22nd Oct 2019 11:54
(Alliance News) - Positive comments around US-China trade relations gave stocks a small boost on Tuesday, with the FTSE 100 further supported by the prospect of a bidding war for constituent Just Eat.
The FTSE 100 stock index was 30.16 points, 0.4%, higher at 7,193.80 Tuesday midday. The FTSE 250 was down just 2.88 points at 20,305.91 and the AIM All-Share 0.24 of a point higher at 885.43.
The Cboe UK 100 index was up 0.4% at 12,201.00. The Cboe UK 250 was down 0.1% at 18,249.06 and the Cboe UK Small Companies 0.1% higher at 11,127.85.
"US indices are close to their highs for the year, and European markets are looking positive, but investors are keeping a nervous eye on their two favourite subjects: trade wars and Brexit," commented Chris Beauchamp, chief market analyst.
This was after US President Donald Trump on Monday said progress in developing the text of a partial trade pact with China means he will likely be able to sign it next month. Trump remains upbeat on the chances Beijing and Washington will seal the mini-deal he announced earlier this month – marking a cooling-off period in the two nations' damaging trade war.
"The ongoing detente between the US and China has helped equities to power higher over the past two weeks, fitting the usual seasonal pattern, but actual progress is still lacking...On their other favourite topic, Brexit, the path is much less certain. Opinion seems to be hardening around the idea that the PM will get his deal through Parliament, if not be 31st October, then over the next month, which will allow for Brexit to be 'done' by year-end," he added.
However, Beauchamp noted that there are "plenty of twists and turns" that could see Johnson's bill "torpedoed".
Seeking to get the bill passed before the end of the month, UK Prime Minister Boris Johnson has been urging MPs to back his Brexit deal.
Ministers have insisted they are confident they have the numbers to get the Withdrawal Agreement Bill through the Commons, despite their defeat in Saturday's special sitting. However they face a fierce parliamentary struggle after announcing plans to fast-track it through the lower House in three days, potentially paving the way for the Lords to consider it over the weekend.
They will need MPs to approve a "programme motion" setting out the timetable for its passage through the Commons, setting up a crunch vote on Tuesday evening.
Many MPs are deeply unhappy that there is so little time for detailed scrutiny of a such an important Bill, which runs to 110 pages with another 124 pages of explanatory notes.
The pound was quoted at USD1.2937 Tuesday midday, down from USD1.2982 late Monday but still trading not too far off recent multi-month highs.
In mainland Europe, the CAC 40 in Paris was 0.1% higher and the DAX 30 in Frankfurt up 0.3% in early afternoon trade.
In the US, stocks are pointed to a marginally higher start, with the Dow Jones and S&P 500 seen just about in the green and the Nasdaq up 0.1%.
Reporting results on Wall Street on Tuesday include consumer goods firm Procter & Gamble, fast food chain McDonald's and aerospace and building industries firm United Technologies.
In London, Just Eat was supporting the FTSE 100 as the prospect of a bidding war emerged for the online takeaway platform.
The stock, up 25% at 739.80 pence at midday, reaffirmed its backing for a planned merger with Takeaway.com as it rejected a new rival bid from Prosus.
Amsterdam-listed Prosus made a GBP4.9 billion cash bid for Just Eat, offering shareholders an alternative to the UK online food delivery platform's all-share merger with Takeaway.com, also Dutch listed.
Prosus made three bids, Just Eat said, at 670p, 700p, and finally 710p, but all of them have been rejected. Prosus Chief Executive Bob van Dijk said Prosus said the firm was unable to constructively talk with the Just Eat board.
Prosus, majority-owned by South African media and technology investor Naspers, said its 710p cash bid is a 20% premium to Takeaway.com's all-paper offer of 594p per share and a 20% premium to Just Eat's closing price in London on Monday.
Prosus shares were up 0.7% in afternoon trade, while Takeaway.com shareholders seemed to breathe a sigh of relief on news of the rival bid, with shares up 4.2%.
Just Eat's surge was helping to offset a 5.8% decline for travel firm TUI, down after Morgan Stanley cut the Anglo-German operator to Equal Weight from Overweight.
Reckitt Benckiser was another faller in the FTSE 100, down 3.0% after cutting annual guidance.
The company, which owns antiseptic brand Dettol, sore throat medicine Strepsils and hair removal brand Veet, said like-for-like sales for the three months to September 30 grew 1.6%, with reported sales rises 5.3% year-on-year to GBP3.29 billion. Year-to-date comparable sales were up 0.9%, while reported sales increased 2.9% to GBP9.53 billion.
The Slough, England-based consumer goods maker now expects its 2019 like-for-like net revenue growth to be in the range of flat to 2% from previous 2% to 3% growth estimate. In July, Reckitt lowered its annual like-for-like sales growth target to range of 2% to 3% from 3% to 4%.
"Reckitt Benckiser's new CEO Laxman Narasimhan looks like he is taking advantage of the honeymoon period enjoyed by incoming chief executives as he slashes full year sales guidance," said AJ Bell investment director Russ Mould. "Kitchen sinking or resetting expectations is a well-rehearsed path in the corporate world although in truth Narasimhan, who joined in September, may have had little choice but to scale back sales expectations after a pretty ropey third quarter."
FTSE 250-listed Travis Perkins rose 3.7% after reporting a "solid" third-quarter trading performance and deciding to pause the sale process of its Plumbing & Heating business for the time being due to market uncertainty.
The builder's merchant did say, however, that the process to demerge the Wickes home improvement business remains on track and is expected to be complete in the second quarter of 2020.
For the third quarter ended September 30, the company's total group sales increased 3.8%, with like-for-like sales rising 3.4%. Year-to-date total sales grew 3.6%, while comparable sales increased 4.7%.
By Lucy Heming; [email protected]
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