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FTSE rebounds as Trump tempers trade tensions

FTSE 100 rebounds from previous session losses as Trump hints at trade settlement with China in coming weeks, despite both sides increasing tariffs on exports.

FTSE rebounds as Trump tempers trade tensions

The FTSE 100 has rebounded from losses in the previous session as US President Donald Trump hinted at a trade settlement with China in the coming weeks, despite both countries implementing tariff increases.

The UK blue-chip index climbed 73 points, or 1%, to 7,226, as Trump said he felt trade talks with China were ‘going to be very successful’ when they resumed.

On Monday, Trump said he was considering raising tariffs on the remaining $300 billion (£232 billion) of goods imported from China, having already slapped an increased rate of 25% on $200 billion of Chinese exports on Friday. China retaliated yesterday by announcing tariffs of between 5% and 25% on around 5,000, or $60 billion worth, of US exports from 1 June.

‘Yesterday our China economists put a 60% indicative probability that the two sides cannot reach a deal in May and tariffs will be imposed on the remaining Chinese exports, including mostly consumer goods,’ Deutsche Bank’s Jim Reid said.

‘The team do expect the two sides to reach a deal eventually (possibly at the G20 in late June), however note that this could take a few months.’

Vodafone (VOD) endured a second day in the red, down 1.2p at 130.6p after confirming market suspicions it would slash its dividend.

The mobile operator said it would be cutting its 2018 full-year dividend to 9 eurocents a share from 15.07 eurocents, below the 14.55 eurocents that had been expected.

Nick Read, Vodafone’s recently appointed chief executive, went back on the business’s previous promise to maintain the hefty dividend, planning instead to put the funds towards building its 5G networks.

The money would also be used, he said, to complete Vodafone’s acquisition of the European assets of US telecoms company Liberty Global (LBTYA.O).

‘Whether today proves to be an inflection point remains to be seen, but Vodafone is setting its sights high,’ said Interactive Investor head of markets Richard Hunter.

‘Now that the challenges are in plain sight, perhaps investors will give consideration to some of the potential for the company, and with the market consensus remaining stubbornly at a "buy", there is clearly already an optimistic following.’

The FTSE 250 rose 210 points, or 1.1%, to 19,337, with Greggs (GRG) jumping 13.4% to £20.30.

The high street baker said the popularity of its vegan sausage rolls continued to grow, resulting in materially higher sales and profits forecasts in 2019.

Since it launched the vegan-friendly snack in January, Greggs has upgraded guidance several times, unveiled a special dividend and added around £700 million to its market value.

‘Not a bad contribution for a humble bit of pastry filled with a meat substitute,’ AJ Bell investment director Russ Mould said.

‘This is not the only reason like-for-like sales have been shooting the lights out at Greggs; investment in the range and quality of products it sells in recent years has turned it from a humble budget baker to a food-on-the-go destination for busy consumers.

AJ Bell (AJB) slid 9% to 405p, despite good results for the online stockbroker in its second quarter, as investors took profits. 

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