FTSE 100 ends 69 points higher
Wall Street shares up as trade war fears ease
US Q2 GDP growth revised to 2%
5.15pm: Footsie finishes higher
The FTSE 100 index closed in positive territory on Thursday with global markets buoyed by an easing of US, China trade tensions.
China indicated today that it wouldn’t immediately respond to the latest US tariff increase announced by President Trump last week, which themselves came after Beijing announced a round of retaliatory tariffs.
China’s Ministry of Commerce spokesman Gao Feng reportedly talked about the two sides now discussing measures to prevent an escalation of the trade war.
The Footsie finished 69.61 points higher at 7,184.32. The mid-cap FTSE 250 index was also higher, closing 89.51 points higher at 19,292.50.
“The Chinese ministry for commerce made it clear they are keen to strike a deal, but at the same time they will not be pushed around. Beijing admitted that further trade tensions will be harmful to everyone, and foreign firms operating in China won’t come under pressure, but at the same time, the country is willing to flex its financial muscles to inflict pain on the US should it see fit,” said David Madden, analyst at CMC Markets.
On Wall Street, the Dow Jones Industrial Average added 335.92 points, while the S&P 500 is up 37.23 points at 2,925.
On currency markets, the pound continued to be a little weaker against the dollar, down 0.1% at US$1.2195 as Brexit continues to dominate UK headlines, with fears over a no-deal exit intensifying after prime minister Boris Johnson prorogued parliament until October 14.
3.55pm: FTSE 100 holds 70-ish point gain into late-afternoon
As it entered its final hour of trading the FTSE 100 had managed to hold to pretty much all fo today’s gains and was up 71 points at 7,186 just before 4pm.
The mid-cap FTSE 250 was also having a good day, logging gains of 72 points taking it to 19,275.
Softer trade war comments from China and a new coalition government for Italy gave markets a boost on both sides of the Atlantic.
Meanwhile, sterling had slipped slightly over the day as fears over Brexit persisted following Boris Johnson’s move to prorogue parliament next month, with the pound down 0.08% at US$1.2199 against the dollar and falling 0.1% to €1.1010 against the euro.
The major blue-chip mover had remained more or less unchanged throughout the session, with Micro Focus still at the bottom of the pile having tumbled 30.6% to 1,078.8 after a cut to revenue forecasts spooked shareholders.
2.45pm: Wall Street sees strong start
The US markets got off to a solid start on Thursday morning as trade optimism lifted market sentiment across the Atlantic.
Shortly after the opening bell, the Dow Jones was up 1.1% at 26,336, the S&P 500 was 1.1% higher at 2,920 and the Nasdaq rose 1.4% to 7,967.
In London, the FTSE 100 was holding steady with solid gains and was up 75 points at 7,189.
2.15pm: US second quarter GDP trimmed to 2%
US gross domestic product (GDP) growth for the second quarter has been revised down to 2% from 2.1% estimated last month.
The downgrade was in line with expectations from economists while also highlighting that economic growth contracted more than expected from the 3.1% expansion rate in the first quarter.
Declining exports amid the ongoing US-China trade dispute and smaller inventory builds were blamed as key factors in the slowdown, offsetting strong growth in consumer spending.
Meanwhile, US weekly jobless claims data for the seven days ending 24 August showed a slight increase, up 4,000 to 215,000, however, they remained at a very low level suggesting that headwinds for the US economy were doing little to dampen the labour market.
The FTSE 100 was up 72 points at 7,186.
US Weekly Jobless Claims come in at 215k, prev: 209k
US Q2 GDP comes in at 2%, Prev: 2.1%
Personal Consumption rise to 4.7%, up from 4.3%
— Michael Hewson ???????? (@mhewson_CMC) August 29, 2019
1.45pm: Wall Street poised for higher start
The US markets are set to open higher on Thursday morning, riding the wave of trade-related optimism that has already sent European markets heading upwards.
Traders have taken heart from indications out of China that the country isn’t rushing to retaliate against the latest round of US tariffs on US$250bn worth of Chinese imports, which are to be raised to 30% from 25% on 1 October.
However, a spokesman for China’s ministry of commerce, Gao Feng, said at a press conference that the question that should now be discussed was about “removing the new tariffs to prevent escalation”, a signal to many that the People’s Republic may be looking to cool its rhetoric on the trade war.
Feng also said that the US and China were discussing a planned meeting of trade negotiators in September.
However, Craig Erlam, senior market analyst at OANDA, said that while the comments did provide “rays of hope” the “unfortunate reality” was that Feng’s comments were likely “more hot air” in the ongoing dispute.
Meanwhile, in London, the FTSE 100 was up 71 points at 7,186.
11.55am: FTSE 100 driven higher by trade optimism in late morning
As lunchtime approached, the FTSE 100 had defied initial expectations of a lower open and was up 79 points at 7,193 in late-morning.
David Madden, market analyst at CMC Markets UK, attributed the rebound to “positive noises” coming out of China, with a spokesman for China’s ministry of commerce saying that an escalation of trade tensions with the US was not helpful for the People’s Republic while also reiterating Beijing’s opposition to the current situation.
“The largely hopeful tones of the update from China has lifted market sentiment, and that sparked buying this morning. US-China relations have been volatile recently, but for now there is a sense that things are heading in the right direction, and that has coaxed some traders back into the market”, Madden said.
Things were also looking a little brighter in the currency markets, with the pound managing to pull out of its recent decline to end mostly flat against the dollar and euro at US$1.2213 and €1.1028 respectively.
10.45am: UK car production slumps in July
The production of new cars in the UK dropped for the 14th month in a row in July after weak demand in the EU and Asian markets drove output down by 10.6% year-on-year.
A report on Thursday by the Society of Motor Manufacturers and Traders (SMMT) also showed that production for export had slipped 14.6% in the month while domestic demand had risen 10.2%.
For the year to date, the SMMT said Britain had cranked out some 774,760 cars, 180,864 fewer than in the same timeframe last year representing a fall of 18.9%.
— SMMT (@SMMT) August 29, 2019
SMMT chief executive Mike Hawes said the ongoing decline in production was a “serious concern” citing strong global headwinds, escalating trade tensions, softening demand and significant technological change as key pressures on the sector.
“With the UK market also weak, the importance of maintaining the UK’s global competitiveness has never been more important so we need a Brexit deal – and quickly – to unlock investment and safeguard the long term future of a sector which has recently been such an international success story”, he added.
Meanwhile, there was some movement in the mid-cap FTSE 250 in mid-morning as guarantor loans firm Amigo Holdings PLC (LON:AMGO) plunged 37.6% to 91.2p after warning that impairments would be higher than previously thought as it braced for an expected regulatory clampdown and a possible recession.
The FTSE 250 itself was up 23 points at 19,226 in mid-morning, while the FTSE 100 was 72 points higher at 7,187.
8.55am: FTSE 100 starts higher
Despite expectations of a lower start, the FTSE 100 moved into positive territory in early trading and was 38 points higher at 7,152.
Connor Campbell, financial analyst at Spreadex, said the markets were “clinging to any positive hints regarding the trade war” after recent comments from the Chinese commerce ministry that Beijing was opposed to any further escalation its in tariff battle with the US adding that the two sides remained in contact with the aim of continuing negotiations over a deal.
Equities may also be getting a lift as sterling continues to struggle amid yet more Brexit-related chaos after Boris Johnson’s moves to prorogue Parliament on Wednesday continued to pile pressure on the currency.
In early trading, the pound was 0.17% lower at US$1.2188 against the dollar and down 0.22% against the euro at €1.0997.
6.45am: FTSE 100 tipped to start lower
The FTSE 100 is set to start Thursday on the backfoot amid apparent ongoing political turmoil as the October Brexit deadline looms.
CFD firm IG Markets sees the London benchmark around 24 points lower, making the price 7,100 to 7,103.
With only a little more than sixty days until Brexit the latest controversy is over parliamentary process, as Prime Minister Boris Johnson sealed approval from the Queen to suspend parliamentary for much of the intervening period until Brexit – likely until 14 October.
The political move saw about 1% come off the pound in one day, meanwhile, market pundits see fresh uncertainties for investors.
“The calculation would be that the Prime Minister is taking a high stakes gamble on forcing a vote of no confidence and daring MPs to push him towards calling a General election, when they return from recess next week,” said Michael Hewson, analyst at CMC Markets.
“What appears to be being forgotten amongst all of the heat, light, and hysterical claims of a coup from yesterday’s events is that MPs still have two big levers they can pull to try and prevent a no deal Brexit from happening.”
“One of them is the previously mentioned vote of no confidence, which could come as soon as next week, and the other lever is to revoke article 50, both of which MPs seem curiously reluctant to use.”
Elsewhere, on Wall Street, the Dow Jones rose by 258 points or 1% to finish Wednesday’s deals at 26,036. The S&P 500 moved 0.65% higher to close at 2,887 while the Nasdaq added 0.38% to 7,856.
In Asia, Japan’s Nikkei was very slightly lower at 20,468 and Hong Kong’s Hang Seng dipped 0.15% trading at 25,574. The Shanghai Compoisite was 0.03% lower at 2,892.
Around the markets:
- Pound: US$1.2213, up 0.01%
- Gold: US$1,544 per ounce, up 0.46%
- Brent crude: US$60.17 per barrel, up 1.09%
- Bitcoin: US$9,598, down 5.16%
Major announcements due on Wednesday August 28:
Economic data: UK BRC Shop Price Index, US MBA mortgage applications
- Brexit backlash begins as Scottish Tory leader quits – Sky News
- Long-term Treasuries rally with downturn fears clouding sentiment – Financial Times
- Goldman-backed broadband network bids for TalkTalk rival – BBC News
- British car industry suffers worst period of decline since 2001 – The Guardian
- Last chance for PPI claims as deadline arrives – BBC News
- Mitsubishi invests in pay-as-you-go solar energy supplier to Africa – Financial Times