• London open: BP paces the gains on solid results as investors eye services PMI

    London stocks rose in early trade on Tuesday, with BP pacing the advance after a solid set of results, as investors eyed the latest reading on the UK services sector.

    At 0830 GMT, the FTSE 100 was up 0.4% to 7,061.45, while the pound was flat against the dollar at 1.3034 and 0.2% firmer versus the euro at 1.1416 as Theresa May was set to visit Northern Ireland and give a speech on Brexit policy.

    Investors were digesting the latest BRC-KPMG retail sales monitor figures, which showed that UK retail sales picked up in January as shoppers were lured in by discounts following the worst December trading performance in a decade.

    Like-for-like sales were up 1.8% last month compared to a 0.7% drop in December, comfortably beating expectations for a 0.2% decline. Meanwhile, total sales rose 2.2% in January compared to no growth the month before, marking the highest growth since June 2018.

    BRC chief executive Helen Dickinson said: “There was a welcome return to growth this month after December’s disappointing sales figures. But while retail discounts helped tempt cautious consumers, there is no guarantee this momentum will continue after the sales have finished. And it will not just be brick-and-mortar stores looking nervously to the future, as online sales continued to grow below the long term trend.

    “Furthermore, the risk of a disruptive no deal Brexit could see these fortunes reversed. Unless the Government want to see well-known brands disappearing from our high streets in 2019, they should work with their colleagues in Parliament to find a solution that avoids the shock of a no deal Brexit on 29 March and removes the risks to UK consumers.”

    Still to come, Markit’s services PMI for January due at 0930 GMT is expected to show a dip to 51.0 from 51.2 in December.

    In corporate news, oil giant BP was the standout gainer as it said profit in 2018 more than doubled to $12.7bn from $6.2bn the year before, beating consensus expectations of $11.9bn thanks to a strong performance across the business.

    Richard Hunter, head of markets at Interactive Investor, said: “Global oil majors are performing strongly at present, but these numbers from BP are superlative.

    “Given the complexity of the operation, BP has the ongoing challenge of keeping the overall engine purring. This has been done with some aplomb, and any number of the metrics have benefited not only from a generally higher oil price over the year, but also a streamlining of operations which has resulted in higher efficiency. This in turn means that the company estimates that it can continue to be comfortable with oil around $50 per barrel, although it has also run the slide rule over lower levels by way of contingency planning.”

    Ocado fell as it said losses swelled last year but the online grocery specialist was able to focus on more significant developments overseas as its partners begin work on major new delivery warehouses. The company’s pre-tax loss widened to £44.4m from £9.8m in 2017.

    Indivior tanked more than 20% as the anti-opioid drugmaker warned it could lose 80% of market share “in a matter of months” to generic versions of its Suboxone drug, after a court defeat in its long-running effort to stop generic competitors entering the market.

    In broker note action, Cobham was lifted to ‘hold’ at Kepler Cheuvreux, while Morrisons was upgraded to ‘buy’ at Berenberg and Petrofac was initiated at ‘neutral’ by MainFirst.

    Greencore was resumed at ‘buy’ by Jefferies .

    US close: Tech stocks lead the way as Wall Street trading ends near session highs

    US stocks started the trading week on a positive note on Monday as tech stocks turned in a decent rally during the session.

    At the close, the Dow Jones Industrial Average was up 0.70% at 25,239.37, while the S&P 500 picked up 0.68% to 2,724.87 and the Nasdaq moved 1.15% firmer to 7,347.57.

    The Dow closed 175 points higher, near a session high, on Monday as trade relations between the US and China remained in focus after Donald Trump said in an interview with CBS that he sees a “good chance” of reaching a trade deal with China and making progress with North Korea on nuclear disarmament.

    “It looks like we’re doing very well with making a deal with China. I can tell you this, no two leaders of this country and China have ever been closer than I am with President Xi. We have a good chance to make a deal,” he said.

    “I don’t know that we’re going to make one, but we have a good chance. And if it is a deal it’s going to be a real deal. It’s not going to be a stopgap.”

    Oanda analyst Craig Erlam said: “This week is likely to be much quieter than the one just passed, with trade in Asia likely to be muted as much of the region celebrates Chinese New Year.”

    “Elsewhere it’s unlikely to be much more lively with the major political events – most notably US/China trade talks and Brexit – probably going a bit quieter this week, with talks having taken place last week in Washington and a vote in the UK parliament.”

    The USD was 0.34% higher against the GBP at 0.7670.

    In corporate news, solid showings from the likes of Microsoft and Apple throughout the session boosted the tech-heavy Nasdaq.

    Ultimate Software Group surged 19.69% in the session after the technology company agreed to be bought by an investor group led by Hellman & Friedman in an all-cash deal valued at about $11bn.

    Elsewhere, consumer products group Clorox picked up 5.57% as its second-quarter profit beat analysts’ expectations.

    Papa John’s rallied 8.98% after it emerged that activist hedge fund Starboard Value LP will make a $200m investment in the company. In addition, Starboard’s chief executive officer, Jeffrey Smith, will replace Papa John’s founder John Schnatter as chairman.

    Seagate shares inched forward 0.24% in extended trading after smashing its second-quarter earnings by $0.79 year-on-year, while Google parent Alphabet dropped 3.48% after the close despite beating on both revenues and earnings.

    Tuesday newspaper round-up: Brexit, Japan, retailers, buses

    Theresa May will insist she can find a way to deliver a Brexit deal that can win the backing of MPs when she visits Belfast in an attempt to reassure businesses and politicians in Northern Ireland she can break the deadlock in Westminster. The prime minister is due to chair a cabinet meeting on Tuesday morning before departing for a two-day visit to Northern Ireland to underscore her commitment to avoiding a hard border. – Guardian

    Europe’s top official offered Britain a legal guarantee that it would not be trapped by the Irish backstop last night but was immediately rebuffed by Brexiteer MPs. Martin Selmayr, the European Union’s most senior civil servant, spent 90 minutes with members of the Brexit select committee, who emerged saying that he was prepared to make significant concessions on Theresa May’s withdrawal agreement. – The Times

    …Selmayr told British MPs at a Brussels meeting that the UK must pay the £39 billion Brexit bill even if there is a no-deal exit. Mr Selmayr, who is the most senior EU civil servant, warned on Monday that the future relationship between the UK and EU could be jeopardised by a refusal to pay the financial settlement after no deal. – Telegraph

    There continue to be record levels of construction activity in Britain’s biggest regional cities, despite the uncertainty caused by Brexit. There was a sustained or increased level of development last year in offices, homes, hotels and student housing in Birmingham, Leeds and Manchester, according to Deloitte. – The Times

    The business secretary has been forced to admit the existence of a previously secret package of state aid to Nissan that could have been worth up to £80m had the carmaker gone ahead with plans to manufacture a new model X-Trail in Sunderland after Brexit. – Guardian

    Experts have warned that a new EU-Japan trade deal could pose a post-Brexit threat to British industry in the wake of Nissan’s decision to backtrack on expanding its Sunderland plant. The world’s biggest free trade deal came into force on 1 February and there are fears that Japan will stop using the UK as a manufacturing base, especially with a 0% tariff on car imports built into the EU-Japan agreement. – Guardian

    Transport giant FirstGroup is selling one of its biggest regional bus divisions in a bid to stem mounting losses. The Manchester operations, once worth about £100m in annual turnover, are to be sold in a cut-price deal, The Telegraph understands.

    Retailers turned to discounts to achieve the biggest rise in sales since last June, but were warned that their recovery may not last. Total retail sales increased by 2.2 per cent last month, a faster pace than the 1.4 per cent rise a year earlier, according to figures from the British Retail Consortium and KPMG, the accountancy firm. The growth also outstripped the three-month and one-year averages of 0.8 per cent and 1.2 per cent, respectively. – The Times

    The government could in future start taking equity stakes in Britain’s technology startups, the chairman of Innovate UK, Ian Campbell, has said, in a move which could give it more say in where businesses base their operations. “We are always looking to see what the impact of our funding is,” he said. – Telegraph

    A New York-based investment firm with ties to Warren Buffett has taken a £63 million stake in Metro Bank, it emerged yesterday. Ruane, Cunniff & Goldfarb, which manages the Sequoia Fund, has amassed a 5.2 per cent stake in the troubled challenger bank, a regulatory filing showed yesterday. – The Times

    Slack, the office messaging app that has been described as an email killer, has become the latest in a stampede of private tech companies filing to go public. The San Francisco company announced last night that it had filed documents with America’s Securities and Exchange Commission in preparation for a “public listing” of its shares. – Telegraph

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