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London open: Stocks rise as traders take tariffs in their stride; IAG flies higher
London stocks rose in early trade on Friday as investors took US President Trump’s lifting of tariffs on $200bn of Chinese goods in their stride.
China has vowed to retaliate after the US lifted tariffs on Chinese goods to 25% from 10%. China said it “deeply regrets” the move and will have to take “necessary counter-measures.”
Nevertheless, the FTSE 100 was up 0.5% at 7,241.22 at 0825 BST, while the pound was flat against the dollar and the euro at 1.3014 and 1.1590, respectively.
London Capital Group analyst Jasper Lawler said: “We are not seeing see the same risk off reaction that we have seen in previous sessions. The fact that the two sides have agreed to continue negotiations on Friday is offering a glimmer of hope that the relationship between the two powers hasn’t deteriorated beyond repair. Markets are also clinging to Trump’s comments over a ‘beautiful letter’ from Chinese President Jinping Xi and an expected phone conversation between the two leaders.”
ING said it expects China to retaliate with $30bn worth of tariffs on US goods. “This could happen either today or tomorrow. But it will become increasingly difficult for China to respond to a further round of tariff hikes,” it said.
On the UK data front, first-quarter GDP is due at 0930 BST, along with industrial and manufacturing production and the trade balance.
In corporate news, British Airways and Iberia parent International Consolidated Airlines was in the green even as it said that profit more than halved in the first quarter as it was buffeted by rising fuel costs and stiff competition. Operating profit in the three months to the end of March dropped 60% to €135m (£117m). Total revenue increased 5.9% to €5.32bn but passenger revenue per available seat fell 0.8% to 6.16 cents.
Aviation support company BBA Aviation rose as it said trading remained in line with expectations, with revenue for the first four months of 2019 up 23.1% year-on year, reflecting organic growth along with the acquisitions of EPIC, Firstmark and Ontic licences acquired during 2018.
Bunzl gained as it announced that finance director Brian May has decided to retire after more than 13 years in the role. He will be replaced by the current CFO of automotive retailer Inchcape, Richard Howes.
On the downside, wealth manager Brewin Dolphin retreated as it confirmed that it has agreed to buy the Irish wealth management business of Investec for around €44m and announced a placing to raise approximately £60m to “maintain a strong regulatory capital level”.
Millennium & Copthorne was on the back foot after it posted a drop in first-quarter revenue and pre-tax profit as it took a hit from the refurbishment of some of its hotels.
Anti-virus software developer Avast lost ground after results from US peer ForeScout Technologies, whose shares fell sharply after-hours as its second-quarter outlook disappointed.
Elsewhere, Auto Trader was hit by a downgrade to ‘neutral’ at Citi.
