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ADVFN Morning London Market Report: Friday 20 July 2018

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London open: Resources stocks lift FTSE after Trump knocks Fed

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London stocks unexpectedly tiptoed higher in early trade on Friday, ignoring a downbeat Wall Street finish overnight and a recuperating pound as comments from President Trump weighed on the dollar.

The FTSE 100 index climbed 0.2% to 7,702.52, having being called lower by City traders ahead of the open. Sterling recovered a little overnight from its battering at the hands of Parliament and the dollar, climbing back above $1.3, though losing 0.1% more to the euro at 1.1167, around its lowest levels against the single currency since March.

Breaking with tradition, Donald Trump again attacked the European Union and China over their currency weakness and said he is “not thrilled” about the potential results of the Federal Reserve hiking of interest rates. “Because we go up and every time you go up they want to raise rates again… I am not happy about it. But at the same time I’m letting them do what they feel is best.”

With President Trump long having made it clear that he wants a weaker dollar, market analyst Neil Wilson at Markets.com said the comments had the dollar on the back foot.

“The comments in the interview may well worry Fed watchers and policymakers given the implicit meddling in their affairs. It may be that someone has just explained yield curve inversion and recession risk to him, but really you cannot help feel this is less about criticising the Federal Reserve for monetary policy decisions and more about attempting to cool the dollar’s ascent. In Jay Powell, his pick, is in the Fed chair and the pace of tightening has been no quicker than markets have been broadly anticipating this year.”

Elsewhere, Mike van Dulken at Accendo Markets said higher commodity prices, notably oil and copper rebounding from week’s lows, could offset this to help heavyweight resources stocks. “Note, however, shares in both Rio Tinto and BHP Billiton offside in Australia overnight on the back of China concerns.”

The prospect of further trade skirmishes between the US and Europe and China is keeping a lid on markets.

Later in the day we will have public sector borrowing numbers at 0930 BST that are expected to a modest increase to £3.6bn for June from £3.4bn in May.

Looking a bit further ahead, this weekend’s will see a G20 finance ministers meeting in Buenos Aires, where US Treasury Secretary Steve Mnuchin will be able to respond to questions on US trade policy. Currently there are no bi-lateral meetings planned with Chinese officials to move things forward on trade.

In company news, oil companies, including BP and Royal Dutch Shell, breathed another sigh of relief after a federal judge dismissed a New York City lawsuit against the companies for their role in contributing to climate changes. As with similar rulings in San Francisco and Oakland last month, the district court judged that problems associated with climate change should be tackled by Congress. The price of oil was was also rebounding, with Brent Crude up 0.8% to $73.15.

Sirius Minerals has signed a couple more supply agreements in China for its POLY4 fertilizer that it expects to produce once its North Yorkshie mine is up and running. The pricing was in-line with other contracts and the aggregate sales volume now stands at 5.7Mtpa as the company targets 6-7Mtpa to support its planned debt financing process.

EasyJet flew a little higher is still interested in Italy’s Alitalia after Italy’s transport minister said the airline will remain the national flag carrier but needed an operational partner, according to a report in the Corriere della Sera.

HomeServe was a little higher as the emergency home repairs group said trading has been as expected during its traditionally quieter first quarter. The FTSE 250 group reiterated that it saw good prospects for growth in the year ahead, with attractive opportunities in all its geographies.

Unilever shares were upbeat as it confirmed the successful completion of the first half of its €6bn share buyback programme and said it would start the second on Friday, as it returns value to shareholders following the disposal of its Spreads business.

On the downside, insurer Beazley tumbled after reporting lower first-half profits as it paid out more for claims and investment returns declined but top-line growth was strong as rates firmed.

Experian dipped after the Competition & Markets Authority gave the company a week to propose measures to ensure its takeover of ClearScore does not harm consumers or face a full competition inquiry. The CMA said the companies were the leaders in credit checking services and each other’s main competitor.

Premier Oil was lower after analysts at Investec downgraded its rating to ‘hold’ with a target price of 130p, while Nostrum Oil & Gas was up 5% after Panmure Gordon raised its recommendation to ‘buy’.

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