FTSE enjoys first week of gains since May, though oil weighs
Trump says Washington hopes for quick trade deal with United Kingdom
LONDON (Reuters) – Falls in energy and bank stocks dampened an otherwise positive week for Britain’s top share index, while changes in broker recommendations prompted moves in easyJet, WPP and Royal Mail.
US President Donald Trump on Saturday met with British Prime Minister Theresa May and said he hoped the United States can quickly seal a bilateral trade deal with the United Kingdom.
“We’re working on a trade deal which will be a very, very big deal, a very powerful deal, great for both countries,” Trump told reporters as he met with May on the sidelines of the G20 in Hamburg.
“I think we’ll have that done very, very quickly,” Trump said.
Britain cannot seal a separate trade deal with the United States until it has left the European Union in 2019.
In London on Friday, Britain’s blue chip FTSE 100 index ended up 0.2% at 7,350.92 points, reversing earlier losses after weak housing data drove sterling to a nine-day low, helping the index’s dollar earners.
The Bank of Israel on Friday set its representative rate for the British pound at NIS 4.5699.
Non-farm payrolls data from the US showing stronger than expected jobs growth also helped support gains that led UK blue chips to their first positive week since the end of May.
Oil & gas stocks dropped however after oil prices fell more than 1% following a rise in US output, with Royal Dutch Shell and BP down 0.9% each.
“Regardless of what OPEC try and do, it seems the supply overhang is preventing any kind of sustainable rally,” Ian Williams, strategist at Peel Hunt, said.
Financials were also weaker, with HSBC and Barclays both in negative territory, cooling after the sector hit its highest level since the end of February in the previous session on expectations of higher interest rates.
Supporting the index, shares in easyJet rose 5.3% after Credit Suisse upgraded the budget airline to “outperform” on the back of an improvement in summer trading.
Utility Centrica was among biggest gainers, up 2.8% on takeover rumors, although analysts at Jefferies were skeptical.
Royal Mail was the worst performer on the day after UBS cuts its rating to “sell” from “neutral,” saying the company would continue to see sub-market growth in parcel volume due to its need to modernize.
WPP also fell 2.7% after Exane BNP Paribas cut the advertising firm to “underperform” and downgraded French peer Publicis to “neutral,” saying they need to evolve more quickly.
“Marketing is driven by mobile, nimbler brands, e-commerce and automation/AI. These areas are dominated by platforms where agencies are sparse, raising the risk of lower mid-term growth,” analysts at Exane said.
“WPP & Publicis have good track records of adapting to industry changes. We would buy once evidence they have adapted mounts, or on a much greater valuation discount,” they added.
Outside of the blue chips, a strong trading update from retailer Dunelm sent its shares 5.4% higher to the top of the FTSE 250, which closed 0.1% higher.
In a second takeover in as many days for British small-caps, Cape shares soared 46% after French construction equipment maker Altrad Investment Authority said it would buy the oil services firm.
“It’s been a little surprising we have not seen more international buyers [for UK companies] given the fact that sterling has been so cheap,” said Andy Jackson, manager of the UK value opportunities fund at Miton. “I think there could well be more approaches.”