London midday: FTSE hits record high as US-China trade war on hold, pound slumps
London's top-flight index hit a new record on Monday, boosted by a weaker pound as the dollar rallied on the back of an easing of tensions between the US and China, which also helped to lift broader market sentiment.
At midday, the FTSE 100 was up 0.5% to 7,815.61, breaking through the 7,800 mark for the first time, having earlier reached an intraday high of 7,851.43 as the pound fell 0.5% versus the dollar to 1.3402 and 0.3% against the euro to 1.1403. A weaker pound tends to lift the blue chip index as around 70% of its constituents derive most of their earnings from overseas.
Investors breathed a sigh of relief after US Treasury Secretary Steve Mnuchin said over the weekend that the US would hold off from imposing tariffs on China, which had originally sparked fears of a trade war between the two. Mnuchin said that a trade war was "on hold" as both countries agree to work on a wider trade agreement.
The dollar was one of the biggest benefactors of the halt in tensions between the US and China, with the prospect of higher demand for US goods meaning increased demand for the greenback, said Joshua Mahony, market analyst at IG.
"While this is no doubt a good news story for markets, the question over whether there is a specific amount of trade required to fulfil the deal remains relevant. From a headline point of view this looks like a big win for Trump, yet only time will tell whether this whole debacle makes any tangible difference to their trade relationship," he said.
"With GBPUSD hitting a four-month low in early trade, it comes as no surprise that we are seeing the FTSE 100 celebrate by punching into fresh all-time highs. The closure of German, French and Swiss markets means that much of the focus is on the UK to lead the way, while a bank holiday in Canada also means lower volumes throughout the US session."
Elsewhere, the latest house price update from Rightmove showed that asking prices for newly marketed properties climbed 0.8% on the month in May to a new record high of £308,075, up from £305,732. However, asking prices in London subsided 0.2% on last year and across the South East as a whole dropped 0.1% - the first fall since 2011.
In corporate news, pharma giant AstraZeneca rallied after receiving US regulatory approval for its Lokelma treatment for hyperkalaemia, an increased level of potassium levels in the blood suffered by many people with chronic kidney disease and heart disease. It also announced that it had submitted a new drug application in Japan for a diabetes treatment, following recent approval in Europe.
RBS was in the black following reports that the state-owned bank is considering restarting dividends on a scale that would it make it one of Britain's most generous payers to shareholders and accelerate the government's sale of its stake.
Rival Barclays advanced after the Crown Court dismissed fraud charges brought by the Serious Fraud Office against the bank over its emergency fundraising deal with Qatar at the height of the financial crisis.
Budget airline Ryanair flew higher as it posted a 10% jump in full-year pre-tax profit but said its outlook for FY19 was on the "pessimistic side of cautious" due to rising costs and flat fare growth as it cut its full-year guidance.
NewRiver gained ground after confirming that it has entered a period of exclusivity with Hawthorn Leisure Holdings and its major shareholder regarding a potential acquisition of the business on Monday, following press comment.
Bank of Georgia ticked down after posting an 18.8% increase in first-quarter profit.
In broker note action, G4S was lifted by an initiation at ‘buy’ at Kepler Cheuvreux, while Tesco was up as Citi resumed its coverage at ‘buy’ and Ocado advanced after an upgrade to ‘add’ at AlphaValue.
Rotork was knocked lower by a downgrade to ‘underperform’ at Credit Suisse, while IWG was managing to hold its head above water despite a downgrade to ‘hold’ at Stifel.
Market Movers
FTSE 100 (UKX) 7,838.81 0.77%
FTSE 250 (MCX) 21,121.75 0.63%
techMARK (TASX) 3,528.05 0.67%
FTSE 100 - Risers
3i Group (III) 1,015.50p 2.68%
Burberry Group (BRBY) 1,979.50p 2.46%
AstraZeneca (AZN) 5,360.00p 2.27%
Royal Mail (RMG) 557.80p 2.24%
Marks & Spencer Group (MKS) 297.65p 2.04%
WPP (WPP) 1,351.00p 1.96%
Ashtead Group (AHT) 2,342.00p 1.96%
Anglo American (AAL) 1,895.00p 1.88%
Sainsbury (J) (SBRY) 311.22p 1.87%
Croda International (CRDA) 4,731.00p 1.85%
FTSE 100 - Fallers
Evraz (EVR) 490.20p -2.39%
Micro Focus International (MCRO) 1,339.00p -1.76%
Randgold Resources Ltd. (RRS) 5,770.00p -0.76%
Mondi (MNDI) 2,065.00p -0.53%
Rolls-Royce Holdings (RR.) 853.40p -0.44%
British Land Company (BLND) 690.60p -0.35%
British American Tobacco (BATS) 3,788.63p -0.30%
Reckitt Benckiser Group (RB.) 5,934.00p -0.27%
Shire Plc (SHP) 4,196.50p -0.06%
Taylor Wimpey (TW.) 203.46p -0.02%
FTSE 250 - Risers
Mitchells & Butlers (MAB) 275.60p 2.91%
Cranswick (CWK) 3,158.00p 2.87%
Drax Group (DRX) 359.00p 2.51%
Hunting (HTG) 933.50p 2.30%
Wizz Air Holdings (WIZZ) 3,148.00p 2.21%
BTG (BTG) 628.50p 2.20%
Crest Nicholson Holdings (CRST) 430.60p 2.13%
Herald Investment Trust (HRI) 1,307.10p 2.12%
Indivior (INDV) 468.00p 2.12%
Purecircle Limited (DI) (PURE) 349.00p 2.05%
FTSE 250 - Fallers
Telecom Plus (TEP) 1,044.00p -2.25%
Thomas Cook Group (TCG) 126.60p -1.78%
TI Fluid Systems (TIFS) 246.00p -1.60%
Capita (CPI) 138.30p -1.50%
Rank Group (RNK) 159.24p -1.46%
On The Beach Group (OTB) 500.03p -1.18%
RDI Reit (RDI) 36.38p -1.14%
Softcat (SCT) 663.00p -1.04%
Bakkavor Group (BAKK) 202.00p -0.98%
Fisher (James) & Sons (FSJ) 1,732.00p -0.92%