Global markets lift on US-China trade deal hopes

Renewed hopes of an end to the US-China trade war ensured another positive session for global markets, with London stocks benefiting from the cheer.

The FTSE 100 Index closed up 18.39 at 7388.08, following its 67 point surge on Monday amid optimism over a trade deal between the US and China.

The Dow Jones Industrial Average on Wall Street was more than 30 points higher at the time of close in London, while across Europe, the Cac 40 in France and Germany’s Dax finished 0.4% and 0.1% higher respectively.

US President Donald Trump’s administration is understood to be considering removing some of the existing tariffs on Chinese goods to pave the way for a deal.

Simona Gambarini at Capital Economics said: “Optimism about a trade deal between the US and China has given a lift to global equities.

“But with a lot of good news already discounted and global economic growth likely to remain sluggish, we suspect that any further upside for stock prices will be limited.”

She added that even with some sort of deal reached, “tensions surrounding trade are unlikely to go away completely”, while she believes growth in the US and China will continue to slow regardless and remain sluggish elsewhere.

In currency markets, the pound fell 0.2% to 1.286 US dollars as the greenback strengthened thanks to cheery economic data and the US-China trade talk hopes.

Sterling rose 0.4% against the euro.

Among stocks, Primark owner Associated British Foods was the biggest riser after figures were boosted by the continued expansion of the high street fashion store and robust grocery sales.

Increased profits at Primark and in the grocery division helped to offset declining profits from the group’s sugar production business.

This saw underlying pre-tax profits for the year improve by 2% to £1.4 billion.

And AB Foods offered a rosy outlook for the new financial year, as it said it expects another year of strong profit as well as margin growth in groceries.

Shares lifted 6%, or 125p to 2374p.

Davidoff and JPS cigarette-maker Imperial Brands was another blue chip riser, up 10.8p at 1749.2p despite revealing that sales of its vape products took a severe hit due to a series of regulator crackdowns on vaping in the US.

Bosses said sales in the Next Generation Products (NGP) division in its Americas market fell 26.5%.

Overall, Imperial sales hit £31.6 billion, up from £30 billion, and pre-tax profits fell 7% from £1.82 billion to £1.69 billion in the year to September 30.

In the FTSE 250 Index, engineer Weir closed 3% higher as it shook off another profit warning for its oil and gas division.

The Glasgow-based group suffered a 32% plunge in gas and oil orders year-on-year in the third quarter after US customers cut back operations and ordered less machinery.

It also revealed a fifth of its US workforce has been axed under plans to slash annual costs by £30 million across the oil and gas division.

But shares lifted 47.5p to 1480p as its other operations helped offset the oil and gas woes.

The biggest FTSE 100 risers were Associated British Foods up 125p at 2374p, Rolls-Royce ahead 32.8p at 769p, Schroders 133p stronger at 3253p and Antofagasta 30.2p higher at 929p.

The biggest FTSE 100 fallers were Aveva off 116p at 4140p, M&G down 5.6p at 214.2p, United Utilities 18.8p lower at 845.6p and Experian 51p weaker at 2368p.