20th Jul 2018 17:04
LONDON (Alliance News) - Stocks in London were mixed at the close on Friday despite European markets being knocked by US President Donald Trump's more aggressive trade tone as well as criticism of the US Federal Reserve's interest rate policy.The FTSE 100 index ended just 3.06 points down at 7,680.91 on Friday, ending the week 0.3% higher.The FTSE 250 finished up 0.1%, or 12.15 points, at 20,919.31, and the AIM All-Share closed down 0.1% at 1,093.74.The Cboe UK 100 ended down 0.1% at 13,015.27, the Cboe UK 250 finished 0.1% higher at 19,048.79, and the Cboe UK Small Companies closed 0.2% lower at 12,473.26.In mainland Europe at the London close, the CAC 40 in Paris was down 0.3% while the DAX 30 in Frankfurt was down 0.9%."Having got off to a slow start after Trump criticised the Federal Reserve for its policy of pushing rates up, European markets got an extra reason to roll over and go 'risk off' after the US President said he was ready to go with new tariffs on all USD505 billion worth of Chinese goods imported into the US," said CMC Markets' Michael Hewson."He wasn't finished there either, as in a tweet storm he then blasted China and the EU for manipulating their currencies lower in order to gain a competitive advantage."Trump has indicated a willingness to impose tariffs on all Chinese imports to the US."I'm ready to go to 500," Trump said in an interview with CNBC that aired Friday morning, apparently referring to the USD505.5 billion of Chinese imports to the US in 2017."I'm not doing this for politics, I'm doing this to do the right thing for our country," Trump said. "We have been ripped off by China for a long time."Previous presidents have largely refrained from commenting on the Federal Reserve's monetary policy, but Trump once again addressed the issue in posts on Twitter on Friday.Trump suggested the Fed's plan to gradually raise interest rates could hurt recent economic progress, claiming the rate hikes penalize the US for doing well."The US should not be penalized because we are doing so well," Trump tweeted. "Tightening now hurts all that we have done."He added, "The US should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals. Debt coming due & we are raising rates - Really?"In an earlier tweet, Trump accused China, the EU and others of artificially keeping their currencies and interest rates low."Trump is not one to accept responsibility for such events and now appears to be actively trying to push the blame onto others in a clear attempt to halt the rise in the greenback, the strengthening of which could weigh on the economy and soften the impact of the trade measures he is taking against other countries," said Oanda senior market analyst Craig Erlam.Erlam added the major risk is that Trump may try to put pressure on US policy makers to slow the pace of tightening, which could be a major risk for the economy in the longer term.Sterling moved off 10-month lows against the dollar quoted at USD1.3107 at the close from USD1.3012 at midday, compared to USD1.2986 at the London equities close on Thursday, amid positive UK finance data and as the greenback took a knock following Trump's Fed comments."After a decent run to the upside this week the US dollar has fallen back sharply today, largely as a result of last night's comments from President Trump, where he was critical of the Fed and the recent strength in the currency," said Hewson. "His follow-up comments this afternoon have accelerated this decline as traders decided to take profits on their US dollar long positions ahead of the weekend." Stocks in New York were nevertheless higher at the London close. The DJIA was 0.2% higher, the S&P 500 index also 0.2% up, and the Nasdaq Composite 0.4% higher.In US company news, General Electric reported second-quarter adjusted earnings per share of USD0.19, down 10% year-over-year.Adjusted industrial EPS was USD0.21, a decline of 9%. with analysts expecting the company to report profit per share of USD0.18 for the quarter. For the second-quarter, earnings from continuing operations attributable to GE common share-owners declined 28% year-over-year to USD736 million. Continuing EPS was USD0.08, compared to USD0.12. Net EPS was USD0.07 compared to USD0.10.Second-quarter consolidated revenues were USD30.1 billion, up 3% from previous year. Analysts expected revenue of USD29.31 billion for the quarter. On the London Stock Exchange, British American Tobacco was among the large cap risers, closing up 2.5%, on a read-across from Philip Morris International, which has lowered 2018 guidance.The Marlboro cigarettes maker revised its outlook for annual reported earnings per share to a range of between USD5.02 to USD5.12, down from the prior range of USD5.25 to USD5.40 per share. The earnings were lowered mainly due to lower consumer demand of tobacco heated products in Japan.Unilever ended 0.7% higher after the Anglo-Dutch consumer goods firm said it has completed the first EUR3 billion tranche of the previously announced EUR6 billion share buyback programme.The Dove soap maker also said it has commenced the second tranche to buy back shares worth EUR3 billion in line with its previously announced plans.In the FTSE 250, Beazley ended 5.6% lower after the insurer reported a fall in profit in the first half of its current financial year, hit by a decline in investment performance.The company reported pretax profit of USD57.5 million for the six months to the end of June, down 64% from USD158.7 million for the same period in 2017. The decline reflects a much lower investment return than the same period in 2017, down significantly to USD8.0 million from USD79.4 million.The drop in investment performance was caused by the recent rise in US interest rates, Beazley said. Beazley said it achieved a combined ratio at 95%, up from 90% a year prior. The higher ratio represents a deterioration of underwriting profitability, as the further the ratio is below 100%, the more profitable the insurer's underwriting business.Also lower in the midcap index was Premier Oil, down 2.0%, after Investec cut its rating to a Hold from Buy, and reduced its price target to 130 pence from 135p.Moody's Investors Service on Friday confirmed the B3 corporate family rating of FTSE 250-listed pharmaceutical firm Indivior, while the outlook remains negative, with the firm ending down 1.7%. In mid-June, Moody's initiated the review of Indivior's ratings for a potential downgrade, after generic drug company Dr Reddy's Laboratories secured a US Food & Drug Administration approval to launch a generic version of Suboxone drug in the US.Suboxone is an Indivior drug for opioid addiction which accounts for about 80% of its US sales. Moody's said the launch of a generic version of Suboxone by any company has the potential to lead to a rapid erosion of Indivior's revenue and earnings. Sirius Minerals ended up 1.0% after the fertilizer development company said it has signed supply agreements for POLY4 fertilizer with two new Chinese customers.Sirius, which is developing a large polyhalite mine in north Yorkshire, has signed a 10-year take-or-pay supply agreement with each of Guangzhou Eiliseng Biotech Co and Yantai Service Agricultural Science and Technology Co for the resale of POLY4 into southern and northern provinces of China. Pricing terms of both the agreements are consistent with the company's existing agreements, Sirius said.In the UK company calendar on Monday are interim results from media firm Ascential and retailer McColl's Retail Group, as well as first quarter results from Ryanair, and a trading statement from Paragon Banking Group. The UK budget deficit narrowed in June, the Office for National Statistics said Friday. Public sector net borrowing, excluding public sector banks, dropped by GBP800 million to GBP5.40 billion.This was the lowest June net borrowing since 2016. PSNB was bigger than the expected GBP5 billion. At the same time, PSNB for the current financial year-to-date period fell by GBP5.40 billion from last year to GBP16.80 billion, the lowest net borrowing for April to June period since 2007.Data showed that public sector net debt was GBP1.79 trillion at the end of June 2018, equivalent to 85.2% of gross domestic product.The EU's chief Brexit negotiator has questioned whether Theresa May's proposals for customs arrangements are workable, in his first public response to last week's white paper.Speaking after briefing ministers from the 27 remaining EU states in Brussels, Michel Barnier said the white paper has opened the way for "constructive discussions" on the post-Brexit relationship between the EU and the UK.And he indicated the EU was ready to amend its "backstop" proposals for the Irish border, which have become the biggest stumbling block in talks.But he said there were elements of the plan agreed by the Cabinet earlier this month at Chequers which the European Commission did not understand, and said further discussions would be needed over the coming weeks to establish how much "common ground" exists between London and Brussels.May's proposal for a "facilitated customs arrangement" opened up the risk of major fraud, additional bureaucracy and damage to EU businesses, he said.Barnier was speaking shortly after May issued a challenge to Brussels to "evolve" its negotiating position in response to the publication of her Brexit blueprint.The euro was quoted at USD1.1707 at the close, from USD1.1605 at the European equities close Thursday.Gold prices recovered somewhat Friday, quoted at USD1,228.31 an ounce at the London equities close. This compares to USD1,216.90 an ounce at the close Thursday, having hit USD1,211.96 an ounce midday Thursday, its lowest level for a year.Brent oil was up quoted at USD72.86 a barrel at the close Friday from USD73.50 a barrel at the London equities close Thursday.Coming up in the economic calendar in the UK next week are CBI quarterly industrial trends at on Tuesday. In the US, there is flash manufacturing and services PMI on Tuesday, mortgage applications and residential sales on Wednesday, as well as its trade balance and the unemployment insurance claims on Thursday.On Friday in the US, there is an advance estimate for GDP as well as the University of Michigan's consumer survey. In the EU, there is flash PMI on Tuesday as well as the ECB's latest interest rate decision following by a press conference with ECB President Mario Draghi. "We're not expecting any surprises from this week's ECB rate meeting coming as we do off the back off last month's decision to taper the asset purchase program by the end of this year," said Hewson. "The main focus is likely to be on when we can expect to see the ECB clarify its guidance on when to expect the first rate hike with speculation varying between on the end of Q3 next year, a time that has been euphemistically described as the 'end of the summer' or whether we'll see one in Q2 or at the end of Q4, after President Draghi's term at the helm of the bank has expired."Related Shares:
Sirius MineralsUnileverBeazleyBritish American TobaccoPMO.LIndivior