22nd Nov 2019 16:55
(Alliance News) - Stocks in London ended higher on Friday after US President Donald Trump said Washington and Beijing could be on the verge of sealing a partial trade deal.
Trump told Fox News the two sides are "potentially very close" to securing a deal but that he was "not anxious" to make a deal.
Trump's remarks echoed a statement made hours earlier by Chinese President Xi Jinping, who told a gathering of dignitaries in Beijing that China wanted a deal but was "not afraid" to fight back if needed.
"We have a deal, potentially very close," Trump said during an interview on Fox News. "He wants to make a deal much more than I want to make it. I'm not anxious to make it."
The FTSE 100 index closed up 88.26 points, or 1.2% at 7,326.81, ending the week up 0.3%.
The FTSE 250 ended up 115.95 points, or 0.6% at 20,485.81, ending the week up 0.4%, and the AIM All-Share closed up 4.69 points, or 0.5% at 906.90, ending the week up 1.5%.
The Cboe UK 100 index finished up 1.3% at 12,416.94. The Cboe UK 250 closed up 0.6% at 18,369.86 and the Cboe UK Small Companies ended up 0.2% at 11,298.90.
In Paris the CAC 40 and the DAX 30 in Frankfurt ended up 0.2%.
"Equities are advancing once more, bolstered by hopes that a China trade deal is still a possibility before the end of the year. 'Very close' could mean a variety of things, but it was enough to create a more positive outlook for equities. Some of that was however diminished following suggestions that the Federal Communications Commission will vote to designate Huawei and ZTE as security risks. There is still plenty that can go wrong where trade talks are concerned. Low readings in volatility continue, with the bounce earlier in the week being mostly faded, and as a result downside for stocks continues to be limited," said IG Group analyst Chris Beauchamp.
On the London Stock Exchange, internationally-exposed miners ended among the blue chip risers amid the US-China trade comments.
Glencore, BHP, Anglo American and Rio Tinto closed up 3.1%, 2.4%, 2.3% and 2.1% respectively.
In the FTSE 250, Hochschild Mining ended the worst performer, down 8.9% after the gold miner cut the 2020 guidance for its Pallancata project in Peru due to permitting delays.
The miner said it is still "firmly on track" for its 2019 output guidance of 457,000 gold equivalent ounces or 37.0 million silver equivalent ounces.
However, its overall attributable production target for 2020 is 432,000 gold equivalent ounces or 35.0 million silver equivalent ounces, which includes a drop in Pallancata's expected production to 7 million silver equivalent ounces.
The pound was quoted at USD1.2831 at the London equities close, down from USD1.2915 at close Thursday, following weak UK purchasing managers' index data from IHS Markit.
The UK private sector in November recorded the sharpest drop in output since July 2016, Markit said, with the general election looming - adding to an already uncertain outlook due to Brexit.
The flash composite output index read 48.5 in November, a 40-month low and down from October's final print of 50.0. The UK services business activity index also slumped to a 40-month low, coming in at 48.6, down from 50.0 in October.
The flash UK manufacturing purchasing managers' index came in at 48.3 in November, down from 49.6 in October and represented a two-month low, IHS noted. The November flash UK manufacturing output index read 48.3, also a two-month low and behind October's final reading of 49.6.
The 50.0 mark separates expansion from contraction, so Friday's data indicates the UK services and manufacturing industries both are in decline.
On the political front, leaders of the four-largest Westminster parties prepare to clash in another TV set-piece on Friday evening.
The BBC is airing a two-hour long episode of Question Time from 1900 GMT in Sheffield, where an audience will quiz Prime Minister Boris Johnson, Labour's Jeremy Corbyn, Liberal Democrat leader Jo Swinson and Scottish First Minister Nicola Sturgeon for 30 minutes each.
Opinion polls continue to suggest the Conservative Party has a strong lead over Labour. The poll averages issued on Thursday put the Tories on 43%, with Labour on 29%, the Lib Dems 14%, the Brexit Party 5% and the Green Party on 3%.
Recently, the pound has been buoyed by the prospect of a Conservative election victory and the implementation of Johnson's Brexit deal, however Capital Economics thinks these outcomes are not fully priced in.
Capital Economics also said a win for Labour in the election would be a "double-edged sword" for the pound.
"The Labour manifesto has ruled out leaving the EU without a deal, which would reduce the downside risk to the pound from Brexit. It also stated that Labour would negotiate a closer relationship with the EU, and then put that deal to a referendum within six months with remain as an option. So there would be either a very close relationship with the EU or no Brexit," Capital Economics analyst Thomas Pugh said.
On Thursday, Corbyn launched his psrty's manifesto in Birmingham which set out plans to raise taxes on higher earners and corporations, nationalise parts of the water, power, rail, mail and communication industries, alongside new rules for businesses and homeowners.
"If followed through, Labour's policies would erode investors' returns and rights. Indeed, perhaps the most concerning aspect of Labour’s election manifesto for the market is that the price paid for nationalised firms would be set by a panel of MPs and may not necessarily reflect market value. What's more, Labour would require that 10% of the shares in large UK companies be transferred to employees. Essentially, investors would probably not be properly compensated for the transfer of their assets and could fear that this is just the tip of the iceberg, causing overseas investors to pull out of the UK. That would create more downward pressure on the pound, perhaps worth five to ten cents," Pugh added.
The euro stood at USD1.1032 at the European equities close, down from USD1.1075 late Thursday, after data showed the eurozone economy remained "close to stagnant" in November.
For November, the flash composite PMI reading fell to a three-month low, slipping to 50.3 from 50.6 in October. The flash services print was at a 10-month low, reading 51.5 compared to 52.2 the previous month, with the flash manufacturing PMI rising to 46.6, itself a three-month high, from 45.9.
The slight dip in the composite PMI was blamed on new orders falling for the third straight month.
The survey showed signs of the steep ongoing manufacturing decline spreading further to services, Markit added.
Against the yen, the dollar was trading at JPY108.63, firm against JPY108.55 late Thursday.
Stocks in New York were mostly higher at the London equities close, with the DJIA up 0.2%, the S&P 500 index up 0.1%, but the Nasdaq Composite was down 0.1%.
Tesla was weighing on the Nasdaq index after the less-than stellar launch of its Tesla Cybertruck in California.
The big reveal of Tesla's electric pick-up went embarrassingly wrong when the supposedly impact-proof windows smashed, leaving a flustered Elon Musk to flounder through the rest of his presentation in front of a badly damaged vehicle.
Tesla was down 6.2% on Wall Street.
Brent oil was quoted at USD63.50 a barrel at the London equities close, lower than USD63.60 at the close Thursday.
Gold was quoted at USD1,464.30 an ounce at the London equities close, down from USD1,468.59 late Thursday.
The economic events calendar on Monday has Germany IFO business climate readings at 0900 GMT.
The UK corporate calendar on Monday has interim results from Germany-focused business parks operator Sirius Real Estate and from computer support services firm D4T4 Solutions.
By Arvind Bhunjun; [email protected]
London Close is available to subscribers as an email newsletter. Contact [email protected]
Copyright 2019 Alliance News Limited. All Rights Reserved.
Related Shares:
HochschildAnglo AmericanRio TintoGlencoreBHP Group