FTSE close to the flat line as China seeks sanctions against the US

The FTSE opened the morning trading session up 0.1%, just about holding above the red line as trade tensions between the US and Asian countries take a turn for the worse.

The stakes have moved up in the global trade tariff dispute with China approaching the World Trade Organization to ask for permission to impose sanctions against the U.S., separate from the tariff battle between the world’s largest economies. The country wants to impose sanctions of $7 billion a year because of the USA’s non-compliance with a ruling in a dispute over US dumping duties.

Stocks fell across Asian markets this morning, and particularly in Japan as the country has become the latest target of US President Trump’s vitriol about trade. He commented late last week that his good relationship with Japan will end soon “when I tell them how much they have to pay.” The Nikkei reacted with a 0.5% drop this morning despite the fact that the yen strengthened marginally against the dollar.

Pound drops as MPs plan to challenge Prime Minister

The pound continues to seesaw in line with Brexit news. This morning it lost just over 0.2% against the dollar on reports that 50 MPs have met to discuss how to relieve Theresa May of her post. Technically Parliament has to pass a Brexit bill before 29 March, the deadline for the UK to leave the Union, but there are other critical deadlines in place between now and then, including the EU summit on 17-18 October by when the UK was expected to have a Brexit agreement in hand.

But as different parts of the government continue to pull in different directions the country is instead hurtling towards a no-deal Brexit, potentially economically the worst option and one that has kept sterling under pressure since August.

MPs are expected to call for a vote of no confidence during or after the Conservative party conference in few weeks’ time. A challenge to Theresa May’s leadership would only continue to deflect from Brexit and instead keep the focus on who is in political power, which in turn would be negative for the pound.

Dunelm’s trading performance beats market expectations

Hot weather doesn't exactly inspire a desire to splash out on beds, sofas and rugs, especially when your wages aren't going up by much and there's beer to be drunk.

It's no wonder then that Dunelm has struggled recently -- so it's somewhat of a relief to see that it hasn't warned on profits again after issuing disappointing updates in May and July.

Profits and margins are line with management's revised guidance, online sales are doing well and the dividend has inched higher. 

Investors, though, could be disappointed that scant details have been provided about the company's current trading performance.

There was some good news on the wages front this week: they rose 2.6% in August, beating market expectations for a 2.4% improvement. But the real chance of a no-deal Brexit is still hanging over the high street like a dark cloud, making it tough for the likes of Dunelm to turn a corner fast.

Galliford Try start to find its feet again

Galliford Try is starting to find its feet again after getting seriously knocked about by Carillion's collapse.

The Aberdeen bypass is at last making good progress and it's pleasing to see there's be no more write-downs on that troubled project.

The upshot of Carillion's demise is that it has taken a competitor out of the market, leaving more work for the likes of Galliford Try to pick over, while encouraging more realistic bid pricing.

The housing business has notched up another solid performance, with good cost control putting the company in a stronger position to weather any downturn in construction markets.

So far though demand appears to be holding up nicely, indicating interest rates haven't risen high enough to spook first-time home buyers still enjoying government support via Help to Buy.