London midday: Miners drag on FTSE amid dollar strength, falling metals prices
London stocks fell sharply into the red by midday on Wednesday, dragged lower by weakness in the mining sector and as investors mulled over the latest UK inflation data.
The FTSE 100 was down 0.9% to 7,547.26, while the pound was off 0.2% against the dollar at 1.2702 and 0.1% firmer versus the euro at 1.1225.
Mining shares suffered heavy losses on the back of US dollar strength and falling metals prices, with Anglo American, Antofagasta, Glencore, BHP Billiton and Rio Tinto all under pressure.
A stronger greenback makes dollar-denominated commodities more expensive for holders of other currencies.
IG market analyst Joshua Mahony said: "Commodity prices have been sliding lower once more, with the rise in the dollar and continued fears over the US-China trade war denting confidence. Yesterday’s earnings-fuelled losses for Antofagasta have been carried through into today, with copper approaching bear market territory."
Meanwhile, the Turkish lira was gaining ground against the dollar after the country announced that it will implement retaliatory tariffs on some US products.
Neil Wilson, chief market analyst at Markets.com, said: "USDTRY is threatening to break below the 6 handle, but it could easily be a dead cat bounce as a sign of confidence returning. The imposition of punitive tariffs on a raft of US imports is hardly indicative of the Turkish authorities being ready to embark on some sensible monetary and fiscal measures to combat the crisis. If we see a repeat of yesterday’s price action, then a drift lower towards the 5 handle is possible today."
Back in the UK, market participants were focused on inflation figures for July, which showed a slight uptick for the first time since November, although the measure used to determine rail fare hikes came in lower than expected.
The consumer price index in July was up 2.5% on the same month a year ago, the Office for National Statistics revealed, with the rate picking up from 2.4% in the previous three months, as economists expected but undershooting the Bank of England's 2.6% forecast. CPI was flat on a month-on-month basis.
Core CPI, which excludes prices for fuel and food, remained at 1.9%, in line with forecasts. CPIH, the ONS's preferred measure as it included a measure of owner occupiers' housing costs, also remained unmoved, at 2.3%.
Factory gate inflation edged down from 3.3% to 3.1%, but input price inflation spiked up further from 10.2% to 10.9%.
“Transport tickets and fuel, along with often erratic computer game prices, drove up costs for consumers," said ONS head of inflation Mike Hardie. "On the other hand, there was a drop in prices for women’s clothing and footwear, and some financial services."
Meanwhile, Land Registry figures revealed average UK house prices increased 3.0% for June, beating the estimated 2.6% but down from May's revised-up 3.5%.
In corporate news, RBS ticked down as it confirmed it will pay an interim dividend of 2p a share on 12 October after reaching a final settlement with the US Department of Justice, while Hochschild Mining fell even as the gold digger raised its interim dividend by 42% following a solid first half.
Insurer Admiral bucked the trend, topping the FTSE 100 as it racked up strong gains as its first-half pre-tax profit beat expectations.
GlaxoSmithKline was not far behind as it reported positive results from clinical trials of its once-monthly injectable treatment for HIV, while generic pharmaceuticals maker Hikma Pharmaceuticals surged after lifting its full-year revenue forecasts for its top two businesses.
FTSE 250 infrastructure group Balfour Beatty rallied after reporting a rise in first-half profit as its turnaround programme bears fruit, hiking its interim dividend by 33% and saying it was confident of meeting its full-year expectations.
On the broker note front, Mitchells & Butlers and Greene King fizzed higher after upgrades at HSBC, while Esure was boosted to ‘hold’ by Berenberg.
Market Movers
FTSE 100 (UKX) 7,547.26 -0.85%
FTSE 250 (MCX) 20,439.20 -0.34%
techMARK (TASX) 3,537.76 -0.14%
FTSE 100 - Risers
Admiral Group (ADM) 2,065.00p 3.35%
WPP (WPP) 1,246.00p 1.84%
GlaxoSmithKline (GSK) 1,581.60p 1.38%
Paddy Power Betfair (PPB) 7,100.00p 1.14%
Rightmove (RMV) 4,939.00p 0.92%
NMC Health (NMC) 4,036.38p 0.86%
Royal Mail (RMG) 458.80p 0.86%
Direct Line Insurance Group (DLG) 331.60p 0.79%
Halma (HLMA) 1,414.00p 0.64%
easyJet (EZJ) 1,558.50p 0.58%
FTSE 100 - Fallers
Fresnillo (FRES) 918.70p -5.56%
Anglo American (AAL) 1,566.40p -4.73%
Antofagasta (ANTO) 847.20p -4.42%
Glencore (GLEN) 302.85p -4.28%
Evraz (EVR) 499.20p -3.55%
BHP Billiton (BLT) 1,642.00p -3.50%
Randgold Resources Ltd. (RRS) 5,122.00p -3.39%
Rio Tinto (RIO) 3,664.50p -2.93%
Micro Focus International (MCRO) 1,199.00p -1.72%
Vodafone Group (VOD) 175.72p -1.71%
FTSE 250 - Risers
Hikma Pharmaceuticals (HIK) 1,775.50p 7.80%
Syncona Limited NPV (SYNC) 270.50p 3.05%
Bank of Georgia Group (BGEO) 1,657.00p 2.33%
Balfour Beatty (BBY) 297.00p 2.31%
Clarkson (CKN) 2,735.00p 2.05%
Softcat (SCT) 834.00p 1.96%
FDM Group (Holdings) (FDM) 965.00p 1.90%
Mitchells & Butlers (MAB) 251.80p 1.86%
OneSavings Bank (OSB) 442.80p 1.61%
Riverstone Energy Limited (RSE) 1,222.00p 1.50%
FTSE 250 - Fallers
Kaz Minerals (KAZ) 568.20p -7.25%
Ferrexpo (FXPO) 161.25p -6.14%
Premier Oil (PMO) 113.77p -3.75%
Hochschild Mining (HOC) 163.35p -3.34%
Energean Oil & Gas (ENOG) 522.00p -3.33%
Investec (INVP) 493.60p -3.14%
Greencore Group (GNC) 173.15p -2.83%
Petrofac Ltd. (PFC) 617.60p -2.74%
Fidelity China Special Situations (FCSS) 222.26p -2.73%
Playtech (PTEC) 532.61p -2.63%