By Emily Horton
London stock markets fell Thursday, as mining and energy names tugged on the broader FTSE 100.
Investors digested mixed political signals, including the latest trade developments between the U.S. and China. Caution followed the Wednesday release of minutes from the Federal Reserve’s January meeting, which showed the U.S. policy-setting committee on a split path for interest rates.
How are markets performing?
The FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +0.52% led the region’s top decliners, falling 0.7% to 7,180.85 after the index finished up 0.7% on Wednesday.
The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD -0.1084% climbed to $1.3066 from $1.3052 late in New York on Wednesday.
What’s driving the markets?
U.S. and Chinese negotiators have started to map out a deal to end the trade war between the world’s two largest economies, Reuters reported Wednesday night. “Optimism around the trade talks between the U.S. and China remains the main catalyst here, so we expect more [stock] gains in the short term,” said Konstantinos Anthis, head of research at ADSS.
On Wednesday, Wall Street investors reacted negatively initially to the meeting minutes revealing details behind the Fed’s decision last month to pause interest-rate hikes. The transcript indicated that officials were divided between those who believed that rate increases might be needed only if inflation accelerated beyond their baseline forecast and those who argued that tighter policy is necessary if the economy evolves as expected. The market dive was short-lived and by Wednesday’s close the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.48% was up 0.2%. U.S. stock futures are on track to open near flat Thursday.
In Brexit news, British Prime Minister Theresa May held “constructive” talks with European Commission president Jean-Claude Juncker, prompting speculation of some long-awaited progress in talks ahead of the March 29 split.
Which stocks are active?
Centrica PLC /zigman2/quotes/205228367/delayed UK:CNA +0.61% slumped by 11%, after the FTSE-100 energy company warned it will struggle to reach cash flow targets in 2019 as it comes under pressure from a cap on energy prices and lower-than-expected oil and gas production, the Financial Times reported.
A Share Centre analyst said this was “hardly surprising, given the warning on cash flow comes on top of pressures from the energy-bill cap and lower-than-expected income from the company’s share in EDF’s nuclear reactors.”
Centrica PLC had a target cash flow range of £2.1 billion to £2.3 billion and although the company met its target for 2018, chief executive Iain Conn warned 2019 would be a challenge.
Heavyweight miners were down, with Glencore PLC /zigman2/quotes/201400686/delayed UK:GLEN -0.40% , Fresnillo PLC /zigman2/quotes/201300065/delayed UK:FRES -0.22% and BHP Group /zigman2/quotes/203323256/delayed UK:BHP -0.09% all losing just over 1%.
The share price of Britian’s defense company BAE Systems PLC dropped by 7%, despite reporting 14% profit increase, after the weapons maker said that Germany’s ban on selling arms to Saudi Arabia could prove “difficult” for the company in the long run, City AM reported .
On a more upbeat note, shares in Barclays PLC /zigman2/quotes/208409333/delayed UK:BARC +2.46% , who reported its profits rose in 2018, added 4% on Thursday. The U.K. bank booked group pretax profits of £3.49 billion last year, while revenues were flat at £21.1 million. Analysts at Jefferies described the figures as “a bit dull, but possibly good enough.”