ADVFN Morning London Market Report: Tuesday 30 April 2019

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London open: Stocks edge up as StanChart impresses, China data disappoints


London stocks rose in early trade on Tuesday, helped along by some well-received results from Standard Chartered, but gains were limited following the release of disappointing Chinese data.

At 0835 BST, the FTSE 100 was 0.1% firmer at 7,449.22, while the pound was up 0.1% against the dollar and the euro at 1.2946 and 1.1577, respectively.

Investors were digesting the latest data out of China, which fell short of expectations and revealed a softer start to the second quarter.

The official manufacturing PMI fell to 50.1 in April from 50.5 in March, missing expectations for an unchanged reading.

Meanwhile, the official non-manufacturing PMI also fell, to 54.3 from 54.8.m, with the sub-index for the services sector edging down and a sharp decline in the sub-index for construction.

Capital Economics said: “Admittedly, we are wary of putting too much weight on the official PMIs given that they have provided false signals in the past.

“We will have a better idea of how the economy has performed recently when the April reading of the Caixin manufacturing PMI, a better guide to cyclical trends than the official index, is published on Thursday. But for now, the official PMIs suggest that Q2 got off to a weaker start and reinforce our view that there are still some downside risks to near-term activity.”

As far as Sino-US trade relations are concerned, CMC Markets analyst David Madden said: “It’s the same old story, where we hear broadly positive soundbites, but not much detail.

“US Treasury Secretary, Steven Mnuchin believes the talks could be wrapped up in weeks, while Whitehouse economic advisor, Larry Kudlow, is cautiously optimistic that an agreement will be reached.”

On home turf, the latest survey from GfK showed consumer confidence remained steady at April. The long-running consumer confidence index came in at -13, unchanged from March.

Joe Staton, client strategy director at Gfk, said: “We reported a -13 headline for the past three months and it appears it’s a case of ‘Keep Calm’ when it comes to how confident consumers are feeling right now.

“Despite political carry-on in the Westminster bubble with the clock ticking on Britain’s eventual departure from the EU, consumers are holding firm and remain unshaken by the daily headlines of turmoil and intrigue, although we remain in negative territory. This month we are reporting a dip in the measures for our personal financial situation looking back a year and ahead to the coming year but this is balanced by a small increase in our perspective on the state of the UK economy.”

In equity markets, Asia-focused lender Standard Chartered was the standout gainer on the top-flight index as it posted a 10% jump in adjusted pre-tax profits to reach $1.38bn, beating the $1.1bn anticipated by analysts at UBS. It also unveiled a $1.0bn share repurchase programme.

On the downside, Micro Focus tanked as its stock went ex-dividend, while Glencore retreated as it reported a drop in first-quarter own-sourced copper production and Premier Inn owner Whitbread fell as it posted a 39% drop in full-year profit and highlighted market weakness across both business and leisure.

Mining stocks were weaker in general after the Chinese manufacturing figures, with RioBHP and Anglo American all lower.

Oil major BP was in the red even as it reported better-than-expected first-quarter profits and cash flows, together with higher output. Underlying replacement cost profit for the first three months of 2019 fell to $2.36bn from $2.57bn in the comparable year ago period, driven by lower prices and margins, although “strong” supply and trading results acted as a partial offset.

That was better than the company compiled consensus for $2.3bn.

Sirius Minerals suffered heavy losses as it launched a $3.8bn capital raising to fund the development of its Woodsmith potash project in Yorkshire and posted a narrowing of its full-year losses.

Specialty chemicals company Elementis lost ground as it said it expects further progress this year, albeit slightly below expectations, as global market conditions remains “challenging”, particularly in the coatings business.


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