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London midday: Stocks maintain small losses as inflation holds steady

By Michele Maatouk

Date: Wednesday 17 Jul 2019

London midday: Stocks maintain small losses as inflation holds steady

(Sharecast News) - London stocks were still a touch lower by midday on Wednesday as investors mulled the latest UK inflation figures, amid renewed concerns about Sino-US trade relations.
The FTSE 100 was down 0.1% at 7,571.93, while the pound was flat against the dollar at 1.2402 and 0.1% lower versus the euro at 1.1056 as data from the Office for National Statistics showed that UK inflation remained at the Bank of England's target last month, in line with expectations.

The consumer price index came in at 2% in June as falls in the cost of petrol and energy were offset by clothing and food, the ONS figures showed. Core inflation, which strips out volatile food, alcohol and energy prices, edged up to 1.8% from 1.7%.

David Cheetham, chief market analyst XTB, said that while inflation remains at the BoE's 2% threshold, "governor Mark Carney and his fellow rate-setters are unlikely to place too great too great a weight on this with economic data still very much of secondary importance given that Brexit uncertainty continues to loom large".

"The pound earlier dropped to its lowest level since March 2017 as it dipped below the $1.24 handle against the US dollar and the currency continues to be pressured by Brexit-related concerns," he said.

"Remarks that Boris Johnson, the clear favourite to be announced as the next PM within a week, is willing to use unorthodox strategies in an attempt to bypass parliament and force through a no-deal by October 31st have done little to help the pound's plight and while this scenario remains unlikely, its represents a significant tail-risk for sterling."

More broadly, relations between the US and China were in focus again after US President Trump said on Monday that the two countries have a "long way to go" to work out a trade deal and warned that he could slap tariffs on $325bn of Chinese goods if he wants.

Han Tan, market analyst at FXTM, said: "Investors who are hopeful of a US-China trade deal in the near-term have once again been reminded of the tremendous gulf that persists between the world's two largest economies. The path towards correcting US-China trade imbalances is still unclear, while the risk of more tariffs being placed on global trade remains on the table.

"Even though negotiations are set to resume in the near future, the ill-effects from the existing tariffs are already being felt in the global economy, as further evidenced by the dismal data out of key Asian economies in recent days. As long as the US-China trade tensions remain at current levels, markets will have scant reasons to push the risk dial significantly higher."

In corporate news, Johnson Matthey was in the red as it reaffirmed its full-year guidance but said that its clean air unit will see annual profits drop on the year.

Fresnillo was also weaker as the precious metals miner cut its production targets for 2019, blaming lower-than-expected grades of ore grades and delays in construction work at the Herradura gold mine in Mexico.

On the upside, Burberry was the standout gainer for the second day in a row following a well-received first-quarter update on Monday.

Builder Galliford Try rallied after saying that it expects annual pre-tax profit to be in line with the current range of analysts' expectations amid "good" housing demand, while GVC Holdings pushed higher as the Ladbrokes Coral owner posted double-digital online growth for the first half.

TalkTalk was in the green after it reported a 1.3% rise in first-quarter revenue thanks to strong demand for fibre products, and backed its full-year guidance.

In broker note action, Hochschild Mining and Polymetal were started at 'sell' and 'hold', respectively, by Berenberg. Burberry was cut to 'underperform' at Jefferies, Experian was downgraded to 'reduce' at HSBC and Micro Focus was bumped down to 'sell' at Goldman Sachs.



Market Movers

FTSE 100 (UKX) 7,571.93 -0.07%
FTSE 250 (MCX) 19,658.24 0.01%
techMARK (TASX) 3,685.56 0.00%

FTSE 100 - Risers

Burberry Group (BRBY) 2,356.00p 3.47%
Imperial Brands (IMB) 2,095.00p 2.15%
Aveva Group (AVV) 4,026.00p 1.56%
Micro Focus International (MCRO) 1,709.20p 1.45%
Coca-Cola HBC AG (CDI) (CCH) 2,739.00p 1.41%
Melrose Industries (MRO) 190.06p 1.23%
Persimmon (PSN) 1,951.50p 1.19%
Diageo (DGE) 3,453.00p 0.96%
Barratt Developments (BDEV) 631.60p 0.96%
Experian (EXPN) 2,412.00p 0.92%

FTSE 100 - Fallers

Johnson Matthey (JMAT) 3,258.28p -3.80%
RSA Insurance Group (RSA) 582.40p -2.45%
ITV (ITV) 108.97p -2.09%
BP (BP.) 532.50p -2.04%
Antofagasta (ANTO) 904.20p -1.87%
Vodafone Group (VOD) 125.90p -1.70%
Fresnillo (FRES) 908.40p -1.39%
St James's Place (STJ) 1,128.00p -1.23%
Marks & Spencer Group (MKS) 205.30p -1.20%
Just Eat (JE.) 627.20p -1.17%

FTSE 250 - Risers

Galliford Try (GFRD) 656.50p 7.45%
CLS Holdings (CLI) 224.90p 5.34%
TalkTalk Telecom Group (TALK) 110.00p 4.07%
Rank Group (RNK) 158.76p 3.76%
Future (FUTR) 990.69p 3.20%
Mitchells & Butlers (MAB) 299.00p 2.93%
Capita (CPI) 115.04p 2.71%
Sanne Group (SNN) 735.00p 2.08%
PayPoint (PAY) 920.51p 2.05%
EI Group (EIG) 209.00p 1.85%

FTSE 250 - Fallers

TBC Bank Group (TBCG) 1,521.77p -3.81%
Euromoney Institutional Investor (ERM) 1,292.00p -3.44%
Hochschild Mining (HOC) 196.60p -3.34%
Oxford Instruments (OXIG) 1,338.00p -3.04%
Syncona Limited NPV (SYNC) 232.17p -2.45%
Metro Bank (MTRO) 487.41p -2.44%
Tullow Oil (TLW) 204.00p -2.21%
Cineworld Group (CINE) 256.13p -2.20%
Hays (HAS) 147.90p -2.05%
Cairn Energy (CNE) 166.82p -2.04%

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