London midday: Stocks extend losses as jitters set in, earnings avalanche digested
London stocks had extended losses by midday on Wednesday as jitters set in ahead of US President Trump's meeting with EU Commission President Jean-Claude Juncker, with a deluge of earnings news to keep investors busy until then.
The FTSE 100 was down 0.6% to 7,661.93, while the pound was up 0.1% against the dollar at 1.3157 and flat versus the euro at 1.1244.
The meeting between Trump and Juncker, due to take place at the White House, comes after the US administration decided to impose tariffs on all imported European cars.
Tweets from Trump ahead of the meeting were doing little to calm nerves. "Tariffs are the greatest!" was one of his gems, while he also tweeted that the US and the EU should drop all tariffs, barriers and subsidies. "That would finally be called Free Market and Fair Trade!" he said.
IG analyst Chris Beauchamp said: "Yesterday’s positive tone to equity markets has been replaced by caution as investors wait to see whether the Trump/Juncker meeting will produce any fireworks. Mr Trump’s suggestion of imposing tariffs on all Chinese imports has uncomfortable implications for the EU, since it indicates he may not shrink from imposing them on all-important car imports from Europe, ramping up the trade war on the US’s other flank."
On the corporate front, meanwhile, there was no shortage of news.
Banks were under pressure after the Financial Conduct Authority suggested a basic savings rate for cash savings accounts, as it noted concerns that savers who stick to the same bank or building society get poor returns on their money. RBS and Lloyds shares were both down more than 1%.
Beauchamp said this would "doubtless hurt revenue at a time of (almost) record low interest rates".
Elsewhere, Vodafone shares declined as the company reported a slowdown in first-quarter organic service revenue, while Informa was weaker as it posted a drop in first-half pre-tax profit, mainly on the back of the completion of its merger with UBM.
Metro Bank was lower after raising a gross £303m in a share placing and reporting a four-fold jump in first-half profit.
Budget carrier Wizz Air hit turbulence as it posted a 14% drop in first-quarter pre-tax profit, while Indivior tumbled after saying the launch of a generic version of its opioid addiction treatment could have a much bigger impact on its 2018 results than it originally expected.
Fresnillo and Antofagasta were both in the red following second-quarter production reports, while Croda International was on the back foot as it posted a small rise in reported half-year profit even as sales dipped on the back of a stronger pound.
Bucking the trend, GlaxoSmithKline rose as the pharmaceutical giant outlined a new research and development programme and lifted its full-year earnings per share guidance.
ITV ticked up after unveiling a plan to focus on production and expand direct-to-consumer activities as the broadcaster announced a reduction in first-half earnings caused by the cost of the World Cup.
3i Group was higher as the private equity fund said net asset value for the quarter ending in June came in at 760p from 724p in the year to the end of March.
Brewin Dolphin gained as it reported a 6.5% increase in total funds under management for the quarter to 30 June, while Rathbone Brothers rose as it posted a 64% increase in first-half profits.
Tullow Oil gushed higher after saying it swung to a first-half pre-tax profit of $55m from a loss of $348m the year before, while property developer Capital & Counties edged up on the back of in-line interim results.
Victrex rallied after saying it has performed well since the end of the first half and that it remains on track for a strong full-year 2018.
Things were just as busy on the broker note front, with Berenberg initiating coverage of a host of housebuilders. Taylor Wimpey, Redrow, Bovis and Bellway were started a 'buy', while Persimmon, McCarthy & Stone, Crest Nicholson and Berkeley were started at 'hold'.
UBS initiated coverage of Thomas Cook at 'sell', while BT and Rio Tinto were cut to 'sector perform' and 'underperform', respectively, at RBC Capital Markets. B&M European Value Retail and Kingfisher were lifted by upgrades from Citi, while budget airline Ryanair was downgraded to 'reduce' at AlphaValue.
In macro news, figures from UK Finance showed mortgage approvals fell in June amid a stagnant housing market, though remortgage figures rose as borrowers sought out new deals ahead of a potential interest rate increase.
The number of new mortgages by the main high street banks fell 2.1% from a year earlier. Total mortgages for house purchases fell to 47,175 from 49,527 and loans for remortgaging rose to 29,819 from 28,832. Gross mortgage lending rose to £23.5bn from £23bn.
Elsewhere, a survey on the retail industry from the Confederation of British Industry showed growth eased in July while the outlook was weaker.
The CBI's quarterly distributive trades survey found that 32% of respondents reported a rise in sales volumes in July compared to a year ago, while 12% said they were down, giving a balance of +20%. This was down from a nine-month high of +32% in June but above expectations for a drop to +15%.
The outlook for the coming month was gloomier, however, with retailers expecting sales volumes to flatten out.
CBI principal economist Alpesh Paleja said: "While the heatwave has boosted retail sales in recent months, we may be seeing some early signs of a cooling off, with orders falling in the year to July and retailers expecting no growth in sales next month.
"Indeed, the long-term challenges facing the retail sector are significant. Continually subdued real wage growth means that households are still feeling the pinch, and retailers are still grappling with deeper structural issues, such as digital disruption."
Market Movers
FTSE 100 (UKX) 7,661.93 -0.61%
FTSE 250 (MCX) 20,809.49 -0.21%
techMARK (TASX) 3,561.00 -0.60%
FTSE 100 - Risers
3i Group (III) 953.60p 3.52%
Taylor Wimpey (TW.) 175.15p 1.68%
Barratt Developments (BDEV) 529.41p 1.42%
Persimmon (PSN) 2,491.00p 1.38%
Smith (DS) (SMDS) 507.40p 1.28%
Berkeley Group Holdings (The) (BKG) 3,747.00p 1.24%
Associated British Foods (ABF) 2,463.00p 1.11%
GlaxoSmithKline (GSK) 1,573.80p 1.09%
Next (NXT) 5,982.00p 0.94%
Burberry Group (BRBY) 2,154.00p 0.89%
FTSE 100 - Fallers
Fresnillo (FRES) 1,047.50p -5.29%
Informa (INF) 817.80p -3.79%
InterContinental Hotels Group (IHG) 4,756.00p -3.08%
Rio Tinto (RIO) 4,151.00p -2.48%
Vodafone Group (VOD) 174.23p -1.93%
BT Group (BT.A) 219.70p -1.88%
Standard Chartered (STAN) 685.44p -1.81%
BHP Billiton (BLT) 1,676.60p -1.52%
BAE Systems (BA.) 660.20p -1.46%
Direct Line Insurance Group (DLG) 334.60p -1.39%
FTSE 250 - Risers
Brewin Dolphin Holdings (BRW) 356.20p 5.89%
B&M European Value Retail S.A. (DI) (BME) 429.17p 4.42%
Tullow Oil (TLW) 225.50p 3.92%
PZ Cussons (PZC) 223.60p 3.52%
Britvic (BVIC) 841.00p 3.32%
Close Brothers Group (CBG) 1,617.00p 2.99%
Sophos Group (SOPH) 529.50p 2.42%
QinetiQ Group (QQ.) 277.40p 2.25%
Bovis Homes Group (BVS) 1,148.50p 2.23%
Redrow (RDW) 545.00p 2.06%
FTSE 250 - Fallers
Indivior (INDV) 282.60p -15.26%
Metro Bank (MTRO) 3,276.00p -4.27%
Wizz Air Holdings (WIZZ) 3,410.00p -4.16%
BCA Marketplace (BCA) 227.24p -4.12%
Contour Global (GLO) 240.00p -3.23%
IP Group (IPO) 126.40p -3.07%
Charter Court Financial Services Group (CCFS) 341.10p -3.03%
Energean Oil & Gas (ENOG) 515.00p -3.01%
Rathbone Brothers (RAT) 2,418.00p -2.97%
Weir Group (WEIR) 1,895.00p -2.82%