LONDON MARKETS: FTSE 100 Climbs As Fears Of Trade Wars Ease, Smurfit Kappa Rallies
By Sara Sjolin, MarketWatch
Tesco, Wm. Morrisons rise after sales gains
U.K. stocks rose for a second session on Tuesday, boosted a rally in shares of Smurfit Kappa and Intertek Group, as fears that U.S. tariffs could spark a global trade war abated.
Tesco's shares advanced after encouraging sales data showed the supermarket chain continues to prosper, having seen particularly strong growth at its Extra outlets.
What are markets doing?
The FTSE 100 climbed 0.4% to close at 7,146.75, adding to a 0.7% rise from Monday, when the London benchmark rebounded from a 14-month low (http://www.marketwatch.com/story/ftse-100-climbs-recovering-from-14-month-low-2018-03-05).
The pound rose to $1.3884 from $1.3846 late Monday in New York.
What is driving the market?
Stocks in the U.K. climbed as part of a broader European rally, which came as traders returned to embracing riskier assets as fears over a global trade war eased.
Those concerns were sparked by U.S. President Donald Trump's announcement last week that he would impose tariffs on steel and aluminum imports.
But on Monday, Republican leaders, including House Speaker Paul Ryan, warned that the tariffs could jeopardize U.S. economic growth and began lobbying for the president to reconsider (http://www.marketwatch.com/story/trumps-tariff-plan-creates-rift-among-republicans-2018-03-06) the move.
"We are extremely worried about the consequences of a trade war and are urging the White House to not advance with this plan," Ryan spokeswoman AshLee Strong said.
There is also relief among investors that other major economies, such as China, have yet to retaliate, analysts said. However, the European Union intends to slap a 25% tariff on some U.S. goods (http://www.marketwatch.com/story/eu-considers-retaliatory-tariffs-on-35-billion-us-imports-report-2018-03-02), if the tariffs come into being, according to a media reports.
Sentiment in Europe was further lifted by news that North Korea is willing to discuss scrapping its nuclear program (http://www.marketwatch.com/story/north-korea-is-willing-to-hold-talks-on-giving-up-nuclear-weapons-says-seoul-2018-03-06) and will meet for a summit with the South in April.
Closer to home, the FTSE was lifted by individual stocks making big moves in Tuesday's trade. Shares of Smurfit Kappa Group PLC topped the list of gainers, up 20%, after the packaging company rebuffed an offer proposal from International Paper Co (http://www.marketwatch.com/story/smurfit-kappa-rebuffs-international-paper-approach-2018-03-06).(IP) .
Which other stocks are in focus?
Intertek Group PLC (ITRK.LN) climbed 4.6% after the product testing and certification company said 2017 pretax profit rose 13% (http://www.marketwatch.com/story/intertek-pretax-profit-rises-13-for-2017-2018-03-06).
Shares of Tesco PLC (TSCO.LN) (TSCO.LN) put on 3.4% and Wm. Morrison Supermarkets PLC (MRW.LN) added 0.1%. The moves came after a survey from Kantar Worldpanel (https://www.kantarworldpanel.com/en/pr/Tesco-and-Morrisons-rise-to-top-the-big-four-) showed the two supermarkets chains were the fastest-growing grocers in the U.K. over the last 12 weeks.
On a downbeat note, shares of Just Eat PLC (JE.LN) slumped 13% after the takeaway company swung to a pretax loss in 2017 (http://www.marketwatch.com/story/just-eat-slides-to-loss-for-2017-2018-03-06). It announced extra investment to boost its delivery services.
Aggreko PLC (AGK.LN) slumped 4% after the power supplier said pretax profit declined in 2017 (http://www.marketwatch.com/story/aggreko-2017-pretax-profit-falls-2018-03-06).
Ashtead Group PLC (AHT.LN) lost 5.5%. The industrial equipment rental company posted an increase in third-quarter profit (http://www.marketwatch.com/story/ashtead-profit-rises-for-3q-backs-2018-view-2018-03-06), but also said finance director Suzanne Wood is to step down from her role on March 31.
What are strategists saying?
-- "Concerns about a trade war have faded from markets somewhat. The hope is that there will be a trade skirmish with added rhetoric from the Trump Twitter feed," said Paul Donovan, global chief economist at UBS Wealth Management.
"The news that White House adviser Cohn is organizing a meeting between steel and aluminum consumers and U.S. President Trump is seen as helpful in promoting a less aggressive stance," Donovan said in a note.
-- "[Just Eat] plans further investments into delivery in the U.K., Canada and Australia & New Zealand -- but there are doubts whether this will deliver for investors, and there is a risk of becoming embroiled in a low-margin street fight with the likes of Amazon, Uber Eats and Deliveroo," said Neil Wilson, senior market analyst at ETX Capital, in a note.
"There is a risk of management taking the eye off the ball by focusing on delivery instead of making the most of its status as the go-to platform and primary distribution channel for restaurants," he added.
(END) Dow Jones Newswires
March 06, 2018 12:10 ET (17:10 GMT)Copyright (c) 2018 Dow Jones & Company, Inc.