By Carla Mozee, MarketWatch
Ocado, tobacco stocks rise after analyst comments
U.K. stocks jumped Tuesday, with gains for oil shares helping
London's blue-chip index bounce off a six-week low that it reached
as trade tensions between the U.S. and China escalated.
How markets are moving
The FTSE 100 index surged 1.2% to 7,697.86. All sectors rose,
led by the basic materials sector, which contains mining
stocks.
Losses in mining shares, which came on concerns that a
U.S.-China trade war will cut demand for metals, contributed to
Tuesday's drop of 0.4% for the FTSE 100
(http://www.marketwatch.com/story/ftse-100-drops-as-us-china-trade-fight-intensifies-2018-06-19).
Tuesday's finish also marked the index's lowest close since May 8,
according to FactSet data.
The British pound traded at $1.3157, down from $1.3173 late
Tuesday in New York.
What's driving markets
Like Asian and continental European equity markets
(http://www.marketwatch.com/story/european-stocks-stage-recovery-but-us-china-trade-tensions-remain-2018-06-20),
U.K. stocks were recovering from Tuesday's slide, which came as
investors fled on worries about the deteriorating U.S.-China trade
relationship. On Wednesday, the Shenzhen index added 1.2%, after
Tuesday's 5.8% slide, while Hong Kong's Hang Seng Index gained
0.9%.
In Washington, the White House accused China of waging a
systematic campaign of "economic aggression" in a report released
Tuesday
(http://www.marketwatch.com/story/navarro-report-blasts-china-for-systematic-economic-aggression-2018-06-19).
That followed U.S. President Donald Trump's threat to impose more
tariffs on Chinese goods, adding up to levies on $450 billion in
imports, after Beijing threatened to retaliate against a first
round of U.S. tariffs
(http://www.marketwatch.com/story/china-threatens-further-tariffs-on-us-products-as-trade-conflict-escalates-2018-06-19).
But the trade-war concerns seemed to be subsiding somewhat after
the governor of the People's Bank of China, Yi Gang, reportedly
appealed
(http://www.scmp.com/business/markets/article/2151558/hong-kong-stocks-steady-early-trading-even-dow-wipes-out-gains-made)
for investors "not to lose confidence" in China's "strong economic
fundamentals." Fears that Beijing would use yuan devaluation as a
weapon in the trade hostilities eased, too, after the Chinese
central bank set its reference rate for the currency
(http://www.marketwatch.com/story/yuan-move-by-chinas-central-bank-shows-no-effort-to-devalue-amid-trade-spat-2018-06-20)
at its lowest since January.
Read:China can't match Trump in a tariff fight, but it does have
other weapons
(http://www.marketwatch.com/story/china-cant-match-trump-in-a-tariff-fight-but-it-does-have-other-weapons-2018-06-19)
Meanwhile, investors are watching developments from the
Organization of the Petroleum Exporting Countries, whose members
are gathering in Vienna
(http://www.marketwatch.com/story/what-time-is-the-opec-meeting-2018-06-19).
While meetings are set for Friday and Saturday, OPEC Secretary
General Mohammad Barkindo on Wednesday delivered his opening speech
for the group's International Seminar, and oil ministers have
started making comments on the sidelines. Oil prices were up nearly
1%, above $65 a barrel, and Brent crude futures picked up 0.6%.
See:What time is the OPEC meeting?
(http://www.marketwatch.com/story/what-time-is-the-opec-meeting-2018-06-19)
And read:Why Goldman Sachs still sees oil peaking above $82 a
barrel this summer
(http://www.marketwatch.com/story/why-goldman-sachs-still-sees-oil-peaking-above-82-a-barrel-this-summer-2018-06-18)
Also, lawmakers in the House of Commons are expected to continue
their debate of the bill that will take the U.K. out of the
European Union. On Monday, the U.K. House of Lords voted to give
Commons members a "meaningful vote" on the final Brexit deal, a
result that's considered a defeat for the U.K. government led by
Prime Minister Theresa May.
What strategists are saying
"Given the absence of any major news on the trade front, the
trigger for the shift in sentiment appears to have been some
market-friendly signals from the People's Bank of China. The
central bank said it is prepared for outside shocks and that China
has room to face all sorts of trade frictions, fueling speculation
for a loosening of policy should the trade outlook deteriorate,"
said Marios Hadjikyriacos, investment analyst at XM.com.
"Ironically, any further easing from the PBOC could lead to a
weaker yuan, thereby potentially exacerbating the U.S.-China trade
deficit that the U.S. administration is so desperately trying to
reduce," he said in a note.
"Last week's discussion [in the House of Commons] descended into
chaos with Scottish MPs walking out in protest and almost 100
Labour MPs going directly against [Labour leader] Jeremy Corbyn.
This kind of discord at the top is continuing to leave business
without clarity on any of the key aspects in their dealings with
Europe and will continue to affect both U.K. company shares and the
pound," said Fiona Cincotta, senior market analyst at City Index,
in a note.
Stock movers
Shares of oil producers BP PLC (BP.LN) (BP.LN) and Royal Dutch
Shell PLC (RDSA.LN) (RDSA.LN) gained 0.7% and 1.1%, respectively,
as OPEC leaders gather in Vienna. Among mining stocks, copper
producer Fresnillo PLC (FRES.LN) leapt 3.4% and Glencore PLC
(GLEN.LN) surged 3.2%.
Ocado PLC shares (OCDO.LN) climbed 5.1%. Peel Hunt analysts said
in a note that they believe the online grocery and technology
company "has potential to become the 'standard' platform for retail
logistics across all sectors as the operating system of
retail."
Berkeley Group Holdings PLC (BKG.LN) stumbled 4.1% after the
home builder said it expects profit to be around 30% lower in
fiscal 2019
(http://www.marketwatch.com/story/berkeley-group-foresees-lower-profit-2018-06-20)
and that pretax profit in fiscal 2018 represented a peak. Shares of
other home builders lost ground, with Barratt Developments PLC
(BDEV.LN) down 1.1%, Persimmon PLC (PSN.LN) shed 0.5% and Taylor
Wimpey PLC (TW.LN) slipped 0.1%.
Imperial Brands PLC (IMBBY) jumped 2.9%, and British American
Tobacco PLC (BATS.LN) gained 2.5%, as Liberum started coverage on
the tobacco producers with buy ratings.
(END) Dow Jones Newswires
June 20, 2018 05:55 ET (09:55 GMT)
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