ADVFN Morning London Market Report: Friday 16 August 2019

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London open: Stocks bounce back after delayed start; ITV rallies


London stocks rose in early trade on Friday, bouncing back from heavy losses in the previous session.

At 1005 BST, the FTSE 100 was up 0.8% at 7,122.03, opening late after a technical issue at the London Stock Exchange affected trading in the top-flight index and its sister FTSE 250.

In currency markets, the pound was up 0.5% against the dollar at 1.2148 and 0.7% firmer versus the euro at 1.0962, underpinned by growing opposition to a no-deal Brexit.

Oanda analyst Craig Erlam said: “Recession fears are alive and well but Friday is off to a more relaxed start, perhaps a sign that investors already have one eye on their weekend activities after a surprisingly exhausting week.

“This week everyone has become obsessed with the inverted yield curve and whether it means we’re headed for recession or if it’s ‘different this time’. Of course, it’s always different this time. Although there are good arguments why ‘this time’ that may actually be true.

“The problem we have is that if enough people are convinced, it could become self-fulfilling. The reality is that this is just a trend that has been reliable over the last 50 years or so, rather than having any solid foundation. If Trump and Xi miraculously resolve the trade war tomorrow, are we still headed for recession? I would think not and the curve would adjust to reflect that.

“At this stage though, there’s probably more reason to have faith in an indicator like to 2-10 inversion than the US and China bringing an end to this unnecessary damaging exercise. Trump is happy to continue to blame the Fed for any evidence of the trade war hurting the US while both sides seem happy to see this through and accept the consequences.”

In equity markets, Hiscox was the standout gainer after an upgrade to ‘overweight’ at Morgan Stanley.

ITV was also in the green after Spain’s La Liga said it signed an initial deal for its matches to be shown on the London-listed broadcaster’s free-to-air network in the UK.

Acacia Mining edged up as it said it had resumed gold exports from its North Mara mine after receiving export permits from the Tanzanian government, but warned that production at the plant was still halted over a ban on the use of its tailings facility. The company said it would be will be able to meet its financial obligations “for an extended period of time” after the sale of gold from North Mara.

Ultra Electronics rallied after saying that it and joint venture partner Sparton DeLeon Springs have won a contract worth up to $1.04bn to manufacture sonobuoys for the US Navy.

Elsewhere, Ted Baker shares slipped after it signed a five-year deal with Next to produce and sell Ted Baker childrenswear from spring 2020. The companies will work together on products and sell them through Next’s retail and wholesale businesses and on Ted Baker websites.

In broker note action, BHP was downgraded to ‘underperform’ at Bank of America Merrill Lynch, while Ferrexpo was double-downgraded to ‘underperform’ and Glencore was cut to ‘neutral’.


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