credit Suisse.

Dunelm was the top performer on the FTSE 250 as the home furnishings retailer reported a 16.7% jump in first-half pre-tax profit and a 1.2% rise in revenue, with like-for-like revenue growth in stores and online.

Mining giant BHP gained ground after it approved $696m (£539m) in funding to develop its share of the Atlantis Phase 3 project in the US Gulf of Mexico and Tullow Oil gushed higher after well-received full-year results.

Galliford Try was in the green as the construction company reported a 4% increase in pre-exceptional pre-tax profit for the first half and said its full-year turnout is expected to come in at the upper end of analysts’ current range.

InterContinental Hotels Group ticked a touch lower as it announced the acquisition Six Senses Hotels Resorts and Spas from Pegasus Capital Advisors for $300m in cash.

Gold and silver miner Hochschild Mining lost its shine as it announced plans to suspend operations at its Arcata precious metal mine in south west Peru and place it on maintenance and care.

In broker note action, Derwent London and Great Portland Estates were started at ‘sell’ byBerenberg.

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