ADVFN Morning London Market Report: Thursday 5 December 2019

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London open: Stocks fall as sterling rallies; Burberry bucks trend

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London stocks edged lower in early trade on Thursday, weighed down by a stronger pound.

At 0840 GMT, the FTSE 100 was down 0.3% at 7,168.82, having ended in the green on Wednesday after a Bloomberg report suggested that the US and China were edging closer to a phase one agreement.

Sterling strength was a drag as the currency hit a fresh 31-month high against the euro, trading up 0.2% at 1.1856. Versus the dollar, it was at a seven-month high, up 0.3% at 1.3143 amid expectations of a Tory win in next week’s general election.

Spreadex analyst Connor Campbell said: “Though the polls have largely showed the Conservative lead shrinking from its early campaign peak, Boris Johnson and co. have nevertheless maintained a 9-12 point buffer between them and Labour. That would likely be enough for the Tories to secure a chunky majority, one that would then presumably see the UK leave the EU on January 31st.

“Desperate for the Brexit uncertainty to be over – even if there is plenty more in the pipeline when the UK starts to actually negotiate its new trade deals – the pound has popped higher every time the polls have pointed towards a Tory win. Thursday was no different.”

Elsewhere, investors continued to mull the latest developments in Sino-US trade talks. Earlier, Bloomberg reported China’s Ministry of Commerce spokesman Gao Feng as saying that Chinese officials are in “close contact” with US counterparts on trade negotiations. He also reiterated that tariffs should be reduced proportionately as part of a phase one deal.

“Ultimately, we’ll only know what the true state of play is as we get closer to 15th December and the decision on the implementation of tariffs on the remaining $150bn of Chinese goods,” said CMC Markets analyst Michael Hewson.

In equity markets, paper and packaging group DS Smith was in the red despite posting a 31% jump in first-half profit as it reaped the benefits of a rise in online shopping. Peers Smurfit Kappa and Mondi were also weaker.

IG Group lost ground as the online trading provider said net trading revenue for the first half was set to slip to around £250m from £251m last year, which benefitted from two months of trading prior to the introduction of product intervention measures by the European Securities and Markets Authority.

Next, Mediclinic, Royal Mail, Britvic and Homeserve were all down as their stock went ex-dividend.

On the upside, luxury fashion brand Burberry was sitting pretty at the top of the FTSE 100 as shares of luxury coat maker Moncler surged following a report that France’s Kering could be interested in the company.

Dunelm surged after the homeware retailer said full-year pre-tax profit was set to be higher than previous expectations, while St Modwen advanced after a well-received trading update.

 

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