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Trade hopes boost FTSE as Plus500 crashes, Debenhams surges

Hopes of trade agreement between US and China coupled with breakthrough in Washington impasse buoys sentiment

Trade hopes boost FTSE as Plus500 crashes, Debenhams surges

The FTSE 100 has risen amid hopes the US and China are moving closer to a trade deal, as a breakthrough in Washington that could avoid another government shutdown further boosted optimism.

The UK blue-chip index rose 24 points, or 0.3%, to 7,153 as US and Chinese officials expressed optimism about the next round of trade talks, though a US Navy mission in the South China Sea loomed over negotiations.

It also appeared a tentative agreement had been reached between US Congress and the White House, offering President Donald Trump a watered-down funding package for his proposed Mexican border wall. 

The FTSE 100 also received a boost from a weakened pound, down against both the euro and dollar, to $1.285 against the US currency.

This comes ahead of the update Prime Minister Theresa May is due to give to  parliament later today, when she is expected to outline progress on a revised Brexit deal, having met with EU officials.

TUI (TUI) was the biggest FTSE 100 faller. Shares in the holiday operator, which issued a profit warning last week, fell 4% to 919.4p, after a sharp drop in first quarter earnings. Turnover rose 4.7% to €3.7 billion (£3.3 billion), but underlying losses increased from €36.7 million to €83.6 million.

Last year’s heatwave was again cited as an issue, as well as overcapacity in Spain and the weakness of sterling.  

‘Despite this, the sunshine is breaking through the clouds for the company’s cruises, with three new ships due to launch later this year, and holiday experiences which account for 70% of earnings,’ The Share Centre investment research analyst Ian Forrest said. ‘However, the company continues to expect earnings this year to remain flat.’  

Plus 500 (PLUS) was the big the focus on the FTSE 250, as shares in the online trader plunged 32.2% to £11.09 after warning 2019 profits would be hit by stricter regulation.

‘Plus500 has looked like an anomaly for some time,’ AJ Bell investment director Russ Mould said. ‘While its peer group have all had to downgrade earnings expectations because of tighter rules on contracts-for-difference – a high-risk way of betting on stocks, currencies, commodities and cryptocurrencies – Plus500 delivered a series of statements that kept saying it would beat earnings forecasts. Its run of good luck has come to an abrupt halt.’

The news also pulled down rival IG Group (IGG), with shares dipping 5.3% to 584.5p.

Debenhams (DEB) led the way among small caps after the troubled department store chain secured a £40 million lifeline from lenders.

Shares in the retailer jumped 34.3% to 4.2p after it secured a 12-month credit facility that would allow it to continue trading while it works out broad refinancing and a recapitalisation package. chief market analyst Neil Wilson said: ‘The worry is Debenhams is now living hand to mouth.

‘Nevertheless, this is an important step towards that refinancing deal and should help management to navigate what is going to be a very tricky few months. Disposals, especially Magasin in Denmark, are certainly on the cards, as well as store closures in the UK.’

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