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London open: Stocks edge lower, Burberry bucks trend after interims
London stocks edged lower in early trade on Thursday but luxury fashion brand Burberry surged on the back of well-received interim results.
At 0850 GMT, the FTSE 100 was 0.2% lower at 7,335.32, while the pound was down 0.1% against the dollar and the euro at 1.2840 and 1.1662, respectively.
Investors were keeping an eye on any developments in trade relations between the US and China following reports late on Wednesday that talks between the two were stalling because of disagreements over agricultural purchases.
CMC Markets analyst Michael Hewson said: “We were told a few weeks ago that a phase one deal was close, and would be signed soon and yet here we are still finding problems around soybean and pork purchases, particular in terms of the actual amounts. And so the theatre goes on, with a deal unlikely to be signed off any time soon.”
On home shores, the latest survey from the Royal Institution of Chartered Surveyors showed that UK house prices fell in October as buyers and sellers opted to sit tight amid political uncertainty.
The net balance of surveyors reporting that house prices had risen over the last three months slipped to -5 from -3 in September, coming in a touch below consensus expectations for an unchanged reading.
The new buyer enquiries balance ticked up to -16 in October from -17 the month before, while the new sales instructions balance rose to -29 from -27.
RICS chief economist Simon Rubinsohn said: “The latest survey feedback continues to suggest that both buyer and seller activity remains in a holding pattern, hampered by political and economic uncertainty.
“Given the upcoming general election next month, it appears unlikely that these trends will pick-up to any meaningful extent over the remainder of this year.
“The picture remains very different on the lettings side however, with tenant demand gathering momentum over recent months. This is running against an increasingly tight supply backdrop for rental properties and seems set to squeeze the pace of rental growth higher going forward.”
In equity markets, private equity firm 3i Group was the worst performer on the FTSE 100 despite posting a 10% total return for the first half of the year.
FirstGroup slumped as it said losses in the first half widened and that the formal sale process for its Greyhound business was “well advanced”.
Sainsbury’s, GlaxoSmithKline, Royal Dutch Shell, Bunzl and Marks & Spencer were all in the red as their stock went ex-dividend.
On the upside, Burberry surged to the top of the FTSE 100 after posting a jump in interim profit and revenue and backing its full-year guidance despite “considerable” disruptions in Hong Kong.
Richard Hunter, head of markets at Interactive Investor, said: “The enthusiastic reaction to these numbers has improved a share price which had struggled recently given the Hong Kong situation, dipping 12% in the last three months.
“Over the last year, however, the shares remain comfortably ahead , with a 13% hike comparing to a 4.5% jump for the wider FTSE 100. It now remains to be seen whether this exuberance translates to the market consensus, which has recently declined to a sell given the wider political unrest.”
National Grid rallied after its first-half pre-tax profit came in ahead of analyst expectations, while Premier Oil gushed higher as it said annual production would be at the upper end of its previous guidance.
Qinetiq gained as the defence technology company reported an increase in first-half profit and revenue as orders grew.
