4th Dec 2019 16:57
(Alliance News) - Stocks in London ended in the green on Wednesday on renewed optimism that the US and China were moving towards a possible trade deal.
Analysts cited a Bloomberg News report that characterised Washington and Beijing as near finalising a partial trade agreement that would avert new tariffs which are scheduled to come later in December.
US President Donald Trump had sent markets into a tailspin on Tuesday after he poured cold water on the chances of a deal with China by the end of the year.
The FTSE 100 index closed up 29.74 points, or 0.4%, at 7,188.50. The FTSE 250 ended up 164.55 points, or 0.8%, at 20,665.48, and the AIM All-Share closed up 1.16 points, or 0.1%, at 907.49.
The Cboe UK 100 ended up 0.2% at 12,170.59, the Cboe UK 250 closed up 0.8% at 18,575.04, and the Cboe Small Companies ended up 0.2% at 11,381.25.
In Paris the CAC 40 ended up 0.3%, while the DAX 30 in Frankfurt ended up 0.1%.
"A report from Bloomberg this Wednesday suggested that Beijing and Washington are willing to separate the political from the economic to get an agreement in place before the scheduled new round of tariffs on December 15. Unnamed sources suggested that the amount of pre-existing tariffs that would be rolled back - really the key sticking point in negotiations - is close to being resolved. The cherry on top was Trump claiming in a press conference with Angela Merkel that 'discussions are going very well'," said Spreadex analyst Connor Campbell.
In the FTSE 100, gold miner Fresnillo ended the worst performer, down 6.4% tracking spot gold prices lower.
The precious metal was quoted at USD1,473.24 an ounce at the London equities close, down from USD1,480.64 late Tuesday.
M&G closed down 2.5% after the investment manager said it was temporarily suspending trading in shares of its property portfolio fund with immediate effect due to "unusually high" outflows, Brexit-related political uncertainty and changes in the UK retail sector.
The portfolio has investments in 91 UK commercial properties across the retail, office and industrial sectors and invests on behalf of UK retail investors. At October 31, the property fund had GBP2.54 billion assets under management.
The FTSE 100-listed firm, fresh from its October demerger from Prudential, said it has been "difficult" for the company to sell property and has turned to a suspension to protect its customers' funds.
Ahead on Wednesday, FTSE Russell will announce the latest index review changes, with budget airline easyJet set to re-enter the FTSE 100 after being demoted six months ago, replacing insurer Hiscox.
The pound was quoted at USD1.3118 at the London equities close, up sharply from USD1.2999 at the close Tuesday, trading at its highest levels since early May, as investors price in the likelihood of a Conservative Party majority in the upcoming genenal election
Investors see this as the most market-positive outcome as it would allow UK Prime Minister Boris Johnson to push his Brexit deal through Parliament in time for next month's deadline.
"If our base case prevails and Johnson wins a majority of seats, we expect UK economic momentum to improve over the medium term, lifted by increased confidence, less political uncertainty (no hard Brexit/no Corbyn government) and a sizeable fiscal stimulus. We look for real GDP growth to rise from 1.3% in 2019 to 1.8% in 2020 and 2.1% in 2021," Berenberg's Kallum Pickering said.
"A likely rally in UK domestic-orientated equities and sterling, and a sell-off in gilts, would reflect the improved market sentiment towards the UK. What would happen if Johnson falls short is an open question. Continued political uncertainty as the two major parties scramble for a coalition partner or else face repeat elections would further damage economic confidence and reverse some of the recent gains for UK assets," Pickering added.
The euro stood at USD1.1087 at the European equities close, flat against USD1.1089 late Tuesday.
In economic news from the continent, IHS Markit revealed the eurozone private sector was "stagnant" in November, remaining at the lowest levels for more than six years.
The final IHS Market eurozone purchasing managers' index composite output reading for November was 50.6, flat from October but exceeding the previous flash November PMI reading of 50.3. While exceeding the 50.0 neutral mark, this still put the index at "amongst the lowest levels in the past six-and-a-half years", IHS Markit said.
Against the yen, the dollar was trading at JPY108.80, up from JPY108.50 late Tuesday.
Stocks in New York were higher at the London equities close as positive signs on trade offset a disappointing hiring report from payroll firm ADP.
The DJIA, the S&P 500 index and the Nasdaq Composite were all up 0.7%.
ADP said 67,000 jobs were added in November, below the market consensus forecast for 140,000 jobs.
Among individual companies, Google-parent Alphabet climbed 1.6% as the tech giant announced that co-founder Larry Page was stepping down as chief executive and would be replaced by Google CEO Sundar Pichai.
Brent oil was quoted at USD63.26 a barrel at the equities close, up 3.8% from USD60.96 at the close Tuesday.
Oil surged after the US Energy Information Administration reported a crude oil inventory draw of 4.9 million barrels for the week to November 29, after a 1.6 million barrel increase reported for the previous week. Analysts had expected an inventory decline of 1.7 million barrels.
Meanwhile, the Organisation of the Petroleum Exporting Countries will gather in Vienna, Austria on Thursday and Friday and are expected to roll-over the production agreement through the end of June 2020 in order to stabilise crude markets and prices.
The cartel is made up of 14 nations from Africa, the Middle East and Latin America which together pump 40% of the world's oil.
OPEC's second largest oil producer Iraq said on Tuesday de facto leader Saudi Arabia was supporting deeper cuts for OPEC+ to 1.6 million barrels per day.
"News of an OPEC+ production cut extension into the mid-2020s and a more stringent export control system for Nigeria and Iraq added some short-term bullish sentiment to oil markets, with a slight nudge in prices ahead of tomorrow's meeting in Vienna," said analysts at SP Angel.
The economic events calendar on Thursday has eurozone third-quarter GDP figures at 1000 GMT.
The UK corporate calendar on Thursday has annual results from stockbroker AJ Bell and speciality chemicals company Victrex. There are also interim results from paper and packaging firm DS Smith.
By Arvind Bhunjun; [email protected]
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