ADVFN Morning London Market Report: Wednesday 14 August 2019

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London open: Stocks nudge up ahead of inflation data; Admiral rallies


London stocks nudged up in early trade on Wednesday amid renewed optimism about Sino-US trade relations but caution ahead of the release of the latest UK inflation data.

At 0830 BST, the FTSE 100 was up 0.1% at 7,257.39, while the pound was flat against the dollar at 1.2056 and 0.1% lower versus the euro at 1.0783

The mood was lifted on Tuesday after the Trump administration said it would delay new tariffs on some Chinese goods until December.

“The announcement was the one bit of good macro news in the past few days, and it sparked a spate of buying. Trade talks between the US and China will take place in September, and traders are a little more optimistic about the situation now,” said CMC Markets analyst David Madden.

However, analyst Neil Wilson sounded a note of caution. “All the risks cannot be whitewashed so easily,” he said.

“The delay to tariffs looks more like a temporary reprieve for domestic reasons rather than a genuine signal of willingness to talk with China. The president didn’t like what he saw in the markets and decided to intervene. Hong Kong remains a trouble spot – the situation remains tense and we see further escalation as a real risk.

“Remember up until now the narrative has been that China’s paying the tariffs…only ever a tweet away…”

Investors were mulling data out of China, which showed that industrial production slowed more than expected in July compared to the previous year, coming in at 4.8% versus a forecast of 5.8% and down from 6.3% in June.

Fixed asset investment came in at 5.7% growth, slightly undershooting expectations of 5.8% and retail sales grew 7.6% in July, down from 9.8% in June and below expectations of 8.6%.

“Overall, it was a poor set of numbers,” said Madden.

On home turf, all eyes will be on the producer price index, consumer price index and retail price index due out at 0930 BST.

In corporate news, insurer Admiral rallied as it said interim pre-tax profits rose 4% to £218.2m as its UK household insurance business swung to a £4.2m profit from a £1.9m loss last year.

AstraZeneca was also on the rise following encouraging results from the study of an ovarian cancer drug.

Balfour Beatty surged as the construction group posted a jump in first-half pre-tax profit and said it was on track to deliver a full-year performance in line with market expectations.

FTSE 250 cybersecurity company Avast gained after saying that full-year revenue growth will be at the upper end of its high single-digit percentage range following a solid first half .

On the downside, Hochschild Mining lost ground as the precious metals miner said first-half pre-tax profit was dented by a drop in the average price of silver, which led to a decline in production.

Auto Trader was under the cosh as it emerged that Volkswagen’s financial services unit is bringing its used car website, Heycar, to the UK.

Mike Ashley’s Sports Direct was on the back foot as it said Grant Thornton has quit after more than a decade as its auditor.


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