12th Sep 2019 08:35
(Alliance News) - Stocks opened slightly higher in London on Thursday, with sentiment lifted by softened stances taken by both the US and China in their trade war, but investors remained cautious ahead of the European Central Bank policy decision later in the day.
The FTSE 100 was 7.23 points higher, or 0.1%, at 7,345.26 early Thursday. The FTSE 250 was up 20.43 points, or 0.1%, at 20,002.59, while the AIM All-Share was up 0.1% at 881.23.
The Cboe UK 100 index was up 0.1% at 881.23. The Cboe UK 250 was flat at 17,863.75, and the Cboe UK Small Companies was also broadly unchanged, at 10,917.55.
In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were up 0.2% and 0.3% respectively in early trade.
"European markets are trading higher ahead of the most important event of this week. Mario Draghi, the president of the European central bank, is going to face one of the most antagonistic policy meeting today in his era of the presidency today," said Naeem Aslam at ThinkMarkets.
"The probabilities of the ECB disappointing the market expectations are quite high because markets are expecting a big bazooka from the ECB today," Aslam noted.
He continued: "Draghi has the reputation of getting things his way, however today the main bone of contention is going to be another round of bond purchases. Germany, France, and Holland have signalled their scepticism. If another round of bond purchases isn't announced today markets aren't going to be very happy, and we could see an intense sell-off across all major European benchmarks."
The European Central Bank announces its monetary policy decision at 1245 BST, with Draghi's press conference starting at 1330 BST.
In Asia on Thursday, the Japanese Nikkei 225 index ended up 0.8%. In China, the Shanghai Composite is up 0.7%, while the Hang Seng index in Hong Kong is down 0.3%.
Elsewhere in the economic events calendar on Thursday, there is eurozone industrial production at 1000 BST and US inflation figures at 1330 BST.
In Asia on Thursday, the Japanese Nikkei 225 index ended up 0.8%. In China, the Shanghai Composite closed up 0.7%, while the Hang Seng index in Hong Kong is down 0.1%.
US President Donald Trump said Wednesday a planned tariff hike affecting USD250 billion worth of Chinese imports will be delayed "as a gesture of good will", as the world's two largest economies gear up for a fresh round of negotiations.
The tariffs in question are to increase from 25% to 30% on October 15, instead of October 1 as originally planned.
The move comes at the request of Chinese Vice Premier Liu He "and due to the fact that the People's Republic of China will be celebrating their 70th Anniversary on October 1", Trump tweeted. The delay also comes after China announced earlier Wednesday that it would exempt US products in 16 categories from its own tariffs in the economic superpowers' tit-for-tat trade war.
Commerzbank noted that Trump's move has boosted risk sentiment, "for now".
The October 15 deadline "indicates that Trump's next decision will be largely dependent on the progress of trade talks to be held in early October in Washington," said Commerzbank.
The German bank continued: "What is on the table is that China could increase agricultural imports from the US, but will request the US to further delay tariffs and relax the sales ban on Chinese tech companies. Compared to the past rounds of trade talks, the upcoming negotiation seems to have a more specific target. However, any progress tells little about the more fundamental conflict between the US and China."
At the top of the FTSE 100 was Wm Morrison Supermarkets, up 2.9% as it posted modest interim like-for-like sales growth.
The grocer said like-for-like sales were up 0.2% in the half-year to August 4, versus a 4.9% rise a year ago. In the second quarter alone, like-for-like sales were down 1.9%, versus a 6.3% increase in 2018.
Total revenue was up 0.4% at GBP8.83 billion, with pretax profit rising 49% to GBP202 million. As well as the revenue rise, profit was helped as finance costs were reduced to GBP55 million from GBP94 million.
Morrisons said it is "satisfied" with its like-for-like performance given tough comparisons and "largely unfavourable" summer weather this year. Looking ahead, the company said retail like-for-like sales should improve in the second half with "various" additional cost-saving opportunities.
The supermarket declared a dividend of 1.93p, up 4.3%, and a special payout of 2.00p, taking the total interim dividend to 3.93p, up 2.1% year-on-year.
"News today of new wholesale initiatives, including a further extension of our partnership with Amazon, and of another special dividend, again show how new Morrisons continues to become broader and stronger for all stakeholders, and how progress can be meaningful and sustainable even in more testing trading conditions," said Chief Executive David Potts.
On Amazon, Morrisons said it has extended its relationship with the US online retail giant by agreeing a multi-year partnership. The agreement is to partner together over a "number of years" rather than on a rolling basis, Morrisons explained.
InterContinental Hotels Group fell 2.1% after JPMorgan cut the Holiday Inn owner to Underweight from Neutral.
Lloyds Banking Group also suffered from a ratings downgrade, trading 1.3% lower after Goldman Sachs cut the lender to Sell from Neutral.
Elsewhere in London, Trainline shares were up 4.4% after the ticket booking platform raised its annual guidance.
Total revenue in the six months to August 31 was up 29% year-on-year to GBP129 million, with net ticket sales amounting to GBP1.84 billion, up 19%. The rise in ticket sales reflected "strong mobile demand", the company said.
With this "strong start" to the financial year, Trainline reconfirmed its net ticket sales expectations but raised guidance for its annual revenue growth, which is now expected in the "low to mid 20% range".
In its IPO prospectus, Trainline said it was targeting net ticket sales growth in the "high teens" for both the year ending February 2020 and over the medium term.
"We are pleased with the strong levels of growth we have delivered in the first half of the year. Our performance is underpinned by the long-term shift of customers from offline to online, the successful rollout of eTicketing and our continued focus on making rail and coach travel easier for customers worldwide," said Chief Executive Clare Gilmartin.
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