10th May 2019 11:58
LONDON (Alliance News) - A more upbeat tone emerged across markets at the end of the week on hopes the US and China may inch closer to a trade deal despite a fresh round tariff hikes on Friday.British Airways-owner International Consolidated Airlines shares rose despite registering a significant drop in quarterly profit, while those of wealther manager Brewin Dolphin fell on fundraising plans. The FTSE 100 was up 33.04 points, or 0.5%, at 7,240.45 Friday midday. Despite Friday's rise, the index of large-caps remains on course to post a loss of just under 2% for the week.The FTSE 250 index was up 165.77 points, or 0.9%, at 19,451.35, while the AIM All-Share was up 0.4% at 957.68.The Cboe UK 100 index was up 0.7% at 12,276.95. The Cboe UK 250 was up 0.9% at 17,482.28. The Cboe UK Small Companies was up 0.1% at 11,721.80.In mainland Europe, the CAC 40 in Paris was up 0.8% on Friday while the DAX 30 in Frankfurt was 1.1% higher.European stocks were enjoying a rather better end to the week following a series of bruising falls.This week's declines have came amid heightened trade tensions between the US and China, culminating in new tariffs on USD200 billion worth of Chinese imports, from consumer goods such as suitcases and furniture along with certain food items, increasing from 10% to 25% at the stroke of midnight in Washington.Trump announced the duty increase on Sunday, saying the move was necessary because trade negotiations are moving too slowly. On Wednesday he also accused Beijing of breaking provisions of the deal negotiated thus far in several rounds of talks.The US and China will continue their latest round of trade talks on Friday.Connor Campbell, analyst at Spreadex, identified some reasons for the brighter mood at the end of the week."That these tariffs don't apply to goods currently on their way to the US has been read as creating a grace period that could potentially see a deal emerge," said Campbell. "Ditto the fact that talks will continue in Washington this Friday and that China is yet to outline the form of its retaliation." In the US, stocks are pointed towards a subdued start with the Dow Jones called down 0.1%, with the S&P seen 0.2% lower and the Nasdaq flat. The highlight for Wall Street on Friday is the stock market debut of ride-hailing app Uber. The IPO marks the highly anticipated start of public trading for a company that in the 10 years since its founding in San Francisco has altered the taxi industry and begun to transform multiple other businesses, most notably the US auto industry.Uber dominates the smartphone app-based ride-hail market in the US, and also offers food delivery services, freight intermediation for truck drivers, and e-bike and scooter sharing.Uber priced its shares at USD45, which is on the lower end of the USD44 to USD50 price range outlined in its filing last month with US regulators. The price values the company at about USD82 billion.In the economic calendar, US consumer price inflation is at 1330 BST. In the UK, official data showed the economy put on a resilient display in the first quarter of 2019, likely boosted by pre-Brexit stockpiling efforts. UK gross domestic product rose 0.5% quarter-on-quarter in the first three months of the year, accelerating from a 0.2% rise in the previous quarter. On an annual basis, GDP advanced 1.8% in the first quarter, having gained 1.4% in the final quarter of 2018. This print was in line with the Bank of England's prediction last week that first-quarter GDP would grow 0.5% sequentially due to Brexit stockpiling efforts. In the second quarter, the BoE thinks growth should slow to 0.2%.The pound was largely unchanged following the data, however, quoted at USD1.3013 at midday versus USD1.3017 late Thursday."Manufacturing contributed 0.2 percentage points to first-quarter GDP growth, and this is unlikely to be repeated over the coming months - especially given the uncertain outlook for global growth," highlighted ING. ING added that a UK interest rate hike in November "shouldn't be ruled out completely" following hawkish signals from the BoE last week, but such a move this year seems "unlikely" given the challenges facing business investment. In London at midday, IAG was helping the FTSE 100 higher. IAG, which in addition to BA also owns Iberia and Aer Lingus, rose 3.2% to be the index's top gainer after posting a profit, albeit a significantly reduced one year-on-year, for the first quarter of 2019. For the three months to March 31, IAG posted pretax profit of EUR86 million, down 90% from the previous year's EUR885 million, hampered by the later timing of Easter this year and higher fuel costs."It's not every day you'll see a company's profits fall so sharply but the shares still rise. But when your competitors have slipped into a loss, it's perhaps not a surprise," commented George Salmon, equity analyst at Hargreaves Lansdown."And it's not just the resilient profits that separate IAG from the pack. While others have bemoaned how Brexit uncertainty has prevented customers from making advance bookings, IAG is seeing no such headwinds," he added.Traffic figures for the month of April, which included Easter Sunday, saw passenger numbers up 7.3%, indicating a good start to the second quarter.Dragging against the FTSE 100's gains was British Land, down 3.2% after Barclays cut the property investor to Underweight from Equal Weight.At the same time, Bunzl dipped 1.8% as it said long-standing Finance Director Brian May is to retire.May has been with Bunzl for 25 years, having been finance director since 2006. He will be replaced by Richard Howes, who will take up the title of chief financial officer-designate with effect from September 1. Howes will then assume the full CFO role in January 2020.Howes is CFO of automotive distributor and retailer Inchcape, whose shares were down 0.6% at midday.Brewin Dolphin was at the bottom of the mid-cap FTSE 250, down 4.3% at 307.19 pence, after unveiling plans for a discounted fundraise. Brewin has bought the Irish wealth management unit of Investec for around EUR44 million. The firm, which confirmed mid-April it was in talks with Investec, said this builds on its plan to expand Irish operations, creating a "top three" wealth management business in the republic.Following the Investec deal and a number of others, Brewin plans to raise approximately GBP60 million at a price of 305 pence a share. Liberum Capital and RBC Europe are acting as joint bookrunners for the placing.The 305p placing price is a 5.0% discount to Brewin's closing price of 321p on Thursday in London.
Investec shares were up 2.1% in London and 1.4% in Johannesburg.Elsewhere on the Main Market, Thomas Cook shares were up 5.5% after Sky News reported Virgin Atlantic has put in a bid for the London-listed firm's long-haul travel arm. The newspaper, citing City sources, said that the airline part-owned by Richard Branson's Virgin Group was looking to acquire Thomas Cook's long-haul operations serving Cancun, Las Vegas and Orlando among others.Related Shares:
International AirlinesInvestecBritish LandThomas CookBRW.LInchcapeBunzl