FTSE edges up as trade talk anxiety boosts defensives
Britain's top share index inched up on Tuesday as investors looked to U.S.-China trade talks set to kick off on Wednesday, while results fromPersimmon , Wood Group and Aggreko impressed and BHP Billiton disappointed.
Hopes that trade tensions will ease helped Asian stocks gain, while U.S. President Trump's criticism of Federal Reserve interest rate hikes in a Reuters interview weighed on the dollar and boosted the euro and sterling.
Investors' anxieties over trade and politics have driven them to cut exposure to risk and move into safer-looking high-dividend stocks.
"It's more a function of coming closer to the later stage of the (economic) cycle. We've been raising cash and selling some positions," said Frederique Carrier, managing director and head of investment strategy for RBC Wealth Management.
Results drove the biggest moves across the UK market.
BHP Billiton (L:BLT) shares fell 1.4 percent, the biggest FTSE 100 faller, after the global miner reported a 33 percent jump in annual underlying profit but flagged cost pressures at some operations and a delay in future savings.
BHP's final dividend, a record $0.63 a share, also disappointed the market.
"We think this could have been higher as net debt is less than $11 billion and the sale of U.S. onshore has been agreed," wrote Goldman Sachs (NYSE:GS) analysts.
Shares in housebuilder Persimmon (L:PSN) were among top gainers, up 1.3 percent, after it reported a 13 percent increase in half-year pretax profit and said it expected to see further growth.
"Margin progress is very impressive given the already high level and as others are struggling to make much progress," said Liberum analyst Charlie Campbell.
Defensive, high-yielding stocks including consumer staples and healthcare have outperformed recently as investors grow more cautious.
The dollar-earning exporter stocks rose despite a stronger pound, which usually weighs on their shares.
The unraveling negative correlation between sterling and the FTSE 100 poses new issues for investors who have up to now relied on a mechanical relationship between the two, as Britain's exit from the European Union draws nearer.
"A fall in currency this time around may not lead to as strong an increase in exporters," said RBC's Carrier.
Leading mid-caps, oil services firm Wood Group (L:WG) jumped 5.9 percent after its first-half profit came in at the higher end of its forecast, and it raised the cost-savings target for its merger with Amec Foster Wheeler by $40 million.
Temporary power provider Aggreko (L:AGGK) rose 4.3 percent after HSBC upgraded the stock to 'buy' from 'hold'.
"We think that much of Aggreko's woes are cyclical rather than structural," wrote HSBC analysts.
On the small-cap index, Hostelworld (L:HSW) shares tumbled 8 percent after the online booking platform forecast bookings would stagnate this year.