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London open: Stocks fall ahead of more Sino-US trade talks
London stocks fell in early trade on Thursday, taking their cue from a downbeat session in Asia as worries about Sino-US trade relations grew after US President Trump blamed China for the breakdown in talks between the two nations, with ex-dividends also proving a drag.
At 0845 BST, the FTSE 100 was down 0.5% at 7,235.80, while the pound was flat against the dollar and the euro at 1.3010 and 1.1616, respectively.
All eyes will be on the next round of negotiations between the US and China in Washington later in the day, after Trump said at a rally in Florida on Wednesday that China “broke the deal” in trade talks.
Neil Wilson, chief market analyst at Markets.com, said: “Rule number one: never break the deal. There is a lot of misdirection and games going on here. Tariffs on $200bn worth of Chinese goods will increase from 10% to 25% just after midnight on Friday if a deal is not done. Beijing is ready to retaliate.
“So is Liu He really coming to do a deal? I think probably it’s case of gaining a reprieve in order to avert the rise in tariffs. It looks like we are yet a wee bit away from a comprehensive trade deal. But the vice-premier’s visit and the prospect of tariffs being hiked is all a bit of an unknown right now and the market positioning is defensive as a result, but not yet into full selloff mode. Even if there it’s no go on trade, the dovish Fed will mean we shouldn’t see a selloff like we saw in Q4 2018.”
On home shores, investors were mulling the latest survey from the Royal Institution of Chartered Surveyors. The RICS gauge of house prices was steady in April from March at -23, remaining at its worst level in nearly eight years. Analysts had been expecting a reading of -22.
RICS chief economist Simon Rubinsohn said: “Although there are sign of greater realism on pricing from vendors, there is little conviction in the feedback from respondents to the survey that activity in the housing market will pick up anytime soon.”
In equity markets, Centrica, Admiral, Hiscox, Card Factory, Polymetal and Ibstock all retreated as their stock went ex-dividend.
BT was in the red as it reported a drop in revenue and just a slight uptick in full-year profit as a solid performance from the consumer business was offset by weakness in the enterprise segment.
Shares in engineer IMI were down after it said trading conditions in the first quarter remained mixed, but results for the year are expected to be in line with current market expectations.
Morrisons was a touch weaker even as it reported solid sales growth in its first quarter as the supermarket chain benefited from a busy Easter. Like-for-like sales in the 13 weeks to 5 May, excluding fuel, rose 2.3%, while retail sales were up 0.2% and wholesale sales rose 2.1%.
On the upside, RSA Insurance gained ground as it posted 3% increase in first-quarter net written premiums, while Barratt Developments advanced after the housebuilder said the outlook for the full year was “modestly” above the board’s previous expectations.
