FTSE starts day on higher note on Tesco results and China stock market link

The FTSE 100 opened 0.2% higher at 7,253 Wednesday, boosted by news about a linkup between China’s largest stock market and London and by better-than-expected results from UK retail giant Tesco.

The head of China’s central bank Yi Gang said early Wednesday that by the end of this year China will launch a trading link connecting the Shanghai stock market with London. 

The link will allow traders in the world’s most populous country access to London shares while also making it possible for foreign traders to trade in Shanghai, the world’s fifth largest stock market. 

China also plans to further ease foreign ownership caps on Chinese banks by the end of June to permit foreign securities firms to hold 51% in Chinese banks, up from the current 49%. The country plans to abolish the cap altogether in three years.

The FTSE’s gains build on a stronger close in the US markets Tuesday prompted by encouraging comments from China’s president about the opening up of the country’s markets and an easing of trade tensions between the US and China.

The Dow Jones rose 429 points to close at 24,408 while the broader-based S&P 500 climbed 44 points to 2,657.

Asian trade was mixed with Japan’s Nikkei 225 closing down 80 points at 21,714 but Hong Kong's Hang Seng index rising 222 at 30,951 despite China posting a lower-than-expected increase in its consumer prices in March. The country’s consumer price index was 2.1% higher against expectations of a 2.5% increase.

The pound traded at $1.4183 early from $1.4159 at the London close on Tuesday.

Tesco results beat forecasts, ASOS also positive on growth

UK retailer Tesco reported a 28.4% increase in operating profits to £1.644 billion, surpassing analysts’ forecasts. Operating profits in the last financial year were £1.28 billion. The company said it was on track to deliver its medium-term targets which include improving operating margins to 3.5% from the current 2.9%.

Online fashion retailer ASOS also reported strong results with first-half retail sales rising 27% to £1.13 billion and a pre-tax profit of £29.9 million pounds, both of which were broadly in line with expectations.

European Commission raids sports betting firms

The European Commission on Tuesday raided the offices of a number of companies involved in sports broadcasting rights as part of an investigation into a possible cartel.  

One of the offices was also Fox Networks Group’s London unit. The Commission said it carried out simultaneous inspections in several European countries but didn’t name the companies involved. 

The raids were described as a preliminary step into an investigation about suspected anticompetitive practices. 

Budget carrier easyJet has submitted a revised expression of interest for a restructured Alitalia as part of a consortium but did not reveal any details yet. The proposal follows on from an offer for parts of Italy’s main airline made in October last year.

Shopping centre operator Hammerson received a revised takeover proposal from French property company Klépierre of 635 pence per share, with 50 percent in new Klepierre shares and the rest in cash. However the board rejected the offer and said that it was only a marginal increase on Klépierre's proposal of 615 pence in March which was rejected.

Focus on Fed minutes

When the US markets opens later today the focus will be on the release of the minutes of the Federal Reserve’s first meeting under new chairman Jerome Powell. 

Federal Reserve policy makers will have also discussed the implications of the US trade dispute with China and the minutes will provide an insight into their expectations of the outlook if the dispute escalates.