13th Feb 2019 12:05
LONDON (Alliance News) - Markets on Wednesday were buoyed by encouraging comments from US President Donald Trump on trade talks with China, with the FTSE 100 getting an additional lift as packaging companies rose following Smurfit Kappa's annual results. The pound, meanwhile, trended lower after official figures showed UK inflation fell to its lowest rate in two years.The FTSE 100 was 50.38 points higher, or 0.7%, at 7,183.52 Wednesday midday. The FTSE 250 was up 150.63 points, or 0.8%, at 18,975.41, and the AIM All-Share was up 0.2% at 910.05.The Cboe UK 100 was up 0.6% at 12,196.10, while the Cboe UK 250 was up 0.9% at 16,919.12 and the Cboe UK Small Companies up 0.1% at 11,165.37."It's been a strong start for equity markets on Wednesday, with investors buoyed by encouraging signals on Sino-US trade talks and the government shutdown," said Oanda senior market analyst Craig Erlam.US President Donald Trump on Tuesday said that if negotiators are close to a deal on trade between Beijing and Washington he could extend the March 1 deadline for upping tariffs on Chinese goods."If we are close to a deal...a real deal...I can see myself letting it slide for a little while," Trump said. The president insisted he wants a "real deal, not a deal that looks cosmetically good for a year."The US imposed tariffs of 25% on USD50 billion worth of Chinese goods and 10% on goods worth USD200 billion. The US stands to raise the 10% tariff to 25% at the end of this month."It goes without saying that the prospect of further escalations in the trade conflict between the world's two largest economies is a major risk factor for markets," said Erlam. "We may not have reached a point at which an agreement is imminent but the acknowledgement that they could let the deadline slide is encouraging, both in terms of it being a sign of progress and the elimination of near-term tariff risks."The overseas earnings-heavy FTSE 100 on Wednesday also got a lift forma lower pound after lower-than-expected UK inflation data. UK consumer price inflation eased in January to a two-year low, the Office for National Statistics said on Wednesday, driven by falls in electricity, gas and fuel prices. The consumer price index came in at 1.8% on an annual basis in January, slowing from a 2.1% rise in December. Analysts had expected a 1.9% rise for January.The latest reading marks the first time CPI has fallen below the Bank of England's 2% target since January 2017.The pound was quoted at USD1.2984 at midday versus USD1.2890 late Tuesday, having traded above the USD1.29 prior to the inflation data release. To come in Wednesday's economic calendar is US inflation at 1300 GMT. CPI is expected to ease to an annual rate of 1.5% in January from 1.9% in December.Ahead of the data, Wall Street is pointed to a higher open with the Dow Jones seen up 0.2%, the S&P 500 up 0.1% and the Nasdaq to rise 0.3%.In data from the eurozone, industrial production fell by a seasonally adjusted 0.9% in December from the month before in the euro area, according to estimates from Eurostat.December's reading represented a slowdown in the pace of decline. In November 2018, industrial production fell by 1.7% on month.On a year before, industrial production decreased in December by 4.2% in the euro area. Industrial production for all of 2018 rose by 1.1% in the euro area and by 1.3% in the EU28, compared to 2017.In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were up 0.3% and 0.2% respectively at midday.In London, packaging firms were among the gainers in the FTSE 100 following Smurfit Kappa's annual results. Smurfit's revenue for 2018 rose 4% to EUR8.95 billion, as earnings before interest, taxes, depreciation and amortisation climbed 25% to EUR1.55 billion. Ebitda consensus for the year had lay at around EUR1.53 billion.However, the company swung to a pretax loss of EUR404 million from a profit of EUR576 million the year before as it booked EUR1.27 billion in exceptional costs relating to the deconsolidation of Venezuela operations.During the third quarter of 2018, the government of Venezuela took control of Smurfit Kappa Carton de Venezuela's business and operations. As a result, Smurfit was no longer able to exercise control over its Venezuelan business and consequently deconsolidated the operations.Venezuela President Nicolas Maduro has faced international demands to give way to Juan Guaido, who is head of the South American country's national assembly, amid mass protests. More than two million people have fled the country's soaring hyperinflation and severe food and medical shortages over the past two years.In a positive read-across, peers DS Smith and Mondi were up 4.9% and 1.5% respectively.Also higher was Rolls-Royce Holdings, up 2.7% after Credit Suisse upgraded the jet engine maker to Outperform from Neutral. FTSE 250-listed Galliford Try was up 7.1% after the construction firm reported a fall in interim profit but remained upbeat on its future prospects. For the six months to the end of 2018, the housebuilder's revenue fell to GBP1.34 billion from GBP1.40 billion in the comparative period a year ago. Pretax profit was down 4% year-on-year to GBP53.8 million.The company cut its interim dividend by 18% to 23 pence per share from the 28p paid to shareholders a year ago. Galliford expects to deliver a full-year outturn towards "the upper end" of analyst consensus. Analysts currently expect Galliford's pretax profit in the range of GBP158.8 million to GBP192.5 million. Pretax profit in its last financial year was GBP143.7 million. Tullow Oil was up 4.9% after declaring its first dividend since 2015 as it swung to an annual profit.In November, Tullow had said it would reinstate its dividend after 18 months of "excellent operational and financial progress". The payout was suspended in early 2015 following a sharp drop in the price of oil.Tullow declared a dividend of 4.8 US cents per share for 2018, worth USD67 million in total. From 2019 onwards, it expects any dividends, paid twice a year, to be worth at least USD100 million.Tullow's pretax profit for 2018 was USD260.5 million, after a pretax loss in 2017 of USD285.9 million. Revenue climbed to USD1.86 billion from USD1.72 billion. Towards the other end of the mid-caps were Great Portland Estates and Workspace Group, both down 1.3%, with Derwent London down 1.0% after rating action from Berenberg. The German bank started both Derwent and Great Portland with Sell ratings, while it lowered its recommendation on Workspace Group to Hold from Buy."Although we acknowledge an improvement in portfolio quality and applaud the deleveraging activity undertaken to date, we still expect a cyclical market correction to impact the listed sector meaningfully," commented Berenberg in a note on the listed London office market.
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Tullow OilWorkspaceSmith (DS)Galliford TrySKG.LRolls-RoyceDerwent LondonGPOR.LMondi