LONDON MARKETS: London Markets Higher, Buoyed By Materials Stocks, Trade Optimism

By Barbara Kollmeyer, MarketWatch

Sage tumbles on downgrade; Mulberry hit by profit warning

Led by banks and commodity-related companies, the U.K.'s main stock index pushed higher on Monday as it tracked gains across global markets driven in part by optimism over a coming U.S.-China trade meeting.

Sage Group PLC fell sharply on a downgrade, while among smaller companies, Mulberry Group PLC got crushed by a profit warning.

What are markets doing?

The U.K.'s FTSE 100 rose 0.6% to 7,606.73. The index rose less than 0.1% on Friday, but last week recorded a 1.4% decline, its biggest since the week ended March 23, according to FactSet data.

The pound was buying $1.2733, a drop of less than 0.1% against the dollar.

What is driving the market?

London tracked global equity markets higher on signs that the U.S. and China are making efforts to resolve trade differences. A report in The Wall Street Journal said negotiators on both sides are mapping out talks (http://www.marketwatch.com/story/stock-futures-inch-up-putting-indexes-near-records-2018-08-20) aimed at resolving major differences by November. The issue has proved an overhang for global stocks at times over the past several months.

U.S. stock futures indicated major indexes could open near multimonth highs (http://www.marketwatch.com/story/stock-futures-inch-up-putting-indexes-near-records-2018-08-20).

Helped along by global trade optimism, commodity-related stocks pushed higher, with heavily-weighted Glencore (GLEN.LN)(GLEN.LN) and BHP Billiton PLC (BLT.LN) (BHP.AU) climbing around 3% each. Royal Dutch Shell Group (RDSA.LN) rose nearly 1%.

Some relative calm over Turkey's currency crisis was also a factor for optimism Monday. The U.S. rejected a bid by the country to tie relief for a big Turkish bank to the release of a U.S. pastor, but so far the lira was down just 1.4% against the dollar. For the month of August, the emerging market currency has tumbled 24% against the greenback, amid fears the country will trigger a wider emerging market crisis.

The U.K.'s negotiations to exit from the European Union will swing into focus this week with the Brexit minister Dominic Raab due in Brussels for talks Tuesday with the EU's chief negotiator Michel Barnier.

What stocks are in focus?

Along with commodity-related stocks, heavyweight banking group HSBC Group PLC (HSBA.LN) (HSBA.LN) was up 0.7%, also helping support the main index.

Sage Group PLC (SGE.LN) led the losers for the FTSE 100, tumbling 6.5% after the enterprise-software maker was downgraded to sell from hold by Deutsche Bank, where analysts cited increasing competition in its core midmarket business.

Persimmon PLC (PSN.LN) and Taylor Wimpey PLC (TW.LN) also were on the losing side, down 1% and 0.5%, respectively. Rightmove reported a 2.3% drop in average asking prices (http://www.marketwatch.com/story/uk-house-prices-see-sharp-drop-in-august-rightmove-2018-08-20)of newly listed homes on a seasonal basis in August, the biggest since a similar decline in December.

Among smaller companies, Mulberry Group PLC (MUL.LN) slumped 21% after the retailer warned earnings will take a hit (http://www.marketwatch.com/story/mulberry-shares-sink-after-profit-warning-2018-08-20) if sales from its concessions in the House of Fraser department stores don't start to recover.

(END) Dow Jones Newswires

August 20, 2018 05:23 ET (09:23 GMT)

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