London midday: Stocks wallow as pound flattened by EC growth projections
London stocks slipped deeper into the red by midday on Thursday as investors waded through a torrent of mixed corporate news, with the pound giving back earlier gains after the European Commission cut its economic growth forecasts for the UK on the back of Brexit uncertainty.
The FTSE 100 was down 0.4% to 7,496.46, while the pound was flat against the dollar at 1.3122 and 0.3% lower versus the euro at 1.1276.
UK growth is likely to slump from 1.5%, down from 1.8% previously, to 1.3% in 2018 and 1.1% in 2019, the EC said.
Since being hit by the Bank of England's dovish hike last week, Spreadex analyst Connor Campbell said sterling "has struggled to regain its pre-hike momentum, with the recent political chaos - and now these dismal forecasts - repeatedly undermining any potential comeback”.
Market participants were mulling over inflation figures from China, where the consumer price index and producer price index came in at 1.9% and 6.9% respectively in October, versus consensus estimates of 1.8% and 6.6%.
Also in focus was the latest housing data from the Royal Institution of Chartered Surveyors, which showed house prices were down in four areas of the country in October, with London, the South East, East Anglia and north-east England all showing declines.
Investors were also eyeing the resumption of Brexit talks.
Oanda analyst Craig Erlam said: “I doubt many are optimistic on progress given how previous meetings have gone. Time is fast running out for both sides to agree to move onto transition and trade talks before businesses begin planning for no deal worst case scenario.
“This would be particularly problematic for the UK so any sign that we’re headed in this direction could be bad for the pound. It will be interesting to see how vulnerable sterling is to these talks over the next couple of days.”
Meanwhile, there was no shortage of corporate news for investors to sink their teeth into.
Shares in luxury fashion house Burberry tanked as new CEO Marco Gobbetti said he wants to enhance the brand's luxury credentials by taking its products out of US stores where they sit alongside less desirable goods - a move that will hit revenues for two years.
Supermarket group Sainsbury’s declined as half-year profits dropped 9% and are not expected to turn positive in the full year.
Hikma Pharmaceuticals was under the cosh after it cut forecasts for its generics business for the third time this year as it blamed challenging market conditions in the US. Hikma also gave an update on its generic version of GlaxoSmithKline’s Advair for asthma, saying approval in the US faces more hurdles. The news hit shares of Vectura, which formulated the drug and provided the puffer device.
Housebuilder Redrow was on the back foot after it said trading in the first 18 weeks of the new financial year was in line with expectations, but noted a slight slowdown in sales in recent weeks.
Builders merchants Grafton was down despite reporting a rise in revenue in the 10 months to the end of October, while retailer Supergroup retreated despite posting a gain in revenue for the 26 weeks to 28 October.
Satellite group Inmarsat reversed earlier gains to trade lower despite posting a jump in third-quarter revenues, while Auto Trader was weaker even as it reported an increase in revenue and profit for the first half.
On the upside, Informa, the events and publishing company, was top of the leaderboard as it said underlying revenue was up 3.2% for the first 10 months of the year.
AstraZeneca rallied after saying it now expects full year earnings to be towards the "favourable end" of its previous guidance.
Retail property developer Hammerson rose after saying third-quarter total leasing volumes were up 17% on the same quarter last year.
Dixons Carphone was boosted by an upgrade to ‘buy’ from ‘hold’ at Investec, while Wizz Air flew higher after JPMorgan lifted its price target.
FTSE 100 - Risers
Informa (INF) 731.50p 4.13%
Hammerson (HMSO) 529.00p 1.44%
Coca-Cola HBC AG (CDI) (CCH) 2,595.00p 1.33%
Associated British Foods (ABF) 3,139.00p 1.10%
Vodafone Group (VOD) 218.10p 1.02%
AstraZeneca (AZN) 5,043.00p 0.98%
HSBC Holdings (HSBA) 744.90p 0.92%
Fresnillo (FRES) 1,321.00p 0.69%
Old Mutual (OML) 192.40p 0.63%
British Land Company (BLND) 600.00p 0.59%
FTSE 100 - Fallers
Burberry Group (BRBY) 1,805.00p -9.07%
Persimmon (PSN) 2,684.00p -3.17%
ITV (ITV) 156.30p -3.16%
Taylor Wimpey (TW.) 191.60p -2.94%
Marks & Spencer Group (MKS) 323.50p -2.88%
National Grid (NG.) 902.00p -2.83%
Barratt Developments (BDEV) 619.00p -2.52%
NMC Health (NMC) 2,988.00p -2.32%
Berkeley Group Holdings (The) (BKG) 3,590.00p -2.07%
Sainsbury (J) (SBRY) 228.90p -1.97%
FTSE 250 - Risers
Wizz Air Holdings (WIZZ) 3,159.00p 4.46%
Rank Group (RNK) 233.30p 2.55%
Euromoney Institutional Investor (ERM) 1,154.00p 2.03%
Playtech (PTEC) 823.00p 1.48%
Hochschild Mining (HOC) 236.10p 1.42%
PayPoint (PAY) 919.50p 1.32%
Sophos Group (SOPH) 616.50p 1.31%
Dixons Carphone (DC.) 154.50p 1.31%
3i Infrastructure (3IN) 198.40p 1.12%
Greene King (GNK) 542.00p 1.03%
FTSE 250 - Fallers
Hikma Pharmaceuticals (HIK) 939.50p -9.75%
Card Factory (CARD) 285.60p -7.06%
Vectura Group (VEC) 89.85p -6.84%
Inmarsat (ISAT) 522.50p -6.70%
Grafton Group Units (GFTU) 772.00p -6.20%
Halfords Group (HFD) 313.20p -5.86%
Go-Ahead Group (GOG) 1,691.00p -5.48%
Redrow (RDW) 607.00p -5.38%
Crest Nicholson Holdings (CRST) 517.50p -5.05%
Bovis Homes Group (BVS) 1,126.00p -4.90%