London midday: Stocks turn lower despite solid manufacturing data
London stocks had turned lower by midday on Friday despite a strong reading on the UK manufacturing sector and a weaker pound, with bank stocks in the red as RBS announced the closure of one in four branches.
The FTSE was down 0.3% to 7,303.39, while the pound was off 0.1% against the euro at 1.1349 and 0.2% lower versus the dollar at 1.3502, as encouraging manufacturing figures failed to provide any support.
Reported activity in the UK manufacturing sector picked up in November, hitting its highest level since August 2013, according to a survey released earlier.
The Markit/CIPS manufacturing purchasing managers' index rose to 58.2 from October's 56.6, which was revised up from 56.3. This marked a 51-month high and was ahead of analysts' expectations for a reading of 56.5.
A reading above 50.0 indicates expansion, while a reading below signals contraction.
Manufacturing production expanded at the fastest pace since September 2016 and to one of the greatest extents during the past four years. This was attributed to stronger inflows of new orders, reflecting solid domestic demand and steeper gains in new export business
Howard Archer, chief economic adviser at the EY ITEM Club, said "The outlook for manufacturing appears mixed. Domestic conditions look challenging despite November’s healthy orders. Increased prices for capital goods and big-ticket consumer durable goods, weakened consumer purchasing power, and economic and political uncertainty threaten to hamper manufacturers. Businesses’ willingness to invest and buy capital goods is being tested by persistent weak UK economic activity as well as Brexit uncertainties."
On the export side, Archer noted that the very competitive pound and healthy global demand were helping UK manufacturers compete in foreign markets.
“The weakened pound also appears to be encouraging some companies to switch to domestic sources for supplies. Significantly, the Bank of England regional agents reported in their November survey of business conditions that some manufacturers reported increased sourcing from domestic customers.”
Investors were also mulling news that the US Senate late on Thursday delayed a vote on the Republicans' tax reform bill until Friday due to problems with an amendment to address a large expansion of the federal budget deficit that is expected to result from the measure.
In corporate news, Royal Bank of Scotland was in the red after saying it will close 259 branches and cut 680 jobs as customers shift to online banking. Barclays and Lloyds also traded lower.
Barclays was also in focus after it completed the sale of a 7.0% stake in Barclays Africa Group Limited to bring down its total shareholding to 14.9%.
Countryside Properties was on the back foot after private equity firm Oaktree Capital - its largest shareholder - sold a 15% stake in the group.
Indivior bucked trend, surging 8% as it received approval from the US drug regulator to market its once-monthly injectable treatment for moderate to severe opioid use disorder, which analysts believe could lift company sales well north of $1bn.
In broker note action, Royal Mail was dented by a downgrade to 'sell' from 'hold' at Deutsche Bank, while Babcock International was under the cosh after Morgan Stanley downgraded the stock to 'equalweight' from 'overweight' and slashed the price target.
Pendragon was lower as JPMorgan initiated coverage of the stock at 'underweight', while Vesuvius was hit by an initiation at 'underweight' by Barclays.
FTSE 100 - Risers
Anglo American (AAL) 1,376.00p 1.25%
Convatec Group (CTEC) 196.20p 1.13%
London Stock Exchange Group (LSE) 3,820.00p 1.08%
Paddy Power Betfair (PPB) 8,410.00p 1.02%
easyJet (EZJ) 1,420.00p 1.00%
GlaxoSmithKline (GSK) 1,288.67p 0.72%
Randgold Resources Ltd. (RRS) 6,820.00p 0.66%
Ferguson (FERG) 5,365.00p 0.66%
Imperial Brands (IMB) 3,081.00p 0.54%
BP (BP.) 491.55p 0.50%
FTSE 100 - Fallers
Babcock International Group (BAB) 677.24p -2.83%
3i Group (III) 883.50p -1.94%
Barclays (BARC) 190.03p -1.79%
Johnson Matthey (JMAT) 2,977.00p -1.78%
Mediclinic International (MDC) 555.50p -1.77%
St James's Place (STJ) 1,193.00p -1.73%
Prudential (PRU) 1,829.00p -1.61%
SSE (SSE) 1,347.00p -1.61%
Kingfisher (KGF) 328.70p -1.59%
G4S (GFS) 252.60p -1.56%
FTSE 250 - Risers
Indivior (INDV) 401.40p 8.25%
Inmarsat (ISAT) 510.00p 5.61%
P2P Global Investments (P2P) 810.00p 2.79%
Petrofac Ltd. (PFC) 431.30p 2.54%
McCarthy & Stone (MCS) 168.90p 2.36%
Wizz Air Holdings (WIZZ) 3,418.00p 2.21%
Greencore Group (GNC) 214.50p 2.09%
Hochschild Mining (HOC) 233.60p 1.96%
Domino's Pizza Group (DOM) 331.50p 1.87%
ZPG Plc (ZPG) 328.60p 1.77%
FTSE 250 - Fallers
Countryside Properties (CSP) 345.80p -5.13%
Travis Perkins (TPK) 1,543.00p -4.10%
Royal Mail (RMG) 424.60p -3.91%
Vesuvius (VSVS) 540.50p -3.57%
Elementis (ELM) 264.50p -2.90%
Spire Healthcare Group (SPI) 239.70p -2.84%
Rank Group (RNK) 239.60p -2.72%
Pets at Home Group (PETS) 169.50p -2.70%
Millennium & Copthorne Hotels (MLC) 575.00p -2.54%
Brown (N.) Group (BWNG) 275.70p -2.23%