London close: Stocks pull-back amid troubling geopolitical headlines
(ShareCast News) - London stocks stumbled on Wednesday as geopolitical tensions between North Korea and the international community came to a boil after another heated verbal exchange between the US and Pyongyang.
The FTSE 100 closed the day lower, giving back just over 44 points or 0.59% to 7,498.06, with the FTSE 250 down 0.37% at 19,875.03.
European markets fared much the same fate with the DAX closing 1.12% lower at 12,154.00, and the CAC 40 down 1.40% at 5,145.70.
Sterling was relatively flat against the dollar at 1.3002 after earlier wavering, but gained 0.14% on the euro to 1.1072, with the single currency down by a similar degree against the greenback, which in turn was down 0.38% against the yen.
Overnight, US and Asian stock markets slipped into risk-off mode late on, as Trump warned North Korea would be "met with fire and fury and, frankly, power the likes of which the world has never seen before" if it continues to threaten the US.
As a result, on Wednesday evening the VIX volatility index, having recently hit an all-time low, spiked from 9.54 just after Europe went home and around 10 when the comments hit the wires to reach a peak of 11.29 with 30 minutes left in the US session before closing at 10.96.
This move in the VIX was only to a level last seen a month ago, while the Dow gave up a paltry 33 points - that after a streak of nine-straight record closes - said analyst Neil Wilson at ETX Capital, noting that European stock indices were all in the red.
Damage control came in the form of Secretary of State Rex Tillerson, on Thursday, who said: "I think what the president was just reaffirming is that the United States has the capability to fully defend itself from any attack, and our allies, and we will do so. So the American people should sleep well at night."
In defence of Trump's comments he said, "What the president is doing is sending a strong message to North Korea in language that Kim Jong Un would understand, because he doesn't seem to understand diplomatic language [...] I think it was important that he deliver that message to avoid any miscalculation on their part."
On the corporate front, gold miners Fresnillo and Randgold Resources were lifted to the top of the FTSE leaderboard, though all other mining heavyweights were in the red with the exception of Acacia Mining.
Asia-focused financial stocks, namely Prudential and Standard Chartered were among the main fallers.
On what is a fairly quiet day in terms of macroeconomic data, the overnight release of Chinese consumer prices showed gains slowed from 1.5% year-on-year in June to 1.4% for July.
Capital Economics told clients: "Rising steel prices aside, broader price pressures appear to have cooled last month. We expect the reflation of the past year to continue to fizzle out in coming quarters as policy tightening dampens economic activity."
In company news, payments processing company Worldpay was on the rise as it had agreed a £9.3bn merger with US rival Vantiv. Worldpay shareholders have been offered 0.55p a share in cash, 0.0672 of a new Vantiv share and a 4.2p dividend. Worldpay investors will own 43% of the combined group, up from the 41% initially mooted.
Also higher was Spirax-Sarco as interim pre-tax profits at the engineering group spurted up 21% to £88.5m as revenue grew 25% to £428.6m. The collapse of sterling after the Brexit vote last year helped boost profits by 16%, the company said, adding that strong UK operations and acquisitions had also contributed to the rise.
Life insurer Legal & General posted a 43% jump in half-year profits before tax to £952m, which saw earnings per share rise from 11.27p in the year-ago period to 15.94p. In turn, the company's payout was raised from 4.0p to 4.3p. Its shares were caught up in the general risk-off mood, however. Fellow life insurers Aviva and Standard Life were also lower.
General insurer Hastings was marginally lower despite reporting continued "strong momentum" through its first half, adding it was on track for another year of "profitable growth" as gross written premiums improved 28% to £462m. Solid numbers were driven by better than expected motor underwriting results which offset weaker investment income. Sector peer Direct Line was also in the red.
Security outsourcing group G4S was the biggest faller after it reported slower than expected growth in the second quarter but held its first-half dividend steady, as management declared their increased confidence in prospects thanks to the "substantial progress" being made with restructuring. Revenue of ongoing business rose 6.2% to £3.7bn and earning per share was up 7.8% to 8.3p.
FTSE 100 (UKX) 7,498.06 -0.59%
FTSE 250 (MCX) 19,875.03 -0.37%
techMARK (TASX) 3,413.79 -0.69%
FTSE 100 - Risers
Fresnillo (FRES) 1,544.00p 4.89%
Randgold Resources Ltd. (RRS) 7,380.00p 2.79%
Worldpay Group (WPG) 388.50p 1.28%
BAE Systems (BA.) 582.50p 1.22%
Mediclinic International (MDC) 736.00p 1.10%
Barratt Developments (BDEV) 607.00p 1.08%
Next (NXT) 4,409.00p 0.94%
United Utilities Group (UU.) 928.50p 0.92%
Persimmon (PSN) 2,536.00p 0.63%
Croda International (CRDA) 3,770.00p 0.61%
FTSE 100 - Fallers
G4S (GFS) 305.90p -7.47%
Standard Chartered (STAN) 783.10p -2.60%
Prudential (PRU) 1,841.50p -2.33%
Shire Plc (SHP) 3,945.00p -2.28%
Ashtead Group (AHT) 1,623.00p -2.17%
DCC (DCC) 6,835.00p -2.15%
Aviva (AV.) 525.50p -2.14%
Glencore (GLEN) 339.80p -2.13%
Smurfit Kappa Group (SKG) 2,177.00p -2.11%
Royal Bank of Scotland Group (RBS) 259.10p -2.08%
FTSE 250 - Risers
SIG (SHI) 179.80p 8.64%
Acacia Mining (ACA) 189.90p 7.71%
Pets at Home Group (PETS) 192.00p 5.44%
Petra Diamonds Ltd.(DI) (PDL) 98.80p 4.77%
Hochschild Mining (HOC) 328.20p 4.72%
Spirax-Sarco Engineering (SPX) 5,835.00p 4.66%
Polymetal International (POLY) 934.00p 3.26%
Senior (SNR) 272.80p 3.22%
CLS Holdings (CLI) 206.90p 2.48%
Galliford Try (GFRD) 1,358.00p 2.18%
FTSE 250 - Fallers
Essentra (ESNT) 521.50p -5.44%
Ladbrokes Coral Group (LCL) 121.50p -5.15%
Tullow Oil (TLW) 173.20p -3.08%
Riverstone Energy Limited (RSE) 1,316.00p -3.03%
RPC Group (RPC) 870.50p -2.63%
Euromoney Institutional Investor (ERM) 1,111.00p -2.54%
Elementis (ELM) 280.50p -2.43%
Renishaw (RSW) 4,337.00p -2.25%
Hikma Pharmaceuticals (HIK) 1,308.00p -2.24%
Clarkson (CKN) 2,599.00p -2.18%