• FTSE 100 finishes ahead 42.5 points 
  • Wall Street subdued awaiting trade talks news
  • Pound weak; UK retail sales survey shows further deterioration

5.15pm:  FTSE 100 finishes higher 

The FTSE 100 index closed higher on Monday, benefitting as the pound eased after recent gains, and as traders showed some cautious optimism over the upcoming resumption of US-China trade talks, due on Thursday, even though US stocks were more subdued.

At the close, the UK blue chip index was up 42.5 points at 7,197.88. On currency markets, sterling shed 0.1% against the dollar to stand at US$1.2321. 

David Madden, market analyst at spreadbetter CMC Markets, commented: “The mood is one of cautious optimism even though it appears that China are not overly eager to strike a broad trade deal.

“It was reported the Chinese government are not willing to compromise on topics like industrial policy as well as government subsidies, but that’s not to say that progress can’t be made in the talks.”

“The feelgood factor from Friday’s US jobs report has spilled over to this week, as traders are a little less worried about the health of the world economy,” he added.

The Footsie’s top riser was British Aiways owner International Consolidated Airlines Group (LON:IAG), which flew 3% higher to 468.60p after the group revealed traffic numbers showing that revenue passenger kilometres increased by 0.8% last month, while the number of passengers carried ticked up by 0.6%. 

4pm: US stocks lag

US equities were weighed by traders trimming their positions in the wake of the strong finish on Friday.

“The largely positive US jobs report at the back end of last week triggered buying, and the bullish sentiment has cooled a little,” says David Madden, market analyst at CMC Markets.

“Thursday’s US-China trade talks will be in play this week, but already traders are managing their expectations as it seems that China won’t budge on certain issues.” 

Among US stocks, Uber Technologies Inc (NYSE:UBER) was being fuelled by an upgrade from Citigroup to ‘buy’ from ‘neutral’ on improved hopes about the group’s ride-sharing operation. 

General Electric Co (NYSE:GE.) was lower as it pledged to freeze pension plans for roughly 20,000 employees in a bid to slash its debt as well as reduce its pension deficit.

In London, the FTSE 100 is finishing on the front foot, up 45 points or 0.6% to 7,200.74.

Vodafone Group plc (LON:VOD) is one of the top risers after saying it was trialling a new open access radio system technology with chip colossus Intel Corp (NYSE:INTC) that is aimed at reducing its reliance on buying equipment from Huawei, Ericsson and Nokia, making it cheaper to build networks in rural areas.

3.15pm: Wall Street whizzes lower

US stocks started off in the red as expectations for new trade talks between Beijing and Washington later in the week were drowned out by other concerns.

The Dow Jones was down 77 points or 0.3 to 26,499.32, while the broader S&P 500 index was down 0.3% and the tech-heavy Nasdaq Composite had slipped 0.2%.

Legal issues have surrounded the White House in recent weeks and it was no different at the start of this one, with a federal judge dismissing a lawsuit brought by President Trump to block a subpoena for eight years of his tax returns.

Following the President’s claim that any occupant of the White House enjoys “absolute immunity from criminal process of any kind”, judge Victor Marrero’s opinion was that this “would constitute an overreach of executive power”.

Over the weekend, reports emerged that China was refusing to make certain commitments over industrial policy reform or government subsidies demanded by US counterparts ahead of talks in Washington on Thursday and Friday.

Back in London, the FTSE is adding to its earlier modest gains, now 32 points higher at 7,187.55. The pound is little moved at $1.2327.

British Airways owner International Consolidated Airlines Group (LON:IAG) is leading the way, with its shares taking off after it reported increased traffic in September.

In the mining and commodities sectors, hopes have been boosted for a cobalt price revival after Glencore PLC (LON:GLEN) signed a five-year supply deal with Chinese battery metals company GEM Co.

Analysts at RBC Capital Markets said that the deal “indicates that the Cobalt market is starting to improve, as we would not expect long-term contracts to be entered into if there was substantial surplus”. (READ more here.)

1.23pm: The accidental retail data

The Footsie is in positive territory despite the inadvertent release of data that revealed September was another terrible month for retailers.

London’s index of leading shares was up 19 points (0.3%) at 7,175, led by British Gas owner Centrica PLC (LON:CNA), which was up 2.2% at 71.2p.

The British Retail Consortium released its September retail sales survey a day early, owing to an administrative mistake rather than any desire to put anxious holders of shares in retailers out of their misery.

Like-for-like sales were down 1.7% from a year earlier, having been down 0.5% in August. Economists had predicted a 0.9% year-on-year fall for September.

“September appears to have been a bad month for retailers, but we doubt that growth in households’ spending is fundamentally slowing,” said Samuel Tombs, the chief UK economist at Pantheon Macroeconomics.

“The poor performance in September likely has partly reflected the unusually warm weather; average temperatures were 0.5 degrees above their 1970-to-2018 September average. Clothing retailers introducing new winter ranges, therefore, likely struggled temporarily. Note too that the BRC’s survey is mainly comprised of large high-street retailers and so does not capture momentum in online sales. Moreover, consumers’ confidence remains in line with its long-run average, reflecting the recent strength of wage growth,” Tombs added.

“Looking ahead, the impact of the impending slowdown in the labour market on growth in households’ incomes should be offset by falling mortgage rates, the end of the freeze on the value of benefit payments in April 2020 and the easing of the drag on income growth from the rollout of workplace pensions scheme. We continue to look for only a modest slowdown in year-over-year growth in households’ real spending to 1.8% in 2020, from 1.9% this year,” Tombs revealed.

Primark owner Associated British Foods PLC (LON:ABF) was trading 0.5% lower at 2,195p but fellow fashion firm Next PLC (LON:NXT) was barely changed.

Wealth management firm Hargreaves Lansdown PLC (LON:HL.) was down 1.8% at 1,783.5p and the biggest faller on the Footsie ahead of its trading statement on Thursday.

The company is expected to come under fire for its closerthanthis relationship with Woodford Patient Capital Trust.

10.45am: Sterling’s weakness cushions the Footsie’s fall

London’s leading shares are modestly lower despite sterling having another difficult time on foreign exchange markets.

The FTSE 100 was down 6 points (0.1%) at 7,150, while sterling was down almost a third of a cent against the mighty US dollar, at US$1.2302.

“On a trade-weighted basis, the dollar remains near the highs of the year. This is despite the likely prospect of three Fed rate cuts this year and Congress at war. The reason for the dollar’s resilience is the lack of attractive alternatives and in a world of secular stagnation, no one wants a stronger currency right now,” postulated the forex-focused bods at ING.

“On a trade-weighted basis, the dollar remains near its 2002 highs. President Trump may not like it, but his tools to get it lower are: a) call off the trade war; b) pressure the Fed into aggressive cuts or c) unilateral FX intervention,” ING’s research note continued.

“c) won’t work, we’re not looking for a) until 1Q20, so his best option is b) – the Fed. Here: i) the Fed would prefer not to cut three meetings in a row and ii) even if the Fed did cut, USD hedging costs for Europe would still be 2.5%!”

Supported by the weakness of sterling – generally regarded as more of a boon for the multi-nationals in the FTSE 100 than the mid-caps in the FTSE 250 – the Footsie is in better shape than the FTSE 250, which has been knocked by the profit warning from SIG PLC (LON:SIG); the company also announced plans to slim down.

“Insulation specialist SIG is the latest in a growing list of companies to sell off non-core assets. Given the gloomy market backdrop, one would suggest this trend has further to run,” opined Russ Mould at AJ Bell.

“When times get tough businesses take a hard look at their assets and work out whether they would be better off having a tighter focus, concentrating on fewer things and doing them better.

“The key challenge is not to sell anything that could be a good earnings driver in more buoyant market conditions,” Mould said.

SIG has made a habit of profit warnings; the latest one has lopped one-sixth off the share price at 99.9p.

Disposals are definitely the thing right now with Grafton Group PLC (LON:GFTU), the building materials group, completing the previously announced disposal of its Belgian business. The shares were off 3.7% – probably more in sympathy with SIG than to di with anything related to the completion of the disposal.

9.15am: Blue-chips mixed

London has made a mixed start with traders sitting on their hands ahead of the resumption of trade talks between the US and China on Thursday.

The FTSE 100 was up a point at 7,157.

“Last week was a reminder to investors that data can still cause quite a stir in the markets but this week, normal business resumes as attention shifts back to trade wars and Brexit,” commented Craig Erlam of Oanda.

“It’s impossible to look past the big macro stories at the moment, especially with another Brexit deadline looming and Washington preparing to host Chinese officials for further trade talks. I wouldn’t say the mood, in either case, is particularly optimistic but they should be interesting, none-the-less,” he added.

Banking giant HSBC PLC (LON:HSBA), down 0.7% at 597.9p, after reports over the weekend that it is looking to make swingeing cost cuts that could put up to risk 10,000 jobs.

Today’s house price index release from the Halifax has not done the housebuilding sector any favours.

Although house prices were up 1.1% year-on-year in September, on a month-on-month basis they fell 0.4%.

“Annual house price growth slowed somewhat in September, rising by just 1.1% over the last year. Whilst this is the lowest level of growth since April 2013, it remains in keeping with the predominantly flat trend we’ve seen in recent months,” said Russell Galley, the managing director of the Halifax.

“Underlying market indicators, including completed sales and mortgages approvals, continue to be broadly stable. Meanwhile for buyers, important affordability measures – such as wage growth and interest rates – still look favourable.

“Looking ahead, we expect activity levels and price growth to remain subdued while the current period of economic uncertainty persists,” he added.

Lucy Pendleton of estate agents James Pendleton said the housing market’s game of “musical statues” continues.

“The only problem is that a rowdy bunch of competitive parents have been jostling for control of the off button for months and the music never actually stops.

“Annual growth is now at a six and a half year low and any fuel injection provided by buyer incentives and low mortgage borrowing rates has long gone. The fumes of uncertainty are all that enter now, and the housing market’s engine must take what sustenance it can until the UK’s political future is more assured,” she said.

“This index has gone from gazelle to sloth in only a matter of months, although some tinkering with the methodology has now removed the astoundingly high year-on-year figures we saw in the first half of the year from the index,” Pendleton noted.

Shares in Persimmon PLC (LON:PSN), down 0.9% at 2,077p, were among the Footsie’s worst performers.

Fellow housebuilder Taylor Wimpey PLC (LON:TW.) was down 0.6% at 148.65p.

Proactive news headlines

Integumen PLC (LON:SKIN), the developer of Labskin technology, has signed multi-year agreements with two top-10 global cosmetic companies for recurring LabskinAI services.

Angling Direct PLC’s (LON:ANG) half-year revenues rose by a fifth as new stores chipped in, customers spent more and online sales grew strongly.

E-Therapeutics PLC (LON:ETX) says multiple proposals for its artificial intelligence-based drug research products have been sent to potential partners and customers.

Argentex Group PLC (LON:AGFX), the recently listed provider of foreign exchange services to institutions, corporates and high net worth private individuals, generated revenues of £9.3mln in just over three months since its AIM flotation.

Maxcyte Inc’s (LON:MXCT) technology for engineered cell mechanisms is to be used by Nasdaq-listed genome specialist Editas Medicine for diseases such as sickle cell anaemia and blood disorders.

Franchise Brands PLC (LON:FRAN) has acquired Willow Pumps to expand its existing drain care and repair business, Metro Rod.

Genedrive PLC (LON:GENE) has received approval from the NHS Health Research Authority to start testing its Antibiotic Induced Hearing (AIHL) test in hospital trials.

Real-time technologies company BATM Advanced Communications Limited (LON:BVC), has souped-up its cyber-security offering to make it compatible with devices using the Arm architecture.

Bezant Resources PLC (LON:BZT) has entered into a conditional transaction agreement to sell an 80% interest in the Mankayan copper project.

Kalahari Metals Ltd, a company in which Metal Tiger Plc (LON:MTR) holds a 59.8% interest, has identified veinlet and disseminated sulphide copper mineralisation in drilling on its licences in Botswana.

Quadrise Fuels International PLC (LON:QFI) chairman Mike Kirk has, in its financial results statement, described “a hugely important year” for the company with significant progress made towards unlocking a broader range of opportunities.

Jersey Oil & Gas Plc (LON:JOG) has hired Rockflow Resources and Petrofac Facilities Management for services on the Greater Buchan Area development project.

i3 Energy Plc (LON:I3E) late in Friday’s session announced that drilling had begun for the Serenity appraisal well in the UK North Sea, the second in a series of three new wells being drilled by i3.

Crossword Cybersecurity PLC (LON:CCS) said its chief executive Tom Ilube and senior adviser Nick Jennings have been included on a list of the 1,000 most influential people in London. 

6.30am: Stocks to open modestly lower ahead of resumption of US-China trade talks later this week

US-Chinese trade talk fears are back to haunt global markets but London seems set to react phlegmatically, with the Footsie pegged for a minor fall.

After rising 78 points to close at 7,155 on Friday, the FTSE 100 was expected to open around 10 points lower at 7,145.

That relatively modest fall would be out of steps with Asian markets this morning, which are mostly lower.

Japan’s Nikkei 225 was down 49 points at 21,362 while in Hong Kong the Hang Seng index was 289 points lower at 25,821 after further protests on Sunday in defiance of the government.

“China and the US resume talks on trade this week – there is some optimism but this has often in the past been misplaced,” cautions Robert Carnell, the chief economist at ING’s Asia-Pacific operations.

“It looks as if we are back to considering the merits of a narrow trade deal today, as news stories break suggesting that China is not looking to make a broader trade deal along the lines it is reported the US is seeking.

“I’m intrigued by this, as from a strategic point of view, I would have thought that the US would have the most to gain from a partial deal, not China,” Carnell pontificates.

Talking of the US, the main benchmarks raced ahead on Friday in the wake of a slightly insipid jobs report for September, which revived hopes that the US central bank will get the paring knife out again when it meets this month to set interest rates.

The Dow Jones index was up 373 points at 26,574 and the S&P 500 was 41 points firmer at 2,952.

Closer to home, the corporate calendar is looking as bare as old mother Hubbard’s cupboard.

Sensyne Health PLC (LON:SENS), the British clinical artificial intelligence technology company, appears to have the day mostly to itself.

In its maiden interim results, announced in January, the company announced an adjusted operating loss from continuing operations of £5.1mln, versus a loss the year before of £2.9mln.

Revenue was just £39,000 – up from £20,000 the year before – which means today’s announcement will be all about partnership milestones achieved in the second half of the year and cash burn.

Cash a year or so ago stood at a healthy-looking £57.7mln.

Fishing tackle flogger Angling Direct PLC (LON:ANG) – the concept of angling indirectly is an interesting one – releases its interims, covering the six months to the end of July.

It has already revealed revenue for the period was in line with management’s expectations, rising 21% to £26.5mln from £21.9mln a year earlier.

The company expects to report gross margins for the period of 32.1%.

Last month, the company said it had traded well over the summer months (June to August), with like-for-like sales up 13.3% in its stores while online sales were up 26.7% year-on-year, with August being a record month for the company.

Significant announcements expected

Finals: Pci-pal PLC (LON:PCIP), Sensyne Health PLC (LON:SENS)

Interims: Angling Direct (LON:ANG)

Economic data: Halifax house price index, German factory orders, US consumer credit, Fed chair Powell speech

Around the markets

  • Sterling: US$1.2327, down 0.07 cents
  • 10-year gilt: yielding 0.445%
  • Gold: US$1,511.70 an ounce, down US$1.20
  • Brent crude: US$58.29, down 8 cents
  • Bitcoin: US7,878, down US$32

Business headlines

The Times

Boris Johnson was trying to save his Brexit plan last night after European leaders warned that the deal would not be approved at next week’s crunch summit unless he backed down.

Leading British steel group Liberty House is to publish consolidated accounts and appoint a board of directors for the first time to silence critics over lack of transparency.

Made.com is exploring a move into rental furniture as the retailer focuses on Generation Rent and the rising number of people who cannot afford to buy a home.

M&G Prudential is investing £875 million to buy and fund the development of the £1.4 billion skyscraper at 40 Leadenhall.

Vodafone has begun testing an open access radio system it has developed with Intel that could reduce its reliance on Huawei.

Sirius Minerals axed nearly 300 workers as the North Yorkshire fertiliser mine developer slashes costs to preserve cash.

Mike Ashley’s Sports Direct is believed to be preparing to shut down almost every House of Fraser store at the end of the crucial Christmas trading period.

Financial Times

Global banking giant HSBC is to swing the axe, with up to 10,000 jobs at risk, as the company embarks on a cost-cutting drive

A boardroom bust-up has broken out at Nissan as powerful internal factions battle to fill the leadership vacuum left by the arrest of Carlos Ghosn.

Thousands of protesters in Hong Kong held marches across the city on Sunday

The Daily Telegraph

Thomas Cook bosses were warned ahead of its collapse that creditor claims could top £10 billion, as a complex network of off-balance-sheet guarantees unwound.

Openreach, BT’s quasi-independent network subsidiary, has shelved an overhaul of its board amid concerns it would give more sway to the parent company.

Matchmaking chief executive Whitney Wolfe Herd of the women-focused dating app Bumble enjoyed a £4 million dividend ahead of a possible float for the firm’s parent company.

Rooney Anand, the former boss of pub giant Greene King, turned down a plea from Domino’s Pizza investors to take over as its chairman.

The Guardian

Proposed reforms of international tax rules by the Organisation for Economic Co-operation and Development will only claw back 5% of profits and could end up worsening global inequality, analysis by tax campaigners has found.

The number of music, theatre and sports fans using tickets website Viagogo has plummeted after its adverts were banned from Google.