11th Jun 2018 12:01
LONDON (Alliance News) - Stocks in London were higher at midday brushing aside a cantankerous G7 summit in Canada, with the FTSE 100 buoyed by weakness in the pound. The FTSE 100 index was up 0.8%, or 60.29 points, at 7,741.45 at midday. The mid-cap FTSE 250 index was up 0.7% at 21,304.28. The AIM All-Share index was up 0.2% at 1,098.53.The Cboe UK 100 was up 0.75 at 13,123.07, the Cboe UK 250 was up 0.7% at 19,448.20, and the Cboe UK Small Companies was up 0.2% at 12,889.14."A drop in sterling has proved to be a boon for the FTSE 100, as equities around the world push higher despite the negative mood music emerging from the G7 meeting. While markets may not have completely adjusted to the idea of trade wars, they seem to have found a modus operandi for the time being, tuning out the tit-for-tat moves by world leaders. Of course, it is still early days, as any economic impact has yet to filter through, but for now the stock market continues to defy the doomsayers," said IG chief market analyst Chris Beauchamp.Over the weekend, US President Donald Trump withdrew his endorsement of the joint communique and left the G7 summit early - calling Canadian Prime Minister Justin Trudeau "dishonest and weak".Trump warned that retaliation against metal tariffs - 25% on imports of steel and 10% on aluminium from countries including the UK and the rest of the EU - would be a mistake after previously calling the EU approach to business "brutal".The summit in Canada was marked by the US president's controversial trade policy which has put him at odds with the rest of the G7 leaders.Despite the differences, Trudeau had announced that the leaders had managed to agree a joint communique at the summit which highlighted the importance of "free, fair and mutually beneficial trade and investment" and said the G7 would "continue to fight protectionism".On the London Stock Exchange, Evraz was the best blue-chip performer at midday up 7.4%. Fitch Ratings upgraded the Russian steelmaker to BB from BB- with a stable outlook, reflecting Evraz's reduction of net debt to USD4 billion, leading to a funds from operations gross leverage of 2.4 times at the end of 2017. Evraz's is targeting absolute net debt in the range of USD3 billion to USD3.5 billion.NMC Health was close behind, up 4.8% after it signed a joint venture agreement to establish a new national healthcare company in Saudi Arabia. The UAE focused private healthcare operator has signed a agreement to form a joint-venture healthcare platform with Hassana Investment Co, the investment arm of the Saudi Arabia's largest pension fund, General Organization for Social Insurance. NMC will retain a majority stake and operational control of the Saudi Arabian joint venture. The venture will serve as the main vehicle of future expansion for NMC in Saudi Arabia and will seek to acquire stakes in regional healthcare operators. The venture will also seek to manage private and government sector hospitals in the country. At the other end of the large cap index, Old Mutual was the worst blue chip performer at midday, down 1.9% as it announced the price range for its global offer of a stake in soon-to-float UK wealth manager Quilter.The Anglo-South African financial services company is offering up to a 9.6% stake, or 165 million shares, in Quilter at a price between 125 pence and 155p. The final price will be determined, and the number of shares sold, at around the same time as it lists.Quilter was formerly Old Mutual Wealth, and the spun-off wealth management business is set to list in both London and Johannesburg on June 25.Rolls-Royce Holdings was down 0.8% after the jet engine maker said it has identified durability issues on a number of Trent 1000 jet engines, dubbed Package B engines.Rolls-Royce said it agreed with US aerospace company Boeing and the relevant regulatory authorities to conduct a one-off inspection of the group's Trent 1000 Package B fleet, which consists of 166 engines. The inspection requirements are expected to incur additional costs for 2018; however Rolls-Royce said it remains confident that its free cash flow guidance of around GBP450 million, plus or minus GBP100.0 million remains unchanged.HSBC Holdings was down 0.4% after its new chief executive officer, John Flint, said the Asia-focused bank was ready to get back into "growth mode" following its restructuring.By 2020, HSBC is targeting a return on tangible equity of more than 11%. It also plan to invest between USD15 billion and USD17 billion dependent on "achieving positive adjusted jaws each financial year". In 2017, HSBC generated a return on equity of 5.9%.HSBC also plans to "sustain" dividends at current levels and engage in share buybacks where "appropriate" as well as intending to retain CET1 solvency ratio above 14%. At the end of 2017, its CET1 ratio stood at 14.5%.In order to achieve this, HSBC is targeting mid-single digit revenue growth combined with a low to mid-single digit growth in operating expenses. The pound was marginally lower against the dollar following disappointing UK industrial and manufacturing data.Sterling was quoted at USD1.3370 at midday, compared to USD1.3394 at the London equities close on Friday, having traded slightly higher earlier in the day.UK industrial production decreased unexpectedly at the start of the second quarter, figures from the Office for National Statistics showed. Industrial production fell 0.8% month-over-month in April, reversing a 0.1% rise in March. It was the first decline in four months. Economists had expected a stable 0.1% increase for the month. On a yearly basis, industrial production growth eased to 1.8% in April from 2.9% a month ago. The expected growth rate was 2.7%. "Whichever way you look at it, these figures for April paint a pretty bleak picture for the manufacturing and construction sectors. It also marks 3 consecutive monthly declines for this indicator and even though the latest PMI indicates some rebound for May, there's next to nothing here that would suggest the Bank of England need to hurry in tightening policy further," said XTB chief market analyst David Cheetham.In addition, the UK's visible trade deficit in April was the biggest in over one-and-a-half years, data from the Office for National Statistics showed. The trade in goods deficit widened to GBP14.04 billion from GBP9.25 billion a year ago and GBP12.00 billion in March. The latest figure was the biggest since September 2016, when the deficit was GBP14.25 billion. Economists had forecast a shortfall of GBP11.40 billion. Good exports decreased 5.9% from the previous month, while imports grew 0.8%. The total trade deficit widened to GBP5.28 billion from GBP883 million in the same month last year. In March, overall trade deficit was GBP3.22 billion.Investor sentiment was also given a boost after Italian Finance Minister Giovanni Tria said Italy would not be leaving the euro."The government's position is clear and unanimous," the 69-year-old economics professor said in an interview with the Corriere della Sera newspaper, published on Sunday. "Leaving the euro is out of the question".Italy's blue chip FTSE MiB index was up 2.2% in Rome.Elsewhere on the continent, the CAC 40 in Paris was up 0.2% while the DAX 30 in Frankfurt was up 0.8%The euro was firm against the dollar quoted at USD1.1796 at midday, against USD1.1761 at the European equities close Friday.Stocks in New York were set for a flat to higher open on the eve of a historic summit between Trump and North Korean leader Kim Jong Un.Tuesday's historic summit, which will see an incumbent US president meeting with a North Korean leader for the first time, will aim to reach an agreement on North Korea's denuclearisation in exchange for the easing of diplomatic and economic sanctions on Pyongyang. "Trump's next meeting with North Korean leader Kim Jong Un on Tuesday will be of interest as the US President looks to score a victory and distract from the country's souring relationship with its Western allies. Whether the two leaders are actually on the same page in regards to the goals of the meeting could determine just how successful the talks are but Trump in particular will be keen to be seen making progress towards denuclearisation," said Oanda senior market analyst Craig Erlam.The DJIA was called up 0.2%, while the S&P 500 index and the Nasdaq Composite were set to open flat.