ADVFN Morning London Market Report: Friday 29 November 2019

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London open: Stocks fall on weak Asian cues but Ocado bucks trend

London stocks fell in early trade on Friday, taking their cue from a downbeat session in Asia amid worries about Sino-US trade relations and following the release of disappointing data, but Ocado bucked the trend as it announced its first deal in Asia.

At 0830 GMT, the FTSE 100 was down 0.5% at 7,382.67, while the pound was flat versus the dollar and the euro at 1.2911 and 1.1728.

Stocks in Asia were firmly in the red after data showed that Japanese industrial production dropped 4.2% last month, while industrial production in South Korea declined 1.7%. Concerns about trade relations between the US and China also weighed on sentiment as China threatened “firm countermeasures” in response to US legislation backing anti-government protesters in Hong Kong.

Spreadex analyst Connor Campbell said the move by the US “will irrevocably damage the relationship between the US and China just as it seemed that the ‘phase one’ trade talks were pointing in the right direction”.

On home shores, the latest GfK survey revealed that consumer confidence in the UK remained subdued in November amid uncertainty over Brexit and ahead of the general election.

GfK’s long-running consumer confidence index was unchanged from October at -14, in line with expectations and at a six-year low.

Joe Staton, client strategy director at GfK, said: “In the face of Brexit and election uncertainty, consumers are clearly in a ‘wait-and-see’ mode. The score for the general economy over the coming year has ticked up three points and this is possibly an indication that some consumers believe the imminent general election might clear the Brexit deadlock, even though this sub-measure is still in deeply negative territory at -34.

“The general election is potentially an opportunity to move us out of the doldrums – but for this to happen there must be a clear result. A hung parliament could be very damaging for consumer confidence and would surely deepen the obvious malaise that we see month after month. We have not seen a positive headline score since January 2016 – that’s nearly four years ago. Uncertainty is nobody’s friend. So, while many issues are under the spotlight in this election, political parties will need to satisfy voters that they will be effective for the wider economy and that, as a consequence, people will be better off next year and beyond.”

There wasn’t much happening on the corporate front, but Ocado surged after the online grocer signed a technology partnership with Japanese supermarket chain Aeon to establish an online business.

Virgin Money was also on the rise, for the second day running, after its annual results on Thursday. Deutsche Bank said in a note that while the results were a miss, guidance was better than expected.

Elsewhere, St James’s Place was knocked lower by a downgrade to ‘sell’ at Goldman Sachs, while Royal Mail was weaker after a downgrade to ‘market perform’ at Bernstein. It was also in focus after the Court of Appeal rejected a union appeal against an injunction preventing its staff from striking ahead of Christmas.

Tullow Oil gushed lower after Peel Hunt downgraded the stock to ‘add’.

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