London close: Stocks little changed as investors wait on G20, analysts divided

London stocks were little changed on Monday amid lingering tensions between the US and Iran, and as investors eyed this week's G20 meeting.

The FTSE 100 was up 0.12% at 7,416.69, while the pound was dipping by 0.15% against the US dollar to 1.27236 and was 0.34% lower versus the euro at 1.1172, while the second-tier index was off by 01.3% at 19,299.68.

Relations between the US and Iran were very much in focus after US Secretary of State Mike Pompeo said on Sunday that "significant" sanctions on Iran would be announced on Monday.

Market participants were also looking ahead to the upcoming G20 scheduled for later during the same week, which would bring the Sino-US trade war back into the spotlight.

In the background, analysts were debating the remaining upside to be had - or not - from investing in stocks.

For Morgan Stanley's US equity strategy team, led by Michael Wilson, the fundamentals in the US were worsening "more than most acknowledge", so that although the possibility of an agreement between the US and China on trade at the 28-29 June G20 might see the S&P 500 rise "a few percentage points" above the 3,000 point mark, thereafter the market was set to become much more data-dependent.

And if the macroeconomic data continued to worsen in the third quarter, then a 10% correction was likely to ensue.

Echoing that sentiment, IG's Chris Beauchamp said: "the rationale for a deal still seems lacking, and as a result equities could be a due another summer swoon.

"Trump’s ongoing beef with the Fed was refreshed today as the president took to Twitter to explain how the central bank had erred over the past few years. It’s nice to know that the occupant of the White House is as convinced as all other investors that he would be able to run the economy much better."

Some analysts however were more upbeat, such as at Jefferies.

Paraphrasing Mark Twain, who once said: "Be careful about reading health books. You may die of misprint", they argued that the trend in the US dollar had now changed and that central banks were now "reluctant" to let real interest rates rise above zero, for fear of inadvertently undermining asset prices.

Corporate news was scarce, but Admiral was the standout gainer on the FTSE 100 throughout much of the session after a double upgrade to 'overweight' from 'underweight' at Barclays. Hastings was also on the front foot as Barclays reiterated its 'overweight' rating.

"Our analysis suggests insurance prices have reached an inflection point in 2Q 2019, with April-May prices up 4% - a trend that we believe will only be recorded by the wider market when the mainstream quarterly indices are published in the second half of July," it said. "We see this turn as a positive for Hastings and Admiral, given their share prices have historically been highly correlated to movements in premiums."

Going the other way, at the weekend, and following years of intense competition from online retailers, French food retailer Carrefour sold an 80% stake in its Chinese operations for $698m to Suning, in which e-commerce giant Alibaba holds a stake, underscoring the threat posed by the likes of Amazon.com to it and its peers (such as Sainsbury and Tesco) in their core markets.

To take note of, consultancy Kantar was scheduled to publish its grocery market share figures for the 12 weeks to 16 June during the following session.

Also due out were the results of the Confederation of British Industry's Distributive Trades survey for June.

Weighing on BT Group meanwhile, Deutsche Bank downgraded its recommendation on the firm's shares from 'hold' to 'sell' and cut its target price from 217.0p to 175.0p, telling clients that the company's rising capex on on alt-FTTH was a threat to the recovery in its operating profits

Carnival also fell, as Barclays downgraded its recommendation on shares of the cruise operator to 'equalweight', while Dixons Carphone was under the cosh yet again following a profit warning last week.

Market Movers

FTSE 100 (UKX) 7,416.69 0.12%
FTSE 250 (MCX) 19,299.68 -0.13%
techMARK (TASX) 3,622.39 0.44%

FTSE 100 - Risers

Micro Focus International (MCRO) 2,077.00p 3.75%
Admiral Group (ADM) 2,191.00p 3.74%
Halma (HLMA) 2,071.00p 3.14%
Ashtead Group (AHT) 2,206.00p 2.68%
Reckitt Benckiser Group (RB.) 6,349.00p 2.25%
Bunzl (BNZL) 2,146.00p 2.09%
Experian (EXPN) 2,463.00p 2.03%
Compass Group (CPG) 1,887.50p 2.03%
Direct Line Insurance Group (DLG) 329.60p 1.89%
Rentokil Initial (RTO) 401.40p 1.83%

FTSE 100 - Fallers

Sainsbury (J) (SBRY) 188.00p -4.01%
BT Group (BT.A) 194.80p -3.25%
Flutter Entertainment (FLTR) 5,690.00p -2.97%
Kingfisher (KGF) 202.20p -2.69%
Marks & Spencer Group (MKS) 204.20p -2.67%
Tesco (TSCO) 231.30p -2.28%
Smith (DS) (SMDS) 345.80p -2.15%
International Consolidated Airlines Group SA (CDI) (IAG) 452.00p -1.91%
Lloyds Banking Group (LLOY) 57.00p -1.89%
Just Eat (JE.) 617.80p -1.72%

FTSE 250 - Risers

Entertainment One Limited (ETO) 396.80p 5.14%
Renishaw (RSW) 4,104.00p 4.64%
PZ Cussons (PZC) 222.00p 4.47%
Sirius Minerals (SXX) 14.05p 4.31%
PayPoint (PAY) 1,064.00p 3.30%
Games Workshop Group (GAW) 4,950.00p 2.92%
Greggs (GRG) 2,298.00p 2.77%
Woodford Patient Capital Trust (WPCT) 58.00p 2.65%
CLS Holdings (CLI) 219.50p 2.59%
Hikma Pharmaceuticals (HIK) 1,701.50p 2.51%

FTSE 250 - Fallers

Drax Group (DRX) 275.20p -5.75%
PPHE Hotel Group Ltd (PPH) 1,780.00p -5.32%
Bank of Georgia Group (BGEO) 1,539.00p -4.05%
Metro Bank (MTRO) 504.00p -3.91%
Network International Holdings (NETW) 565.00p -3.58%
Mediclinic International (MDC) 294.10p -3.42%
Tullow Oil (TLW) 208.40p -2.98%
Kainos Group (KNOS) 652.00p -2.96%
Dixons Carphone (DC.) 107.60p -2.93%
TI Fluid Systems (TIFS) 203.00p -2.87%