London midday: Stocks fall further as US tech earnings disappoint, RBS slides
London stocks had fallen further into the red by midday on Friday as sentiment was undermined by disappointing earnings from US tech companies and declines for Rolls-Royce and RBS.
Just before midday, the FTSE 100 was down 1.5% to 6,897.05, while the pound off 0.2% against the dollar at 1.2791 and flat versus the euro at 1.1272.
Earnings from tech giants Amazon and Alphabet set the tone for trading. Although Amazon topped the earnings per share forecast for the third quarter, it fell short on revenues and guidance. Meanwhile, Google parent Alphabet surpassed quarterly earnings per share estimates but missed revenue forecasts.
Amazon shares were down a whopping 10% in pre-market trade on Friday, while Alphabet slumped nearly 6%, with the Dow Jones and Nasdaq futures 0.9% and 2.2% lower, respectively.
"Any suggestion UK stocks might end the week on a more positive note has been swatted aside after the third quarter sales performance of Amazon and Google’s parent company Alphabet disappointed after the market close in the US," said Russ Mould, investment director at AJ Bell.
"Given the technology sector helped lead US indices to fresh highs in 2018 and is so dominant, its performance in the current earning season was always likely to be pivotal to investor sentiment."
There were no major UK data releases but in the US, third-quarter domestic product will be eyed at 1330 BST. Economists expect a reading of 3.3%, which would be a slowdown from 4.2% growth in the second quarter.
In individual company news, Rolls-Royce tanked after Bloomberg said the aerospace and defence giant has told its staff that it is far short of engines for the new Airbus A330neo jet and will only be able to deliver 10 of the 30 targeted engines by the end of the month.
Royal Bank of Scotland was in the red as third-quarter attributable profit of £448m came in short of City consensus of £507m and the bank warned of a more uncertain outlook.
Mining conglomerate Glencore fell as it said third-quarter copper production rose and lifted its full-year copper guidance, but cut its full-year oil output guidance, while Segro ticked a touch lower after saying it has exited the Belgian market.
On the upside, British Airways and Iberia parent IAG was the standout gainer as its third-quarter operating profit and revenue beat estimates.
Retirement products company Just Group was the standout gainer on the FTSE 250 a day after the Prudential Regulation Authority said it had delayed a decision on changing capital requirements for equity release mortgages. Broker Numis said this was good news for Just Group as three year phase-in would have been challenging.
In broker note action, Burberry was lifted to 'hold' from 'reduce' at HSBC, while Lloyds Banking Group was lifted to 'neutral' from 'underperform' by Macquarie. 888 Holdings was upgraded to 'hold' from 'sell' by Investec and ConvaTec was cut to 'neutral' from 'buy' at UBS.
Market Movers
FTSE 100 (UKX) 6,897.05 -1.53%
FTSE 250 (MCX) 18,294.34 -1.28%
techMARK (TASX) 3,211.64 -1.36%
FTSE 100 - Risers
International Consolidated Airlines Group SA (CDI) (IAG) 605.60p 3.10%
Randgold Resources Ltd. (RRS) 6,308.00p 1.77%
Paddy Power Betfair (PPB) 6,440.00p 0.86%
Severn Trent (SVT) 1,866.50p 0.57%
British American Tobacco (BATS) 3,626.00p 0.50%
Diageo (DGE) 2,687.50p 0.19%
easyJet (EZJ) 1,171.50p 0.17%
Associated British Foods (ABF) 2,354.00p 0.13%
Marks & Spencer Group (MKS) 285.00p 0.11%
Imperial Brands (IMB) 2,744.50p 0.04%
FTSE 100 - Fallers
Rolls-Royce Holdings (RR.) 796.80p -8.62%
Evraz (EVR) 494.20p -7.97%
Ocado Group (OCDO) 759.20p -7.82%
Royal Bank of Scotland Group (RBS) 224.00p -4.48%
Johnson Matthey (JMAT) 2,766.00p -4.36%
Scottish Mortgage Inv Trust (SMT) 455.88p -4.32%
Melrose Industries (MRO) 151.21p -4.20%
Hargreaves Lansdown (HL.) 1,735.00p -4.04%
WPP (WPP) 875.40p -3.89%
Micro Focus International (MCRO) 1,197.50p -3.85%
FTSE 250 - Risers
Just Group (JUST) 88.35p 5.94%
Vivo Energy (VVO) 116.42p 3.74%
888 Holdings (888) 185.10p 2.55%
Polypipe Group (PLP) 352.00p 2.39%
Playtech (PTEC) 473.90p 2.35%
Plus500 Ltd (DI) (PLUS) 1,385.00p 1.84%
Inchcape (INCH) 503.50p 1.15%
Domino's Pizza Group (DOM) 267.40p 0.94%
Weir Group (WEIR) 1,422.00p 0.92%
Dechra Pharmaceuticals (DPH) 2,180.00p 0.83%
FTSE 250 - Fallers
Sophos Group (SOPH) 399.40p -6.51%
Premier Oil (PMO) 100.00p -5.84%
Tullow Oil (TLW) 211.10p -5.72%
Travis Perkins (TPK) 1,020.50p -4.80%
Hastings Group Holdings (HSTG) 181.43p -4.66%
SIG (SHI) 108.00p -4.42%
Avast (AVST) 270.60p -4.04%
Baillie Gifford Japan Trust (BGFD) 751.00p -3.96%
Babcock International Group (BAB) 574.80p -3.91%
Elementis (ELM) 195.10p -3.89%