London open: Stocks edge lower but Sky bucks trend on Comcast deal
London stocks edged lower in early trade on Monday as fresh US-China trade tariffs kicked in, but Sky bucked the trend after Comcast outbid Fox for the broadcaster.
At 0840 BST, the FTSE 100 was down 0.2% to 7,476.42, while the pound was up 0.3% versus the dollar and the euro at 1.3108 and 1.1166, respectively.
Traders were looking east after China cancelled the latest round of US trade talks, bolstering trade war concerns, just as new US tariffs were due began. Beijing declined an invitation to explore further trade talks and summoned Washington’s ambassador to Beijing to protest over Russia-related sanctions imposed on a Chinese general.
Market analyst Rebecca O’Keeffe at Interactive Investor said: "During the first stages of the US-China trade war, markets concluded that the US President clearly held the upper hand and US markets reached new highs. However, as a new round of tariffs are imposed, the market is far less sure that this is a smart thing for the President to be doing. Not only has China retaliated immediately, but many of the new US tariffs are likely to have a direct negative impact on US companies and consumers.
"Last week, US chipmaker Micron warned of the negative effects of new tariffs on its business outlook, while consumer companies including Walmart and Target warned that US shoppers would have to pay higher prices as a result of the new tariffs. Support for tariffs in the US works as long as it doesn’t have a direct impact on US consumers, jobs or share prices. If this latest move starts to result in higher prices for customers or lower corporate profitability, the President may find the going much tougher, even with his most ardent fans."
On the UK data front, the CBI industrial trends survey is at 1100 BST.
In corporate news, Thomas Cook tumbled 23% after warning over its full-year profits as it said unseasonably hot weather hit bookings. TUI was also under the cosh.
Drax slipped after confirming that it is in talks with Spain’s Iberdrola about the potential acquisition of a UK portfolio of pumped storage, renewable hydro and gas-fired generation assets.
AstraZeneca ticked a little lower even as it said that its diabetes drug Farxiga met a key goal in a major clinical study to show the medicine’s heart-protecting benefits.
On the upside, Sky surged nearly 9% as it urged its shareholders to accept a takeover offer from US-based Comcast after it outbid Rupert Murdoch’s 21st Century Fox for the London-listed broadcaster. Sky said the Comcast offer of £17.28 represents an "excellent outcome" for its shareholders, at a premium of 125% to the closing price 6 December 2016, which was the last business day before Fox’s initial approach.
O’Keeffe said: "Sky shareholders are popping the champagne after this weekend’s bidding auction valued the company at eye watering levels. The premium that is being offered by Comcast in indicative of how much pressure is on traditional media platforms.
"Their newer tech savvy rivals have revolutionised the way people engage with TV and internet content and these technology giants are investing huge amounts of money into both popular shows and new content to keep customers coming back for more."
Randgold Resources rallied as it agreed to a merger with larger Canadian rival Barrick Gold to create a $18.3bn giant while Pennon was a touch higher as it maintained its full-year expectations.
Oil stocks were boosted as crude oil prices continued to rally, with a barrel of Brent up 2% to $80.38.
In broker note action, Smiths was downgraded to ‘neutral’ at Bank of America Merrill Lynch, while SSP was rated new ‘hold’ at Jefferies. Spire Healthcare was resumed at ‘hold’ by Peel Hunt and Johnson Matthey was started at ‘outperform’ by Bernstein.
Capital & Counties was lifted to ‘outperform’ from ‘neutral’ by Credit Suisse.
Market Movers
FTSE 100 (UKX) 7,476.42 -0.18%
FTSE 250 (MCX) 20,596.33 0.03%
techMARK (TASX) 3,505.04 -0.15%
FTSE 100 - Risers
Sky (SKY) 1,722.01p 8.64%
Randgold Resources Ltd. (RRS) 5,122.00p 4.04%
GVC Holdings (GVC) 990.50p 2.38%
Fresnillo (FRES) 861.20p 0.89%
Ocado Group (OCDO) 910.40p 0.71%
ITV (ITV) 152.30p 0.63%
BP (BP.) 570.50p 0.62%
Standard Life Aberdeen (SLA) 325.30p 0.59%
Next (NXT) 5,230.00p 0.58%
SSE (SSE) 1,135.50p 0.58%
FTSE 100 - Fallers
TUI AG Reg Shs (DI) (TUI) 1,386.50p -2.63%
Antofagasta (ANTO) 874.20p -2.41%
Glencore (GLEN) 331.84p -1.47%
Berkeley Group Holdings (The) (BKG) 3,623.00p -1.23%
Diageo (DGE) 2,668.00p -1.19%
Anglo American (AAL) 1,740.00p -1.18%
International Consolidated Airlines Group SA (CDI) (IAG) 686.60p -1.18%
Micro Focus International (MCRO) 1,346.50p -1.14%
Kingfisher (KGF) 253.40p -1.13%
Reckitt Benckiser Group (RB.) 6,881.00p -1.08%
FTSE 250 - Risers
JD Sports Fashion (JD.) 464.40p 2.74%
Premier Oil (PMO) 127.80p 2.49%
Tullow Oil (TLW) 252.40p 2.27%
Hikma Pharmaceuticals (HIK) 1,893.50p 2.10%
Fisher (James) & Sons (FSJ) 1,856.00p 1.98%
Petrofac Ltd. (PFC) 650.80p 1.85%
Cairn Energy (CNE) 224.20p 1.45%
RDI Reit (RDI) 32.50p 1.42%
Games Workshop Group (GAW) 3,940.00p 1.42%
Inmarsat (ISAT) 503.00p 1.27%
FTSE 250 - Fallers
Thomas Cook Group (TCG) 59.30p -23.83%
Contour Global (GLO) 210.00p -2.60%
Sequoia Economic Infrastructure Income Fund Limited (SEQI) 110.50p -2.21%
On The Beach Group (OTB) 498.50p -2.06%
IWG (IWG) 239.70p -2.04%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 339.02p -1.73%
Morgan Advanced Materials (MGAM) 323.40p -1.46%
Fidelity China Special Situations (FCSS) 211.50p -1.40%
Edinburgh Dragon Trust (EFM) 361.00p -1.37%
Fidelity European Values (FEV) 231.87p -1.33%