2nd Oct 2018 17:06
LONDON (Alliance News) - Stocks in London ended lower on Tuesday amid Brexit worries and renewed concerns about heavily indebted Italy's budget which dented investors' appetite for risk.In addition, US President Donald Trump stepped up his trade war with China by saying it was "too early" to negotiate with Beijing.Italian Prime Minister Giuseppe Conte reaffirmed his country's commitment to the euro after a ruling coalition ally spooked financial markets by saying life would be better outside the single currency."Italy is a founding member of the EU and of the Monetary Union and I want to reaffirm this: the euro is our currency and it is irrevocable for us," Conte wrote on Facebook.Earlier, Claudio Borghi of the League party, told RAI state radio: "I am very convinced that with its own currency Italy would solve the majority of its problems. Not all of them, obviously."Borghi chairs the budget committee of the lower house of parliament and is an economics advisor to Deputy Premier and Interior Minister Matteo Salvini, leader of the far-right, eurosceptic League.Borghi's radio remarks were blamed for a new spike in Italy's spread, a key sovereign risk indicator which measures the yield differential between Italian and benchmark German 10-year bonds. Although, he later tweeted that he expressed personal views "not in the government contract" negotiated by the League and its coalition partner, the anti-establishment Five Star Movement."There has been increasing chatter about Italy dropping the euro, but Giuseppe Conte, the prime minister, confirmed that Italy will be keeping the euro. The fact that the head of government had to say it, doesn't instill too much confidence in the country or the currency. The Italian government is standing up to the EU, and this could keep pressure on the Italian government bonds market, and in turn eurozone stocks," said David Madden, market analyst at CMC Markets.In Paris the CAC 40 ended down 0.7%, the DAX 30 in Frankfurt ended down 0.4%, while Italy's flagship FTSE MiB index ended down 0.2%. The FTSE 100 index closed down 0.3%, or 21.12 points at 7,474.55. The FTSE 250 ended down 0.7%, or 136.35 points, at 20,264.86, and the AIM All-Share closed down 1.1%, or 11.91 points, at 1,089.70.The Cboe UK 100 ended down 0.3% at 12,691.13, the Cboe 250 closed down 0.7% at 18,386.87, and the Cboe Small Companies ended 0.2% lower at 12,115.42.On the London Stock Exchange, gold miners ended the trading session among the best blue chip performers, tracking spot gold prices higher as investors' risk appetite waned. Randgold Resources closed up 1.9% and Fresnillo ended up 1.5%. Midcap peer Centamin closed up 1.8%. The precious metal was quoted at USD1,205.20 an ounce at the London equities close against USD1,188.75 late Monday."In addition to the dollar easing back a little, gold may have been supported further by the mild sell-off in the equity markets," noted Forex.com analyst Fawad Razaqzada.Moreover tobacco stocks, which often rise during times of market turmoil, ended among the blue chip risers with Imperial Brands and British American Tobacco both up 1.5%. At the other end of the large cap index, Royal Mail's woes continued after the postal operator was downgraded to Underweight from Neutral by JPMorgan following its profit warning late Monday. Ferguson closed down 6.6% after the plumbing and heating products supplier poor UK performance overshadowed the strong showing in the US, Canada and Central Europe.UK markets remained challenging, as revenue dropped by 5.3% to USD2.57 billion from USD2.55 billion, due to the closure of branches and the exit of low margin wholesale businesses.The group is continuing with its restructuring programme first started in March, with Mark Higson appointed to lead the business throughout the programme. So far category management has been improved, the logistics and supply chain reconfigured and the branch network and distribution centre capacity.The US remained Ferguson's biggest contributor and highest performer in the year, with revenue rising by 11% to USD16.67 billion from USD14.98 billion, with all business units gaining market share.The pound was down against the dollar quoted at USD1.2979 at the London equities close, compared to USD1.3040 at the close Monday, after data showed UK construction industry slowed to its weakest output in six months in September.UK construction sector unexpectedly grew at the weakest pace in six months in September, as all three sub-sectors lost momentum, survey data from IHS Markit showed. The IHS Markit/CIPS UK construction purchasing managers' index fell to 52.1 from 52.9 in August. In contrast, economists had expected the index to rise to 53.1. A PMI score above 50 suggests growth in activity. Civil engineering was the worst performing sub-sector. Activity growth slowed in house building and commercial construction.Meanwhile in Birmingham, Boris Johnson rebuked Prime Minister Theresa May's Chequers plan for EU withdrawal as an "outrage" that would leave the UK "locked in the tractor beam of Brussels".Speaking on the fringe of the Conservative Party conference, Johnson called on his peers to persuade May to "chuck Chequers" and return to the hard Brexit blueprint first set out in her Lancaster House speech. At the time, May had said she would take the UK out of the customs union, single market and jurisdiction of the European Court of Justice.The former foreign secretary was dismissive of May's proposals saying it was a "total fantasy" that it would be possible to "bodge" Brexit now and then negotiate a better deal after leaving in March 2019. The Member for Uxbridge and South Ruislip said May's blueprint - which ties the UK to a common rulebook with the EU for trade in goods - would be "politically humiliating for a GBP2 trillion economy" and would prevent the UK from making its own laws and subject it to the directives of Brussels."Boris Johnson's speech does show that there is an alternative to the current leadership, but that whether that alternative has the vote to succeed in leadership contest remains to be seen. For the time being, his hardball approach to the EU is not something Michel Barnier need worry about, but the Commission is probably aware that they cannot afford to push May too far," said IG chief market analyst Chris Beauchamp.May will close out the Conservative Party conference on Wednesday when she delivers her highly-anticipated keynote speech at 1000 BST. May's 2017 speech famously featured a coughing fit, a backdrop which fell apart and a comedian handing her a mock P45.The euro stood at USD1.1555 at the European equities close, against USD1.1566 late Monday. In economic news from the continent, euro area producer price inflation slowed for the first time in four months during August, preliminary data from the statistical office Eurostat showed.Industrial producer prices on the domestic market rose 4.2% year-on-year following 4.3% in July, which was revised from 4%. Economists had expected a 3.80% increase. Inflation eased for the first time since April.Stocks in New York were broadly higher at the London equities close, with the DJIA up 0.4%, and the S&P 500 index and the Nasdaq Composite both flat. Ahead, US Federal Reserve Chairman Jerome Powell will speak at the National Association for Business Economics Annual Meeting in Boston at 1745 BST. Powell will be speaking on "The Outlook for Employment and Inflation" before the National Association for Business Economics and investors will be on the lookout for additional cues on the pace on interest rate hikes.Brent oil was higher quoted at USD85.03 a barrel at the London equities close from USD84.70 at the close Monday. The economic events calendar on Wednesday has services PMI readings from Italy at 0845 BST, France at 0850 BST, the eurozone at 0900 BST and UK at 0930 BST. In addition, Powell will speak at the Atlantic Festival in Partnership with the Aspen Institute at 2100 BST. The UK corporate calendar on Wednesday has half year results from supermarket chain Tesco and trading statements from kitchen and bathroom tile specialist Topps Tiles and optical components and systems maker Gooch & Housego.Related Shares:
Centamin PLCBritish American TobaccoRandgold ResourcesFergusonFresnilloRMG.LImperial Brands