London close: Stocks little changed despite Gulf tensions, trade uncertainty

London stocks finished the session little changed on Tuesday as investors shunned risky assets amid rising geopolitical tensions and as they waited on the upcoming G-20 leaders summit in Japan, where the US and Chinese Presidents were scheduled to meet again to talk trade.

The FTSE 100 edged up 0.08% to 7,422.43, while the pound was down by 0.19% against the US dollar at 1.27152 and by 0.09% versus the euro at 1.1168.

Overnight, US President Donald Trump signed off on a new round of "hard-hitting" sanctions against Iran following its downing last week of a US surveillance drone. The measures were targetted at Supreme Leader Ayatollah Ali Khamenei and other Iranian officials. US Treasury Secretary Steven Mnuchin said they "go after the supreme leader's office and lock up literally billions more in assets".

Iranian Foreign Ministry spokesman Abbas Mousavi said the "fruitless sanctions" mean "the permanent closure of the road of diplomacy with the frustrated US administration".

With Middle East tensions high, investors opted for safe havens, pushing the price of gold to a six-year high of $1,438 an ounce overnight - its best level since May 2013 - and it was last trading at $1,433.20/oz. on COMEX.

Front month Brent crude oil futures meanwhile managed to reverse their earlier losses, traing up by 0.61% to $65.26 a barrel on the ICE.

Neil Wilson, chief market analyst at Markets.com, summed things up nicely: "Four things are really driving gold - falling yields, a weaker dollar, a soft macroeconomic outlook and geopolitical risks rising in the Middle East."

With gold on the rise, Fresnillo, Centamin, Hochschild Mining and Polymetal all rallied, although they finished off their best levels of the session.

William Hill also bucked the trend as Morgan Stanley said US casino owner Eldorado's agreed merger with Caesars makes the London-listed company's position for US sports betting "more powerful, with wider market access, boosted revenues and potential optionality on brand, database and media assets".

"With US sports worth 35-55% of the current market cap, we would buy the shares here," MS said.

International Airlines Group was the biggest loser on the FTSE 100 on the back of concerns for the global growth outlook.

It was followed closely by supermarket chains Morrisons and Tesco, as the latest Kantar data showed that sales at the retailers were down 0.1% and flat, respectively, in the 12 weeks to 16 June. The data also showed that Morrisons' market share fell to 10.4% from 10.6% the year before, while Tesco's declined to 27.3% from 27.7%.

Sainsbury's was also on the back foot. Although the figures showed its sales decline eased to 0.6% from 1.2% in the previous period, the chain's market share fell to 15.3% from 15.6% and it continued to underperform its 'big four' peers.

Oil services company Petrofac was weaker after a mixed trading update, while Imperial Leather maker PZ Cussons was hit by an initiation at 'sell' out of Panmure Gordon.

Investors were also mulling the latest figures from the Confederation of British Industry, which showed that retail sales fell at their fastest rate since March 2009 in the year to June, with bad weather partly to blame.

The balance of retailers reporting year-on-year growth in sales volumes came in at -42% from -27% in May. Analysts had been expecting a reading of -10%.

The CBI said it was worth noting that the yearly drop in sales volumes was likely driven in part by the heatwave-induced boost to retail sales growth in June last year.

Alpesh Paleja, CBI principal economist, said: "This month’s drop in sales should be taken with a pinch of salt, given the backdrop of last June’s heatwave and the start of the World Cup. But even accounting for both factors, underlying conditions on the High Street remain challenging. Retailers are having to continually compete for the attention of value-conscious shoppers, in the age of digital disruption."

Further afield, on Monday evening America's Trade Representative and the Secretary of the Treasury reportedly talked by phone with Chinese vice premier Liu He and had agreed to maintain communications open, but no details of the conversation were reported in either country.

Donald Trump and his Chinese counterpart, Xi Jinping, were reportedly set to meet on Wednesday.

Market Movers

FTSE 100 (UKX) 7,422.43 0.08%
FTSE 250 (MCX) 19,286.51 -0.07%
techMARK (TASX) 3,631.40 0.25%

FTSE 100 - Risers

3i Group (III) 1,098.50p 3.34%
Smurfit Kappa Group (SKG) 2,394.00p 3.18%
Smith (DS) (SMDS) 356.20p 3.01%
Antofagasta (ANTO) 912.20p 2.04%
Land Securities Group (LAND) 830.80p 1.90%
BAE Systems (BA.) 494.80p 1.77%
Aveva Group (AVV) 3,926.00p 1.60%
RSA Insurance Group (RSA) 576.20p 1.16%
Hargreaves Lansdown (HL.) 1,909.00p 1.14%
Just Eat (JE.) 624.80p 1.13%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 440.40p -2.77%
NMC Health (NMC) 2,364.00p -2.23%
Scottish Mortgage Inv Trust (SMT) 524.00p -1.78%
Vodafone Group (VOD) 124.26p -1.58%
Rolls-Royce Holdings (RR.) 877.60p -1.44%
Tesco (TSCO) 228.20p -1.34%
Experian (EXPN) 2,430.00p -1.34%
Morrison (Wm) Supermarkets (MRW) 196.35p -1.33%
Flutter Entertainment (FLTR) 5,620.00p -1.23%
Rightmove (RMV) 560.20p -1.20%

FTSE 250 - Risers

Dixons Carphone (DC.) 113.85p 5.81%
Plus500 Ltd (DI) (PLUS) 605.00p 3.81%
Sequoia Economic Infrastructure Income Fund Limited (SEQI) 113.80p 3.27%
Intu Properties (INTU) 77.64p 2.86%
Senior (SNR) 231.40p 2.84%
Capital & Counties Properties (CAPC) 217.00p 2.84%
Polymetal International (POLY) 985.80p 2.79%
Rank Group (RNK) 161.00p 2.55%
Quilter (QLT) 141.56p 2.53%
Hastings Group Holdings (HSTG) 186.60p 2.30%

FTSE 250 - Fallers

Funding Circle Holdings (FCH) 216.00p -9.11%
Stagecoach Group (SGC) 117.92p -6.59%
Petrofac Ltd. (PFC) 405.00p -6.57%
Royal Mail (RMG) 196.70p -4.65%
Vivo Energy (VVO) 126.00p -3.82%
Future (FUTR) 980.00p -3.73%
PZ Cussons (PZC) 212.50p -3.60%
Ted Baker (TED) 807.50p -3.29%
Network International Holdings (NETW) 547.00p -3.19%
McCarthy & Stone (MCS) 130.50p -3.19%