London close: Shares struggle for direction amid trade tensions
London's stocks struggled for direction for a second day on Tuesday as investors seemed to shrug off the latest escalation in global trade tensions as the US and China both levied new tariffs on each other.
After edging lower and then creeping higher, the FTSE 100 ended up little changed at 7,300.23 by the close, down just 1.87 points or 0.03%, while the pound was largely flat against the dollar and the euro at 1.3161 and 1.1260.
President Trump announced overnight that he was imposing 10% tariffs on $200bn worth of Chinese imports, a levy that will be raised to 25% from January. If Beijing retaliates, the President threatened to impose tariffs on an additional $267bn of Chinese goods.
"We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly," Trump said in a statement. "But, so far, China has been unwilling to change its practices."
Beijing struck back with their own sanctions on $60bn worth of US goods, targeting goods such as liquefied natural gas from states loyal to the US President ahead of November’s mid-term elections, prompting him to react with outrage.
"Markets have shown an incredible resilience today, with US markets following their mainland European counterparts higher despite the declaration of tariffs from both the US and China throughout the course of the day," said analyst Joshua Mahony at IG, adding that there has even been an element of relief given the staggered nature of the measures.
"This staggered nature at least incentivises the Chinese to negotiate over the coming months to avoid feeling the brunt of further tariffs. The Chinese announcement of a retaliatory set of tariffs on $60 billion worth of US goods may have surprised in its swiftness, but not in its nature. With both the US and China implementing a lower levy rate on imports, there is a feeling that the tone is somewhat softer than expected. This has been a classic day of 'sell the rumour, buy the fact', with downside largely baked in to the markets."
Oil provided support, with Brent crude up 1.2% to $79.01 per barrel, while miners were also bolstering the Footsie in a rare day of not being hit by trade war gloom, said Russ Mould at broker AJ Bell, amid talk that Beijing will increase infrastructure investment.
Among other corporates, Jardine Lloyd Thompson was the standout gainer, surging more than 30%, after the insurance broker agreed to be bought by US professional services giant Marsh & McLennan for around £4.3bn.
Ocado was a strong early morning riser but gave up most of its gains from revealing that the pace of growth had been kept up in the third quarter, with its fourth robot-operated warehouse getting up to speed in record time.
BBA Aviation rallied from recent 11-month lows as it acquired Firstmark, an aerospace focused aftermarket service provider, for $97m.
Specialist lender Paragon advanced as it reiterated its guidance for the year and said it continues to operate in line with the board’s expectations.
On the downside, Spire Healthcare slumped as it reported a drop in first-half profit and downgraded its annual guidance after an "unprecedented decline" in admissions of NHS patients. Analysts at Morgan Stanley said the path to profits growth was "unclear without a significant turnaround in trends, not just in the NHS business but also in self-pay and PMI where growth would need to accelerate".
Sainsbury's was among the fallers as data from Kantar Worldpanel showed that while the FTSE 100 grocer enjoyed its best sales this year, it was still the slowest growing of the big four, with Asda and Morrisons leading the pack but still losing ground to the discounters. Tesco shares were positive, while Morrisons was slightly in the red.
Aerospace engineer Meggitt slipped as it said that Louisa Burdett, former group finance director of Victrex, will succeed Doug Webb as chief financial officer.
In broker note action, Polymetal was lifted to ‘outperform’ at RBC Capital Markets, while Fresnillo was upgraded to ‘top pick’ from 'sector perform' and bumped up to a price target of 1,300p from 1,200p.
Centrica was upgraded to ‘buy’ at Goldman Sachs, while Spectris was boosted to ‘outperform’ and IMI was downgraded to ‘underperform’ at Exane BNP Paribas.
Berenberg was busy, cutting CYBG to ‘hold’, initiating coverage of Wizz Air and IAG at ‘buy’, Ryanair at ‘hold’ and EasyJet at ‘sell’, while also cutting its numbers on ITV to reflect lower advertising revenue and more opex.
IWG was under the cosh as Credit Suisse cut the stock to 'underperform' from 'neutral' and chopped the price target to 200p from 245p.
Imperial Brands and British American Tobacco both fell after being reinstated at ‘underweight’ and ‘equalweight’ by Morgan Stanley, wary of several "lingering clouds" for the industry in the shape of new regulation, new entrants and pressure from interest rate rises, which tend to drive tobacco underperformance, partly through the effects on emerging market currencies.
Market Movers
FTSE 100 (UKX) 7,296.24 -0.08%
FTSE 250 (MCX) 20,424.55 0.25%
techMARK (TASX) 3,475.39 0.09%
FTSE 100 - Risers
Glencore (GLEN) 309.00p 2.88%
Evraz (EVR) 509.60p 2.80%
Centrica (CNA) 149.20p 2.58%
Anglo American (AAL) 1,577.20p 1.99%
Antofagasta (ANTO) 789.60p 1.62%
Royal Dutch Shell 'B' (RDSB) 2,553.37p 1.55%
Royal Dutch Shell 'A' (RDSA) 2,509.50p 1.48%
3i Group (III) 945.60p 1.26%
Ferguson (FERG) 6,445.00p 1.18%
BT Group (BT.A) 231.35p 1.11%
FTSE 100 - Fallers
NMC Health (NMC) 3,428.00p -3.33%
ITV (ITV) 153.10p -3.10%
British American Tobacco (BATS) 3,593.00p -2.07%
Relx plc (REL) 1,539.00p -2.04%
GVC Holdings (GVC) 976.67p -1.84%
Standard Chartered (STAN) 597.00p -1.81%
Imperial Brands (IMB) 2,581.00p -1.69%
easyJet (EZJ) 1,417.00p -1.49%
Marks & Spencer Group (MKS) 280.70p -1.44%
Experian (EXPN) 1,893.50p -1.41%
FTSE 250 - Risers
Jardine Lloyd Thompson Group (JLT) 1,870.00p 30.59%
Sirius Minerals (SXX) 30.76p 5.05%
Paragon Banking Group (PAG) 474.40p 4.45%
Ferrexpo (FXPO) 164.30p 4.42%
Millennium & Copthorne Hotels (MLC) 544.00p 4.21%
Kaz Minerals (KAZ) 482.00p 4.13%
Indivior (INDV) 271.00p 4.07%
Equiniti Group (EQN) 257.50p 3.41%
TalkTalk Telecom Group (TALK) 136.10p 3.34%
Sanne Group (SNN) 663.00p 3.27%
FTSE 250 - Fallers
IWG (IWG) 213.60p -6.64%
Hochschild Mining (HOC) 157.15p -3.94%
Sophos Group (SOPH) 475.00p -3.85%
Alfa Financial Software Holdings (ALFA) 157.00p -3.68%
Just Group (JUST) 71.00p -3.53%
Stagecoach Group (SGC) 157.40p -3.44%
Go-Ahead Group (GOG) 1,701.00p -3.08%
IMI (IMI) 1,107.00p -2.81%
Mediclinic International (MDC) 449.40p -2.77%
Spire Healthcare Group (SPI) 165.10p -2.42%