London close: Stocks jump on improved news on trade, rally in tobacco

12 September 2018

(Sharecast News) - London stocks shook off a profit warning from SSE, helped by news that the US is reaching out to Beijing before any decision on moving ahead with further trade tariffs is made and a sharp rally in tobacco stocks.
The FTSE 100 was up by 0.55% or 39.82 points to 7,313.36, while the pound was flat against the dollar at 1.3034 and off 0.16% versus the euro at 1.1211.

According to the <em>Journal</em>, Washington is giving China another opportunity to address outstanding issues between the two countries before it implements new levies on goods made in the Asian giant.

Nevertheless, some analysts expressed caution.

"Markets received a late shot in the arm today, as US seemingly offered an olive branch to China, raising hope that we could yet see some form of compromise in the near future. With a whole new round of tariffs set to be imposed, the US approach aimed at providing another round of talks is certainly welcome," said Josh Mahony at<em> IG</em>.

"Yesterday's move by the Chinese to push the WTO into enacting tariffs on the US are likely to be too slow given the processes involved and thus there is no doubt that the Chinese are seeking some form of retaliation in an ever-intensifying trade war. Should further discussions go ahead, there is likely to be a growing feeling that if the two sides do not progress in a positive manner, then this trade war could play out for a long time yet."

On the corporate front, shares of <strong>British American Tobacco</strong> and <strong>Imperial Brands</strong> jumped back after it was reported that the US Food and Drug Administration had threatened to pull certain electronic cigarettes from the market if the manufacturers did not properly address concerns around their increasingly high use by children.

Big Oil also put in a strong showing after the US Department of Energy reported an unxpected 5.3m barrel drop in the nation's commercial crude oil stockpiles over the week ending on 7 September (consensus: -0.8m barrels), although analysts cautioned that upon closer inspection there were signs of weak demand in the figures.

<strong>SSE</strong> was the biggest drag on the FTSE 100 as it warned that first-half profits are likely to have halved compared to last year due to higher costs and lower volumes of energy being consumed. After five months of its financial year, the group said full-year adjusted operating profit at its Energy Services arm was likely to be significantly lower than predicted at the start of the year ahead of its spin-off and merger with Npower.

<strong>Centrica</strong>, <strong>Severn Trent</strong> and <strong>National Grid</strong> all retreated.

Elsewhere, <strong>TI Fluid Systems</strong> was on the back foot after private equity group Bain Capital sold around 60m shares in the company, although the stock finished well-off its session lows.

On the upside, <strong>Galliford Try</strong> rallied as it posted a jump in full-year profit and revenue as completions rose and the housebuilder said it was making "excellent" progress towards its strategic objectives across all three businesses.

<strong>Dunelm</strong> advanced after saying that annual sales improved but underlying profits in the past 12 months have fallen due to lower margins and trading losses from its acquisition of online specialist Worldstores.

Luxury fashion brand <strong>Burberry</strong> was boosted by a report that a private equity firm had contacted Ferragamo about an offer, but this was later denied by the company.

Rare diseases specialist <strong>Shire</strong> ticked a touch higher after saying that Veyvondi has been granted EU marketing authorisation to treat bleeding events for adults with von Willebrand disease.

<strong>Sports Direct</strong> rose as it said ahead of its AGM that trading was in line with the group's expectations of achieving a 5% to 15% improvement in underlying earnings for current financial year, excluding the acquisition of House of Fraser and announced that chairman Keith Hellawell is stepping down. Three shareholder advisory groups have been calling on investors to vote against the re-election of Hellawell and CEO Mike Ashley at the AGM.

<strong>Superdry</strong> edged up as it appointed the former head of global womenswear for Tommy Hilfiger, Brigitte Danielmeyer, to the newly-created role of chief product officer.

<strong>Big Yellow</strong> was in the green as it announced plans to raise around &#163;67m to fund its pipeline of development opportunities and continue its longer-term portfolio expansion strategy, while Safestore gained after it reported a strong performance in the third quarter.

In broker note action,<strong> Anglo American</strong> was lifted to 'buy' at <em>HSBC</em>, while <strong>Capital &amp; Counties</strong> was boosted to 'neutral' from 'underperform' by <em>Exane BNP Paribas</em>.

<strong>LSE</strong> was upgraded to 'buy' at <em>Alphavalue</em> and <strong>RBS</strong> was bumped up to 'buy' at <em>Goldman Sachs</em>.

<em>Barclays</em> upped<strong> Taylor Wimpey</strong> to 'overweight' from 'equalweight' and<strong> Bovis Homes</strong> to 'equalweight' from 'underweight', but cut <strong>Crest Nicholson</strong> to 'equalweight' from 'overweight'.

<strong>Market Movers</strong>

FTSE 100 (UKX) 7,313.36 0.55%
FTSE 250 (MCX) 20,380.53 0.76%
techMARK (TASX) 3,463.42 0.38%

<strong>FTSE 100 - Risers</strong>

British American Tobacco (BATS) 3,763.00p 5.87%
Imperial Brands (IMB) 2,696.50p 3.37%
Glencore (GLEN) 295.10p 2.86%
Antofagasta (ANTO) 758.80p 2.49%
Burberry Group (BRBY) 2,126.00p 2.06%
Evraz (EVR) 475.30p 1.78%
BP (BP.) 552.90p 1.64%
Marks &amp; Spencer Group (MKS) 293.30p 1.52%
easyJet (EZJ) 1,415.00p 1.51%
BHP Billiton (BLT) 1,517.40p 1.44%

<strong>FTSE 100 - Fallers</strong>

SSE (SSE) 1,147.00p -8.28%
Centrica (CNA) 144.35p -3.61%
Ocado Group (OCDO) 933.00p -2.30%
CRH (CRH) 2,439.00p -1.85%
Barclays (BARC) 172.10p -1.51%
Rolls-Royce Holdings (RR.) 961.00p -1.44%
WPP (WPP) 1,148.75p -1.31%
Relx plc (REL) 1,633.00p -1.24%
Smurfit Kappa Group (SKG) 3,128.00p -1.01%
RSA Insurance Group (RSA) 605.40p -0.98%

<strong>FTSE 250 - Risers</strong>

Dunelm Group (DNLM) 570.50p 11.86%
Galliford Try (GFRD) 1,099.00p 10.01%
Energean Oil &amp; Gas (ENOG) 585.00p 7.34%
Greencore Group (GNC) 191.80p 6.85%
Kaz Minerals (KAZ) 464.60p 6.39%
Premier Oil (PMO) 126.40p 5.42%
Fisher (James) &amp; Sons (FSJ) 1,858.00p 5.09%
Hunting (HTG) 793.00p 4.76%
Centamin (DI) (CEY) 90.32p 4.71%
Wood Group (John) (WG.) 729.60p 4.62%

<strong>FTSE 250 - Fallers</strong>

AA (AA.) 114.10p -3.10%
Sanne Group (SNN) 612.00p -2.55%
Crest Nicholson Holdings (CRST) 359.40p -2.23%
FirstGroup (FGP) 96.70p -2.13%
Millennium &amp; Copthorne Hotels (MLC) 504.00p -1.95%
Nex Group (NXG) 1,025.00p -1.73%
Capita (CPI) 143.70p -1.58%
Equiniti Group (EQN) 252.00p -1.56%
Cobham (COB) 120.80p -1.55%
Rathbone Brothers (RAT) 2,532.00p -1.48%