London close: Stocks play 'catch-up' with global bourses
London stocks played catch-up with the rest of global markets on Tuesday, with sentiment underpinned by news of a new trade deal between the US and Mexico, although not all analysts were buying into the news.
The FTSE 100 was up by 0.52% or 39.73 points to 7,617.22, while the pound was drifting lower by 0.08% against the dollar and trading at 1.28839 and 0.4% lower versus the euro at 1.0998 as Prime Minister Theresa May said a 'no-deal Brexit' would not be the end of the world, but insisted she was working to get a good deal by October.
To take note of, Sterling had jumped on Monday, even as the stockmarket had remained closed.
May's comments followed a statement last week from Chancellor Phillip Hammond, who said a no-deal Brexit could mean the UK requires an extra £80bn in domestic borrowing over the following decade. However, May argued the forecasts cited by Hammond were out of date.
US President Trump announced on Monday that the US and Mexico had agreed the terms of a new trade deal which he hoped would replace the North American Free Trade Agreement (NAFTA). It has been reported that the new deal would require 75% of auto content to be made in the NAFTA region, up from 62.5%, while 40% to 45% would have to be made by workers earning an average of $16 per hour.
Rabobank said the glass half full way to view the announcement is that two of the three parties needed for a new NAFTA have come to an agreement which is a huge step in the right direction.
The glass half empty view is that the US has come to an agreement with Mexico as tri-party talks had stalled and now it plans to use the agreement with Mexico as a way of strong arming Canada into an agreement.
On a more critical note, Oliver Jones at Capital Economics was telling clients that: "Admittedly, signs that the US administration is willing to negotiate and accept a compromise on trade will presumably be welcomed in China and Europe. (See our US Economics Update, 27th August.) But the agreement between the US and Mexico is no guarantee of progress elsewhere."
Meanwhile, investors were still eyeing US-China trade relations after last week's talks between the two failed to yield a breakthrough.
"It would appear that the trade spat will rumble on and there is chatter in the markets that the US is eyeing up another round of tariffs on Chinese goods, but this time it could be up to $200bn worth of Chinese imports," said CMC Markets analyst David Madden. "The US department of agriculture has plans to financially support farmers who have been targeted by Beijing’s tariffs, and this initiative suggests how determined Washington DC is to maintain a hard-line."
Miners put in the strongest performance, with Anglo, BHP Billiton, Glencore and Rio Tinto all trading higher.
Elsewhere, private healthcare operator NMC Health rose after it denied reports that it is looking to buy assets in India.
Global plastic products design and engineering company RPC Group slipped even after it reached an agreement to sell its foodservice business Letica Corp to Graphic Packaging International for a pre-tax cash-free, debt free consideration of $95m.
Shares of Polymetal International also dipped, after the company secured a $250m long-term five-year fixed-rate loan with Alfa-Bank.
Melrose Industries gained following a report over the weekend that the turnaround specialist has put the sale of its US subsidiary, Ergotron, on hold following the illness of its chief executive.
Bunzl fell after it announced its first acquisition in Norway and reported a 4% increase in first-half profit as the distribution and outsourcing group’s growth in Europe more than made up for the weaker dollar's impact on its business in North America.
On the broker note front, Coats was initiated at 'buy' by Citi, while Genel Energy was lifted to 'buy' from 'hold' at Canaccord.
Petrofac was downgraded to 'hold' at Kepler Cheuvreux and TI Fluid systems was boosted to 'overweight' from 'neutral' at JP Morgan.
Market Movers
FTSE 100 (UKX) 7,617.22 0.52%
FTSE 250 (MCX) 20,849.24 0.76%
techMARK (TASX) 3,578.00 0.61%
FTSE 100 - Risers
Evraz (EVR) 518.00p 5.37%
NMC Health (NMC) 3,952.00p 3.57%
Anglo American (AAL) 1,626.40p 3.26%
Royal Mail (RMG) 479.60p 3.16%
Mondi (MNDI) 2,200.00p 2.95%
BHP Billiton (BLT) 1,708.20p 2.83%
Burberry Group (BRBY) 2,326.00p 2.65%
Johnson Matthey (JMAT) 3,629.00p 2.11%
London Stock Exchange Group (LSE) 4,597.00p 2.11%
Informa (INF) 781.00p 2.09%
FTSE 100 - Fallers
Associated British Foods (ABF) 2,286.00p -3.14%
CRH (CRH) 2,607.00p -1.32%
Ocado Group (OCDO) 1,071.00p -0.79%
BP (BP.) 560.60p -0.71%
Sainsbury (J) (SBRY) 334.40p -0.59%
Coca-Cola HBC AG (CDI) (CCH) 2,643.00p -0.56%
Micro Focus International (MCRO) 1,282.00p -0.54%
Carnival (CCL) 4,648.00p -0.51%
ITV (ITV) 164.75p -0.45%
British American Tobacco (BATS) 3,892.00p -0.43%
FTSE 250 - Risers
Kaz Minerals (KAZ) 496.60p 8.43%
Investec (INVP) 530.00p 5.28%
Rank Group (RNK) 175.00p 4.79%
JD Sports Fashion (JD.) 514.60p 4.51%
TI Fluid Systems (TIFS) 281.20p 4.30%
Softcat (SCT) 875.00p 4.29%
Just Group (JUST) 96.15p 3.67%
Charter Court Financial Services Group (CCFS) 362.40p 3.31%
Polypipe Group (PLP) 372.20p 3.22%
Tate & Lyle (TATE) 659.80p 3.19%
FTSE 250 - Fallers
Playtech (PTEC) 490.00p -5.19%
Computacenter (CCC) 1,444.00p -3.48%
TalkTalk Telecom Group (TALK) 124.80p -3.41%
Premier Oil (PMO) 120.60p -3.05%
Contour Global (GLO) 220.60p -2.73%
Euromoney Institutional Investor (ERM) 1,332.00p -2.49%
Hill & Smith Holdings (HILS) 1,075.00p -2.36%
Sanne Group (SNN) 654.00p -2.24%
888 Holdings (888) 229.60p -2.21%
Stagecoach Group (SGC) 160.70p -2.13%