13th Feb 2019 08:41
LONDON (Alliance News) - Hopes over a US-China tariff deadline extension fed risk appetite on Wednesday as the FTSE 100 got off to yet another positive start. London's blue-chip index was boosted by gains for Rolls-Royce and Smurfit Kappa, while the FTSE 250 got a lift from Dunelm and Galliford Try.The FTSE 100 was 32.68 points higher, or 0.5%, at 7,165.82 early Wednesday. The FTSE 250 was up 63.64 points, or 0.3%, at 18,888.42, and the AIM All-Share was flat at 908.21.The Cboe UK 100 was up 0.4% at 12,173.74, while the Cboe UK 250 was up 0.4% at 16,838.51 and the Cboe UK Small Companies flat at 11,157.17.In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were both 0.3% higher in early trade."We've seen a clear shift in risk appetite over the last 24 hours, with the US being the source of most of this as the government looks to avoid a shutdown and the truce deadline with China may be extended," 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.Meanwhile, Trump is studying a proposal by a bipartisan group of legislators to avert another federal government shutdown, but said on Tuesday that he is not happy with what he has seen and will make demands of his own.However, the president indicated another shutdown does now seem less likely.Much of the shutdown hinges on funding for Trump's plan to vastly expand the wall on the US-Mexico border, which Democrats say is not needed, while many Republicans insist a barrier is integral to border security.In Asia on Wednesday, the Japanese Nikkei 225 index closed up 1.3%. In China, the Shanghai Composite ended up 1.8%, while the Hang Seng index in Hong Kong closed up 1.2%.In the economic calendar on Wednesday is UK consumer price inflation at 0930 GMT, with producer prices due at the same time. At 1000 GMT is industrial production from the eurozone, followed by the US consumer price index at 1330 GMT.Ahead of the UK inflation data, the pound was quoted at USD1.2918 versus USD1.2890 late Tuesday.The consumer price index is seen rising 1.9% in January on an annual basis, slowing from the 2.1% growth seen in December.On the LSE, Rolls-Royce Holdings was the top performer in the FTSE 100, up 2.6% as Credit Suisse upgraded the engine maker to Outperform from Neutral. Smurfit Kappa rose 2.0% as adjusted earnings came in slightly ahead of consensus but the paper and packaging firm swung to an annual loss due to its Venezuelan operations.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.On a pre-exceptional basis, Smurfit Kappa posted a pretax profit of EUR938 million versus EUR601 million last year.Smurfit raised its final dividend by 12% to 72.2 cents per share, bringing its total dividend to 97.6 cents, up 11% year-on-year.FTSE 250 constituent Dunelm gained 4.6%. The homewares retailer said it remains confident in delivering an annual result in line with forecasts after a rise in interim profit.Revenue for the six months to December 29 rose 1.2% to GBP551.8 million, with like-for-like revenue 6.9% higher, as pretax profit climbed 24% to GBP70.0 million.Dunelm proposed an interim payout of 7.5p, up 7.1% on last year's 7.0p."We traded well through our key Winter Sale period and remain pleased with our performance to date," said Chief Executive Nick Wilkinson. "As previously highlighted, we are cautious about the outlook for the remainder of the financial year due to the continuing political uncertainty in the UK. We are confident in delivering market expectations for the full year assuming no material change in the macro-economic environment."Galliford Try was 3.5% higher as the construction firm and housebuilder said revenue and profit fell in its first half, but the company nonetheless expects an annual outturn towards the higher end of consensus.Group revenue for the six months to the end of December fell 4% to GBP1.34 billion, with pretax profit declining in step with this, down 4% to GBP53.8 million. Galliford cut its dividend by 18% to 23p.Despite the decline in interim profit, Galliford expects a full-year result "towards the upper end" of analyst consensus."The group enters the second half of the year with a solid foundation, underpinned by a strong balance sheet and our focus on high-quality earnings which will drive further margin improvements over time. Our mix of residential development creates a robust proposition in more uncertain markets," it said.Galliford booked a GBP26 million charge in the period related to the Aberdeen Western Peripheral Route, which was set back by the collapse of partner Carillion."The final impact of AWPR on the group's financial results will be determined by the result of the significant claim on this contract, in respect of which the board continues to pursue constructive discussions with the client," Galliford said. Tullow Oil rose 1.7% after it said revenue rose in 2018 as it swung to a profit, and forecast production to improve in 2019.Revenue for 2018 came in at USD1.86 billion, up from USD1.72 billion the year before, as the company swung to a pretax profit of USD260.5 million from a USD285.9 million loss in 2017.The oil and gas exploration firm has recommended a final dividend of 4.8 cents per share, its first payout since 2015.Tullow said its west Africa oil assets performed "strongly" in 2018 and delivered net production of 88,200 barrels of oil per day. Overall group net production in 2018 came in at 90,000 barrels a day.In 2019, overall group net production is expected to be in the range of 94,000 to 102,000 barrels per day. Hochschild Mining fell 2.1% after suspending operations at its Peruvian Arcata precious metal mine and placing it on care and maintenance, partly due to low silver prices."This decision has been expected but is still disappointing for the organisation. Arcata was the company's first mining operation and started producing in 1964. It has been an excellent operation with an outstanding workforce and supportive communities but the continuing low silver price over some years and current geological conditions leaves us no option," said Chief Executive Ignacio Bustamante.
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