London midday: Stocks flat but pound continues to lose ground on euro
London stocks had almost crawled back to level ground by midday on Tuesday despite a wobble for miners after disappointing China data and several sets of corporate results that left investors unimpressed.
The FTSE 100 was down just over two point points at 7,529.52, with the more UK-focused FTSE 250 also recouping some of its earlier modest losses.
The pound extended its nine-month lows against the euro, down 0.2% to 1.1027, but was just below flat against the dollar at 1.3025.
With strong recent Chinese data having helped lift global sentiment, overnight trade data for July indicated the People's Republic's third quarter has got off to a slow start with imports only rising 11%, a sharp fall from June’s 17.2%, raising concerns that domestic demand may be softening.
Exports were also "a bit of a worry", said Michael Hewson at CMC Markets, as they rose 7.2%, below expectations of 11% and a fall from June’s 11.3%.
"This would appear to suggest that while global demand is still positive it may well not be as strong as initially thought, which might be a concern further down the line if it suggests a start of a trend."
Steel prices continue to rise in China however, noted broker SP Angel, as traders continue to buy stock ahead of expected winter environmental shutdowns, though iron ore prices lost some their gains on a build-up in iron ore port stocks.
"Iron ore demand is likely to be hit through the winter months though we expect good quality Australian iron ore to continue to gain market share as preferred feedstock," the analysts said.
German data was also weighing, with a trade surplus increasing to €21.2bn from €20.3bn, according to the Federal Office of Statistics, which was less than the €23.9bn which economists had penciled in.
"Equities remain mixed, and to a certain extent rangebound," said analyst Mike van Dulken at Accendo Markets.
"The FTSE holds its sideways channel, digesting the recent rally. The DAX outperforms after a breakout from the range since yesterday lunch. Poor China/German trade data dented sentiment, but a weaker USD helping commodities and positive corporate results keep the longer-term uptrend alive."
The international trade data added to some mixed UK staffing and retail numbers.
The July Markit/Recruitment & Employment Confederation jobs report showing staff appointments increasing at fastest rate for over two years as candidate availability drops. Permanent placements growth reached a 27-month record, while temp billings increased at the fastest rate for nearly two-and-a-half years, with the marked decline in staff availability amid historic low in unemployment was contributing pay increases.
Meanwhile, the BRC/KPMG retail sale monitor showed UK sales increased 0.9% in July on a like-for-like basis, down from 1.2% in June, with total sales slowing to 1.4% in July but against a strong comparative performance. UK retail sales growth slowed in July from the previous month's weather-assisted rally, as robust food sales counterbalanced falling non-food sales.
In company news, Paddy Power Betfair led the fallers for a second day in a row, having revealed the departure of CEO Breon Corcoran on Monday. Tuesday's results confirmed the 21% increase in earnings before interest, tax, depreciation and amortisation, but some analysts were concerned by the softening gaming revenues.
InterContinental Hotels fell as its 10% interim dividend increase was not enough to impress investors as growth in revenue per available room (revpar) slowed to 2.1% from the 2.7% at the start of the year.
Standard Life was down as news of increased outflows overshadowed better bottom-line growth. Ahead of its upcoming merger with Aberdeen next Monday, it posted a £5.6bn outflow from its flagship Global Absolute Return Strategies multi-asset fund, underscoring the logic behind the merger as both outfits try to offset competition from passive investment vehicles.
Burberry, which has strong exposure to China and Hong Kong, was down after the earlier trade data release.
British American Tobacco, Vodafone and Reckitt Benckiser were lower, with analysts citing a selling down of defensives and profit taking post-bounce.
Operational challenges at the AA's roadside assistance division in coming months led to Credit Suisse downgrading to 'underperform', with earnings per share forecasts cut up to 10% for coming years and the share's target price to 175p from 235p.
The Swiss bank also chopped its price target for Pearson to 690p from 730p, following cuts of 3%, 13% and 8% for adjusted earnings per share for the following three fiscal years. "We maintain a neutral rating but believe the stock looks expensive relative to peers in FY18 even excluding restructuring charges."
Workspace provider IWG watched its share price tumble after it reported a 6% fall in gross profits to £211.3m in the first half, or a 13% drop at constant currencies. The FTSE 250 company, formerly known as Regus, said its revenue for the six months to 30 June was £1.17bn, an 8.5% improvement, although when calculated at constant exchange rates it was a drop of 0.4%.
Specialist building products distributor SIG fell as it reported underlying operating profits down 16.1%, or 20.4% at constant exchange rates, to £45.7m in the six months to 30 June, while underlying profit before tax was off 20%, or 24.3% at constant currencies, to £38.3m.
Pets at Home was a good boy for investors, scurrying higher after barking out some strong first quarter numbers. Like-for-like sales were up 2.7%, with its merchandise LFL growth accelerating to 1.5%.
Bellway was slightly higher as the housebuilder said it expected to increase revenues 13% and on slightly stronger profits margins for the 12 months to 31 July.
Standard Chartered continued to rebound after its results.
FTSE 100 - Risers
Standard Chartered (STAN) 812.20p 1.17%
Royal Mail (RMG) 402.70p 1.00%
Ferguson (FERG) 4,716.00p 0.99%
Smiths Group (SMIN) 1,562.00p 0.84%
Royal Dutch Shell 'A' (RDSA) 2,214.00p 0.75%
Associated British Foods (ABF) 3,137.00p 0.71%
Mondi (MNDI) 2,007.00p 0.65%
Royal Dutch Shell 'B' (RDSB) 2,244.00p 0.63%
easyJet (EZJ) 1,287.00p 0.63%
Kingfisher (KGF) 307.20p 0.59%
FTSE 100 - Fallers
Paddy Power Betfair (PPB) 7,225.00p -4.30%
InterContinental Hotels Group (IHG) 4,274.00p -3.11%
Burberry Group (BRBY) 1,789.00p -1.11%
British American Tobacco (BATS) 4,999.50p -1.10%
Rio Tinto (RIO) 3,597.50p -1.09%
Standard Life (SL.) 438.60p -1.06%
Pearson (PSON) 624.00p -1.03%
Provident Financial (PFG) 2,051.00p -0.92%
Merlin Entertainments (MERL) 474.00p -0.88%
Whitbread (WTB) 3,873.00p -0.79%
FTSE 250 - Risers
Pets at Home Group (PETS) 184.20p 6.91%
Evraz (EVR) 268.10p 2.52%
Sports Direct International (SPD) 407.00p 2.44%
PayPoint (PAY) 886.00p 2.37%
Nostrum Oil & Gas (NOG) 417.20p 2.18%
Thomas Cook Group (TCG) 118.80p 1.97%
Ferrexpo (FXPO) 266.50p 1.68%
Genus (GNS) 1,778.00p 1.48%
IG Group Holdings (IGG) 642.50p 1.42%
Cairn Energy (CNE) 173.90p 1.40%
FTSE 250 - Fallers
IWG (IWG) 315.30p -8.08%
AA (AA.) 188.50p -6.22%
SIG (SHI) 163.30p -4.22%
Just Group (JUST) 147.10p -2.97%
CLS Holdings (CLI) 204.00p -2.86%
Acacia Mining (ACA) 180.20p -2.75%
Millennium & Copthorne Hotels (MLC) 454.50p -2.32%
Hikma Pharmaceuticals (HIK) 1,396.00p -2.31%
Ultra Electronics Holdings (ULE) 1,951.00p -2.11%
QinetiQ Group (QQ.) 237.00p -1.99%