19th Jun 2018 08:44
LONDON (Alliance News) - Stocks in London opened sharply lower on Tuesday, after the tit-for-tat trade war between the US and China escalated, while Ferguson bucked the trend, rising after a strong third-quarter performance.The FTSE 100 index was down 0.9%, or 65.03 points, at 7,566.30 at the open Tuesday. The mid-cap FTSE 250 index was down 1.1%, or 223.31 points, at 20,776.29. The AIM All-Share index was down 0.5% at 1,095.12.The Cboe UK 100 was down 0.9% at 12,821.94, the Cboe UK 250 was down 1.0% at 19,016.97, and the Cboe UK Small Companies was down 0.1% at 12,878.33.Beijing immediately vowed retaliation after US President Donald Trump late Monday said he would impose a 10% tariff on another USD200 billion worth of Chinese goods, in a further escalation of the trade row between the economic rivals.The Chinese Commerce Ministry accused the US of practising "extreme pressure and blackmail", saying it was deviating from the "consensus reached by the two parties' many consultations" and had "disappointed the international community very much".If the US became "irrational", China would have to take strong and comprehensive countermeasures, it added.In the US on Monday, Wall Street ended broadly lower, with the Dow Jones Industrial Average ending down 0.4%, the S&P 500 down 0.2% and Nasdaq Composite closing down flat.In Asia on Tuesday, the Japanese Nikkei 225 index closed down 1.8%. In China, the Shanghai Composite ended down 3.8%, while the Hang Seng index in Hong Kong down 3.2%. Markets in China and Hong Kong resumed trading following the Dragon Boat holiday on Monday."In the last few weeks investors have been a bit flaky in terms of how much attention they were willing to pay to the trade tensions. Well, they took them seriously on Tuesday, the markets following Monday's bloody trading with another truly troublesome decline," said Spreadex analyst Connor Campbell.On the London Stock Exchange, Ferguson was the best blue-chip performer at the open, up 1.8% after the plumbing and heating products supplier reported a rise in third-quarter earnings. For the quarter ending April 30, profit rose 17% to USD356 million from USD304 million last year. Revenue grew 10% to USD5.08 billion from the prior year's USD4.61 billion. Revenue was 8% ahead of last year at constant exchange rates and 7.1% ahead on an organic basis. Ferguson also said the sale of Nordics business Stark Group was completed in March for around USD1.20 billion. Looking ahead, the company, which was formerly known as Wolseley, said the fourth quarter has started well with organic revenue growth in line with the third quarter. Given the third-quarter performance, the group said it is well positioned for a successful outcome for the year, it said.At the other end of the large cap index, Ashtead Group was the worst performer, down 6.8% despite the equipment rental company registering double-digit growth in profit and revenue for its recently ended financial year through strong performances in each of its markets.Underlying pretax profit for its year ended April 30 rose by 16% to GBP862.1 million from GBP765.1 million the year before due to strong performance in its Sunbelt business, both in the US and Canada. Taking out the impact of amortisation and exceptional items, pretax profit was up 21% to GBP927.3 million from GBP793.4 million.This was on double-digit revenue growth to GBP3.79 billion from GBP3.19 billion the prior year, as rental revenue rose by 20% to GBP3.41 billion from GBP2.90 billion. Adjusted pretax profit fell slightly short of analyst consensus for its year of GBP934.7 million, however revenue emerged as the outperformer, beating the GBP3.67 billion forecast.In the FTSE 250, Capita was the best performer at the open, up 3.3% after the outsourcer said it agreed to sell its non-core Supplier Assessment Services business to Warburg Pincus for GBP160 million in cash. The sale comes as Capita looks to simplify its business operations after a issuing a profit warning earlier this year. Languishing at the bottom of the midcap index was McCarthy & Stone, down 17% after saying it has seen a "noticeable decline in reservation rates" since April, prompting the retirement housebuilder to issue a profit warning.McCarthy & Stone said its annual earnings were always heavily dependent on a strong spring selling season and as a result of less favourable conditions is now forecasting to achieve 2,100 to 2,300 legal completions in the financial year ending August compared to 2,302 in 2017.McCarthy & Stone is now guiding annual operating profit in the range of GBP65 million to GBP80 million, down from GBP96 million last year. The group's forward order book including legal completions currently stands at GBP706 million, up from GBP639 million a year ago. As such, the company is now conducting a strategic review led by Chairman Paul Lester. McCarthy & Stone also said Chief Executive Officer Clive Fenton will retire in August, and the search to find his replacement is underway.Still to come in the international economic events calendar, there is eurozone current account and construction output figures at 0900 BST and 1000 BST, respectively. There also are US housing starts at 1330 BST. In addition, European Central Bank President Mario Draghi speaks at the ECB Forum on Central Banking in Sintra, Portugal at 0900 BST.Sterling was lower quoted at USD1.3208 early Tuesday, against USD1.3246 at the London equities close on Monday.In domestic political news, the UK government faces another battle to appease Brexit rebels in the Commons after Lords again backed giving MPs a "meaningful vote" on the final Brexit deal.The to-and-fro over Parliament's role as the UK leaves the EU will return to the Commons after peers inflicted another heavy defeat on the government on Monday.They backed an amendment to the EU (Withdrawal) Bill, tabled by Viscount Hailsham, which would require the government to allow MPs to vote on how it would proceed in the absence of a Brexit deal by January 21 next year.MPs will now vote on whether to adopt the motion, which was brought in after pro-EU rebels led by former attorney general Dominic Grieve accused the government of reneging on measures they believed had been agreed to stave off a rebellion last week."This will not only test May's ability to steer a minority government, but also the pounds buoyancy as pro-EU rebels promise they can collapse the government if their demands aren't met. Theresa May showing signs of weakness and an inability to control her party wouldn't bode well for the future as several other piece of legislation is still needed in order to prepare for Brexit," said London Capital's Jasper Lawler.Related Shares:
CapitaMCS.LAshtead Group