London close: Stocks gains on dovish comments by US Fed chair
London stocks eked out only small gains, boosted by a positive tone to trading on Wall Street's, where several of th main market gauges were notching up fresh record highs after US central bank chief Jerome Powell struck a relatively dovish note in his keynote speech at the Federal Reserve's annual Economic Symposium at Jackson Hole, Wyoming.
Not all economists were in agreement that the chief of the world's main central bank had indeed sounded less aggressive than in the recent past.
Be that as it may, the UK's top flight index and Sterling snapped higher after Powell told markets there was "no clear sign" that inflation was accelerating above the central bank's 2.0% target, nor does there seem to be an elevated risk of overheating.
The FTSE 100 was up by 0.19% at 7,577.49 going into the bank holiday, with the pound strengthening by 0.32% versus the dollar to 1.2856 on the back of Powell's remarks.
Against the euro on the other hand, Sterling weakened 0.38% to 1.1059, amid sharp criticism from pro-Bexiters of the Chancellor's warning on Thursday of the potential for severe harm to the economy from leaving the European Union without a deal.
On a related note, the World Trade Organisation cautioned on Friday that Britain risked trade disruption under a no deal scenario because it was rather unlikely that it would be able to reach agreements with other WTO members on tariffs and quotas in time.
In remarks to BBC Radio 4 on Friday, WTO director general, Roberto Azevedo, said: "The moment that other countries begin to sense an opportunity to increase their market share or increase a quota here or there, they are going to go for that."
Azevedo added that a 'no-deal' Brexit is "not going to be the end of the world, in the sense that trade is going to stop and that everything is going to fall down -- no, but it's not going to be a walk in the park, either."
Trade relations between the US and China were naturally still in focus.
There was no breakthrough in this week's talks as both countries imposed 25% tariffs on $16n worth of each other's goods, although the Chinese commerce ministry did say that discussions had been "constructive" and "candid".
Nevertheless, Chinese finance minister Liu Kun told Reuters that while China doesn't want to engage in a trade war, it will "resolutely respond" to the "unreasonable measures" taken by the US.
"With the US mulling $200bn in additional 25% tariffs, this is not going away," said Neil Wilson, chief market analyst at Markets.com. "The real worry is what does China do then. While Beijing cannot match the US in terms of raw firepower as it imports far less from the US, it can respond with ‘qualitative’ measures, which could seriously impede US firms doing business in China."
Mining stocks were on the front foot as copper and zinc prices rebounded, with Anglo American, BHP Billiton, Glencore and Rio Tinto all higher. This helped to offset losses in the housebuilding sector, with Berkeley, Barratt, Persimmon and Taylor Wimpey lower after the latest figures from UK Finance showed mortgage approvals fell in July. Mortgage approvals declined to 39,584 from 40,330 in June, versus consensus expectations for a rise to 40,700.
Meanwhile, gross mortgage lending was up around 7.6% on the year before to £24.6bn, while credit card spending was up 8.1% and personal deposits grew 1.2% in the last 12 months.
Samuel Tombs, chief economist at Pantheon Macroeconomics, said the renewed fall in mortgage approvals in July, to below their post-referendum average of 40.4k, demonstrates that the housing market is still fundamentally slowing.
"Approvals likely will languish at their current low level, given that the new buyer enquiries balance of the RICS Residential Market Survey remained close to zero in July. In addition, the number of people searching for 'mortgage' on Google - a good leading indicator of lending activity - was down 3.8% year-over-year in July. Meanwhile, the MPC’s decision to increase Bank Rate in August likely will hit lending volumes."
Shire gained after the US Food and Drug Administration approved a first-of-its-kind drug, Takhzyro, to treat patients aged 12 plus suffering from a rare hereditary disease that causes swelling.
Computacenter ticked lower even as the IT infrastructure and services provider posted a 24.3% jump in first-half pre-tax profit as revenue exceeded £2bn, marking the first time this milestone has been reached in the first half.
Petrofac rallied after saying it was selling Petrofac GSA Holdings to Ithaca Energy for up to $292m.
In broker note action, Antofagasta was boosted by an upgrade to 'outperform' at RBC Capital Markets, while OnTheBeach got a lift after Berenberg upped its price target on the stock.
John Laing Group was cut to 'sector perform' by RBC Capital Markets, while N Brown, Ted Baker and Henry Boot were all lifted to 'add' at Peel Hunt and McBride was upgraded to 'buy' at Jefferies.
Market Movers
FTSE 100 (UKX) 7,577.49 0.19%
FTSE 250 (MCX) 20,691.41 0.13%
techMARK (TASX) 3,556.28 0.44%
FTSE 100 - Risers
Glencore (GLEN) 321.55p 3.56%
Antofagasta (ANTO) 833.60p 3.55%
Anglo American (AAL) 1,575.00p 2.54%
Fresnillo (FRES) 947.20p 2.49%
BHP Billiton (BLT) 1,661.20p 2.16%
CRH (CRH) 2,642.00p 2.13%
Shire Plc (SHP) 4,515.00p 2.09%
Melrose Industries (MRO) 230.00p 1.63%
Micro Focus International (MCRO) 1,289.00p 1.62%
Rio Tinto (RIO) 3,719.90p 1.59%
FTSE 100 - Fallers
British American Tobacco (BATS) 3,909.00p -3.42%
Ocado Group (OCDO) 1,078.38p -3.24%
Berkeley Group Holdings (The) (BKG) 3,639.00p -1.65%
Imperial Brands (IMB) 2,798.50p -1.62%
United Utilities Group (UU.) 716.80p -1.57%
Taylor Wimpey (TW.) 168.80p -1.52%
Persimmon (PSN) 2,452.00p -1.49%
Severn Trent (SVT) 1,935.00p -1.38%
GVC Holdings (GVC) 1,092.00p -1.36%
ITV (ITV) 165.35p -1.28%
FTSE 250 - Risers
On The Beach Group (OTB) 503.00p 5.67%
Ferrexpo (FXPO) 159.60p 4.35%
Sophos Group (SOPH) 532.00p 4.21%
Kaz Minerals (KAZ) 462.60p 2.80%
Aveva Group (AVV) 2,764.00p 2.67%
Hochschild Mining (HOC) 180.00p 2.53%
Stobart Group Ltd. (STOB) 244.00p 2.52%
Cranswick (CWK) 3,240.00p 2.40%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 330.00p 2.17%
OneSavings Bank (OSB) 425.00p 2.16%
FTSE 250 - Fallers
TalkTalk Telecom Group (TALK) 128.70p -3.96%
Greencore Group (GNC) 173.40p -3.37%
Capita (CPI) 142.85p -3.05%
Crest Nicholson Holdings (CRST) 386.80p -2.72%
Redrow (RDW) 537.00p -2.45%
Daejan Holdings (DJAN) 5,800.00p -2.36%
UDG Healthcare Public Limited Company (UDG) 753.50p -2.02%
TR Property Inv Trust (TRY) 413.50p -2.01%
Keller Group (KLR) 1,074.00p -2.01%
Contour Global (GLO) 226.80p -1.99%