London midday: Stocks flat as investors eye US earnings; Hammerson tanks
London stocks were steady by midday on Friday as investors kept an eye on the geopolitical situation, with the latest Chinese trade data in focus and US bank earnings eyed.
The FTSE 100 was flat at 7,255.89, having been a touch weaker at the open, underperforming its European peers as the pound rose 0.4% against the dollar and the euro to 1.4291 and 1.1584.
A stronger sterling tends to dent the top-flight index as around 70% of its constituents derive most of their earnings from overseas.
IG analyst Joshua Mahony said: "The FTSE has continued to underperform its peers this morning, with the index trading in the red despite gains across German, Spanish and French indices. Dovish minutes from the ECB yesterday, coupled with a wider story of USD weakness has ensured the pound continues to outperform against its main peers. With the pound hitting a two-month high against the dollar and ten-month high against the euro, it comes as no surprise that the internationally focused FTSE 100 suffers."
Data out of China earlier showed a surprise monthly trade deficit in March for the first time in 13 months. China's trade balance swung to a deficit of $4.98bn from a surplus of $33.7bn the month before, versus expectations for a surplus of $19.6bn.
Meanwhile, geopolitics remained in focus after UK Prime Minister Theresa May and US President Trump agreed during a late-night phone conversation that Syria’s suspected use of chemical weapons should not go unchallenged.
Downing Street said Cabinet ministers had agreed "on the need to take action" to "deter further use of chemical weapons" after concluding that it was "highly likely" the Assad regime was behind the chemical attack.
Transport Minister Jo Johnson later said there had been no decision to take military action at this point.
Spreadex analyst Connor Campbell said: "News - well a tweet from Trump - that the US could re-join the Trans-Pacific Partnership appears to be countering the threat of military action in Syria following a unanimous decision from Theresa May’s Cabinet that the use of chemical weapons must be challenged."
Across the pond, earnings were due from banking giants JPMorgan Chase, Wells Fargo and Citigroup as they kick off the US earnings season.
In UK corporate news, London Stock Exchange edged higher as it appointed Goldman Sachs veteran David Schwimmer as its new chief executive.
Elsewhere, software company Sage Group tumbled after cutting its full-year organic revenue growth guidance, reflecting inconsistent operational execution.
Shopping centre owner Hammerson also suffered sharp losses as French real estate investment trust Klepierre said it does not intend to make an offer for the company after its second approach was rebuffed. Klepierre said it was abandoning its pursuit "after careful consideration" as Hammerson "did not provide any meaningful engagement with respect to the increase proposal".
Rolls-Royce was in the red after saying that it plans to step up the number of inspections it carries out on the Trent 1000 jet engines, a move that will lead to more disruption for customers and higher costs
There was a lot going on the broker note front. Fidessa was lifted to ‘equalweight’ at Barclays, while British Airways and Iberia parent IAG was a high riser as it was upgraded to ‘hold’ at HSBC a day after revealing it had taken a minority stake in Norwegian, which it is considering making an offer for.
Ultra Electronics was boosted by an upgrade to ‘hold’ at Berenberg.
Flybe was cut to ‘hold’ at HSBC, while Royal Mail was downgraded to ‘underperform’ at RBC Capital Markets and TalkTalk was cut to ‘sector perform’ at RBC. Lloyds was downgraded to ‘hold’ at HSBC and Wood Group was cut to ‘equalweight’ at Morgan Stanley.
Halma and Hill & Smith were initiated at ‘buy’ at Berenberg, while Renewi was initiated at ‘hold’.
Virgin Money was started at ‘hold’ at HSBC.
FTSE 100 - Risers
Micro Focus International (MCRO) 1,323.50p 5.16%
GKN (GKN) 451.00p 2.64%
Mondi (MNDI) 1,954.50p 2.49%
Smith (DS) (SMDS) 500.87p 2.11%
Whitbread (WTB) 3,870.00p 1.60%
NMC Health (NMC) 3,422.00p 1.54%
International Consolidated Airlines Group SA (CDI) (IAG) 617.00p 1.38%
Anglo American (AAL) 1,692.40p 1.32%
Rentokil Initial (RTO) 276.70p 1.28%
Barratt Developments (BDEV) 557.00p 1.20%
FTSE 100 - Fallers
Sage Group (SGE) 592.86p -11.78%
Royal Mail (RMG) 556.60p -2.49%
easyJet (EZJ) 1,632.00p -1.75%
Rolls-Royce Holdings (RR.) 871.20p -1.13%
British American Tobacco (BATS) 4,129.50p -1.07%
Old Mutual (OML) 235.50p -0.97%
BP (BP.) 499.88p -0.92%
TUI AG Reg Shs (DI) (TUI) 1,576.50p -0.66%
Pearson (PSON) 765.00p -0.55%
G4S (GFS) 252.10p -0.51%
FTSE 250 - Risers
Ultra Electronics Holdings (ULE) 1,433.38p 6.57%
Capita (CPI) 148.80p 5.42%
Greene King (GNK) 554.60p 5.04%
Hunting (HTG) 765.50p 4.93%
IP Group (IPO) 133.37p 4.03%
Spire Healthcare Group (SPI) 231.60p 3.76%
Euromoney Institutional Investor (ERM) 1,304.00p 3.49%
Go-Ahead Group (GOG) 1,870.00p 3.31%
Polymetal International (POLY) 684.20p 3.23%
Kier Group (KIE) 1,013.00p 3.00%
FTSE 250 - Fallers
Telecom Plus (TEP) 1,098.00p -10.73%
Hammerson (HMSO) 464.69p -10.64%
Wood Group (John) (WG.) 527.20p -5.35%
Greencore Group (GNC) 152.32p -2.95%
WH Smith (SMWH) 1,967.00p -2.53%
Dunelm Group (DNLM) 556.00p -2.46%
Cairn Energy (CNE) 215.60p -2.27%
Bakkavor Group (BAKK) 176.00p -1.68%
Fidelity China Special Situations (FCSS) 236.50p -1.66%
TalkTalk Telecom Group (TALK) 122.10p -1.61%