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ADVFN Morning London Market Report: Monday 15 April 2019

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London open: Stocks steady as investors eye more US earnings, Sino-US progress

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London stocks were little changed in early trade on Monday, with investors seemingly reluctant to make any big moves ahead of more key US earnings later in the session and important UK and Chinese data due later in the week.

At 0830 BST, the FTSE 100 was flat at 7,435.42, while the pound was up 0.1% against the dollar at 1.3089 and flat versus the euro at 1.1567.

Investors may be eyeing the release of UK inflation data and first-quarter Chinese GDP, both due on Wednesday.

In addition, first-quarter earnings from Goldman Sachs and Citigroup later in the day were expected to be scrutinised, particularly following impressive numbers from JPMorgan Chase and Wells Fargo on Friday.

London Capital Group analyst Jasper Lawler said: “After a tough couple of months, economic data and corporate updates are finally providing some ray of light. However, it’s questionable whether this can last. Traders will be keeping a close eye on where US earning season goes from here.

“A good run from the banks is half expected given the US rate rises that we have seen last year. Whether the strong start is able to continue beyond the banking sector will be key; right now this is looking unlikely.”

Meanwhile, Sino-US relations were in focus again after US Treasury Secretary Steve Mnuchin said over the weekend that he was hopeful talks between the two would soon come to a close. According to Reuters, Mnuchin said on Saturday that a deal between the two nations would go “way beyond” previous agreements and that the two sides were “close to the final round” of negotiations.

Elsewhere, the latest survey from Rightmove showed that house prices rose 1.1% on the month in April compared to a 0.4% increase in March. This marked the biggest month-on-month rise for over a year and the largest at this time of year since 2016.

On the year, house prices were down 0.1% versus a 0.8% decline the month before.

“The uncertain political backdrop continues to hold back the market, with new seller asking prices, the number of properties coming to market and the number of sales agreed all below this time last year,” Rightmove said.

“But despite these headline falls, market activity remains resilient with would-be buyers and sellers still having housing needs to satisfy, especially in the family home sector.”

Meanwhile, figures from the British Retail Consortium and Springboard showed that footfall increased 1.4% in March compared to the previous year, boosted by milder weather.

High Street footfall was up 2.5% versus an 8.6% drop in March 2018, and retail park footfall was 1.5% higher versus a 1.8% decline in March.

Springboard marketing and insights director Diane Wehrle said appearances were deceptive. As while the year on year rise in footfall might appear to signify a reverse in trend from the previous two years, when footfall dropped in all but two of the past 22 months, “it is simply not the case” and the rise “should be regarded as an exceptional circumstance” relating to the dramatic slump in March last year.

In equity markets, WPP was the standout gainer as French peer Publicis posted a rise in first-quarter net revenue and announced the $4.4bn acquisition of marketing and data group Epsilon.

Office space provider IWG, formerly Regus, rallied 19% as it continued its shift towards a franchise model with a £320m deal to sell 100% of its Japanese office space to Tokyo-listed TKP Corporation, with which it has agreed a master franchise agreement.

Mediterranean-focused Energean Oil and Gas saw its shares surge after saying that its Karish North exploration well had made a “significant” gas discovery.

Wealth manager Brewin Dolphin ticked higher as it confirmed that it is exclusive talks with Investec about the possible acquisition of its Irish wealth management business.

Rio Tinto nudged up as it said it would invest an extra $302m (£231m) to develop its US Resolution copper project as it sought to capitalise on the growing green energy market.

On the downside, Acacia Mining lost its shine as it said first-quarter gold production fell 13% from the previous year due to lower output at the North Mara and Buzwagi mines.

In broker note action, outsourcer Compass was hit by a downgrade to ‘equal-weight’ at Barclays and CYBG was knocked lower by a downgrade to ‘hold’ at Investec. British Gas owner Centrica was cut to ‘neutral’ at JPMorgan.

 

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