15th Jan 2020 17:11
(Alliance News) - Stocks in London ended mostly higher on Wednesday, as US and China finally signed the 'phase one' trade deal.
"Today, we take a momentous step one that has never been taken before with China toward a future of fair and reciprocal trade as we sign phase one of the historic trade deal," US President Donald Trump said in a press conference following signing of the trade deal.
Investors have welcomed the trade deal as a sign of mellowing tensions between the two economic superpowers, but some analysts note investors have largely priced in the positive news, which could limit further gains.
The FTSE 100 index closed up 20.45 points, or 0.3%, at 7,642.80. The FTSE 250 ended down 42.94 points, or 0.2%, at 21,713.11, and the AIM All-Share closed up 1.21 points, or 0.1%, at 970.95.
The Cboe UK 100 ended up 0.2% at 12,944.32, the Cboe UK 250 closed down 0.2% at 19,630.63, and the Cboe Small Companies ended up 0.1% at 12,508.57.
In Paris the CAC 40 ended down 0.1%, while the DAX 30 in Frankfurt ended 0.2%.
In the FTSE 100, SSE closed up 1.9%. The energy company said it will complete the sale of its UK household energy and services business SSE Energy Services Group to OVO Energy for GBP500 million.
The completion of transaction will enable SSE to strengthen its focus on delivering the low-carbon infrastructure needed to help the UK reach net zero emissions, the company said.
At the other end of the large cap index, Royal Bank of Scotland closed down 2.5% after Barclays downgraded the state-backed lender to Underweight from Equal Weight.
"We expect returns to fade in core Retail and Commercial businesses, challenging restructuring in Ulster and NatWest Markets and longer-dated capital return, contingent on the sale of the Government shareholding," Barclays analysts said.
In the FTSE 250, Provident Financial closed up 5.3% after the subprime lender said it expects 2019 profit to come in line with expectations and has obtained a new loan to fund its Moneybarn business.
At the other end of the midcap index, Tullow Oil ended the worst performer, down 16%.
The oil and gas company booked pretax impairments and exploration write-offs to the tune of USD1.5 billion, due to a USD10 per barrel fall in the company's long-term accounting oil price assumption and a reduction in reserves at the TEN field.
The pound was quoted at USD1.3024 at the London equities close, firm against USD1.3003 at the close Tuesday, recovering from earlier losses.
Sterling fell to an intraday low of USD1.2983 following the release of UK inflation data in the morning, as fears of an interest rate cut mounted.
The UK inflation rate for December disappointed analysts, drifting further away from the Bank of England's 2.0% target.
The annual UK inflation rate in December was 1.3%, decelerating from 1.5% in November and below expectations, according to FXStreet, for the rate to remain stable. December's reading marked the lowest annual inflation rate since November 2016. Month-on-month, consumer prices were flat after a 0.2% rise in November.
"With November data highlighting clear pre-election weakness, today's inflation reading provides us with yet another reason to believe the MPC could act at the end of the month. With commentary from BoE members signalling a clear interest in supporting the economic recovery, today's decline in both core and headline inflation provides another crucial arrow to the bow for the doves. With markets now seeing a 63% chance of a rate cut, we are moving into a position where the committee could end up acting just to avoid a ramp-up in market volatility," said IG Group.
Analysts at FXPro told Alliance News: "Earlier this week, we also saw disappointing GDP data, which unexpectedly fell by 0.3%, and before that, there were frightening falling retail sales. All this is evidence that the UK economy approached Brexit in a very wary state.
"At the same time, the British markets dismissed weak data inspired by the positiveness of world markets. Over the past month and a half, world markets grew with anticipation of a trade agreement between the US and China, which could spur global growth."
The euro stood at USD1.1159 at the European equities close, up from USD1.1127 late Tuesday.
Against the yen, the dollar was trading at JPY109.92, down from JPY110.07 late Tuesday.
Stocks in New York were higher at the London equities close, as a host of prominent companies reported earnings.
The DJIA was up 0.6%, the S&P 500 index up 0.4% and the Nasdaq Composite up 0.5%. The Dow touched a record intraday high of 29,116.47 in early trade.
Goldman Sachs reversed earlier losses after the lender said its earnings declined in 2019 due a one-time charge of USD1.1 billion for legal costs and lower investment banking revenue.
The US banking behemoth posted annual pretax earnings of USD10.58 billion, down 15% from USD12.46 billion the year before. Including a USD2.12 billion tax provision, up from USD2.02 billion, net earnings fell 19% to USD8.47 billion from USD10.46 billion.
The stock was up 0.7% in New York.
Bank of America's earnings for the fourth-quarter to December-end showed a 4.0% slip in net income to USD6.99 billion from USD7.28 billion the year before. Revenue in the quarter shrunk 1.5% to USD22.34 billion from USD22.68 billion the year before, net interest income fell 2.9% year-on-year to USD12.14 billion from USD12.50 billion.
The stock was down 2.3% on Wall Street.
BlackRock reported a sharp rise in assets under management as the New York-based asset manager generated record net inflows during 2019.
At December 31, the BlackRock's assets under management stood at USD7.430 trillion, 24% higher than the USD5.976 trillion recorded at the end of 2018.
The stock was up 2.1% in New York.
Brent oil was quoted at USD63.70 a barrel at the London equities close, down from USD64.70 late Tuesday.
Oil prices fell after the US Energy Information Administration reported an inventory draw of 2.5 million barrels for the week to January 10, versus 1.2 million barrels a week ago. Analysts were expecting an inventory decline of 750,000 barrels for the period.
Gold was quoted at USD1,549.30 an ounce at the London equities close, up from USD1,542.80 late Tuesday.
The economic events calendar on Thursday has Germany inflation readings at 0700 GMT and US retail sales figures at 1330 GMT.
The UK corporate calendar on Thursday has first-quarter results from Primark clothing store owner Associated British Foods and third-quarter results from Premier Inn hotel chain owner Whitbread. There are also trading statements from education publisher Pearson, sandwich maker Bakkavor, recruiter Hays and car parts retailer Halfords Group.
By Arvind Bhunjun; [email protected]
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