25th Nov 2019 12:02
(Alliance News) - It was a good start to the week for European equities on US-China trade deal hopes, with stocks in the US also pointed to a buoyant session.
In London on Monday, Burberry shares advanced on acquisition activity in the luxury goods sector as LVMH Moet Hennessy Louis Vuitton struck a deal to takeover jeweller Tiffany, while shares in gold miners fell on reduced risk appetite for the safe-haven metal.
The FTSE 100 was 57.49 points higher, or 0.8%, at 7,384.30. The FTSE 250 was up 145.49 points, or 0.7%, at 20,631.30, and the AIM All-Share was up 0.2% at 908.57.
The Cboe UK 100 index was up 0.8% at 12,516.69. The Cboe UK 250 was up 0.9% at 18,533.41, and the Cboe UK Small Companies was 0.1% higher at 11,307.59.
In European equities, the CAC 40 index in Paris was up 0.4% and the DAX 30 in Frankfurt likewise 0.4% higher in early afternoon trade.
"Hints of progress in US-China talks emboldened futures markets on the open last night, and the start of cash trading this morning has seen equity indices gain ground. If China is prepared to make compromises on intellectual property rights, one of the previous sticking points, then investors are right to be more optimistic about a deal," said Chris Beauchamp, chief market analyst at IG.
Bloomberg reported on Sunday that China said it will raise penalties on violations of intellectual property rights as it seeks to address one of the major sticking points in trade talks with the US.
The US wants China to commit to cracking down on IP theft and stop forcing US companies to hand over their commercial secrets as a condition of doing business there.
The report came after US President Donald Trump and his Chinese counterpart Xi Jinping on Friday both insisted they would resist pressure to give ground on an agreement that Washington's leader said could be "very close".
The comments from Trump and Xi came six weeks after the announcement of a "phase one" bargain, which appears no closer to becoming a reality as the two sides tussle over tariffs and China's future purchases of US farm exports.
In Beijing on Friday, President Xi Jinping said China wants a deal but is "not afraid" to "fight back" if necessary.
In the US, stocks are also pointed to an upbeat start with the Dow Jones and S&P 500 both seen up 0.3%, and the Nasdaq 0.4% higher.
Pre-market, shares in New York-listed Tiffany & Co were up 5.9% after French luxury goods firm LVMH Moet Hennessey Louis Vuitton reached an agreement to buy the jeweller.
The USD135 per share deal has an equity value of around USD16.2 billion, exceeding the initial USD120 per share bid tabled on October 28 which valued the US ring maker at USD14.5 billion. LVMH, which owns watch brand Tag Heuer and jewellery brand Bvlgari, expects the deal to "transform" its Watches & Jewellery division, strengthen its overall jewellery position, and increase its US presence.
In Paris, LVMH shares were up 2.0%. In London, luxury fashion house Burberry was 2.7% higher on the sector M&A activity.
Faring less positively in pre-market US trade was ride-hailing app Uber, down 5.3% after Transport for London decided not to grant the firm an operator license over passenger safety.
Uber's existing licence expires just before midnight London local time on Monday, but it will be allowed to continue to operate pending an appeal.
London's transport body said it found "several breaches that placed passengers and their safety at risk". This included a change to Uber's systems, which allowed unauthorised drivers to upload their photos to other driver accounts. This meant they could pick up passengers as though they were the booked driver, which occurred in "at least" 14,000 trips, TfL said.
Uber now has 21 days to appeal the decision.
Craig Erlam at Oanda said the move by TfL will create uncertainty for Uber in a "crucial market".
"It's also not great PR for the company in a market that's got plenty of competition for consumers these days," Erlam added.
In London, gold miner Fresnillo was the worst performer in the FTSE 100, down 3.5% as the value of the precious metal fell amid a pick-up in risk appetite. The safe haven asset was quoted at USD1,458.04 Monday midday, down from USD1,464.30 late Friday.
Mid-cap gold miners Hochschild Mining and Centamin were down 6.8% and 2.5% respectively.
At the bottom of the FTSE 250 was Restaurant Group, despite the causal dining firm reporting strong quarterly figures for pan-Asian eatery Wagamama.
Revenue in the 13 weeks to September, Wagamama's second quarter, rose by 11% year-on-year to GBP93.5 million, with like-for-like revenue growth coming in at 6.3%. Restaurant Group's own financial year aligns with the calendar year.
Wagamama generated GBP16.7 million of adjusted earnings before interest, tax, depreciation, and amortisation in the quarter, Restaurant Group said, 27% higher than a year before. Overall, the brand delivered a 5.1% outperformance of the UK market, the company said, and has consistently outperformed over the past five years.
Meanwhile, the pound was firm with two-and-a-half weeks to go until the UK heads to the polls.
UK Prime Minister Boris Johnson is expected to face questions this week over the veracity of his election promises after his manifesto was called into question by Labour and fact-checkers.
The prime minister's pledge of boosting the NHS with another 50,000 nurses secured headlines following the Conservative Party manifesto's unveiling in Telford in the West Midlands on Sunday. But Labour said the figure was disingenuous when it included 19,000 nurses who the Tories wanted to re-train, and another 12,000 from overseas.
Johnson will resume campaigning in Wales, while Labour leader Jeremy Corbyn will be in South Yorkshire discussing Labour's GBP58 billion compensation promise to Waspi women who lost out financially when the retirement age was pushed back from 60 to 66.
Sterling was quoted at USD1.2880 at midday, up from USD1.2831 late Friday.
By Lucy Heming; [email protected]
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