London midday: Brexit concerns drag stocks lower

London stocks were under pressure on Friday after the International Monetary Fund warned a vote by the UK to leave the European Union would have a detrimental impact on the economy.

IMF chief Christine Lagarde said if Britain voted to leave the EU in the 23 June referendum it would have “pretty bad to very, very bad” consequences including a stock market crash and steep fall in house prices. In the IMF’s regular update on the UK economy, Lagarde added that she had not seen anything positive about Brexit.

Her remarks echo the Bank of England’s warning on Thursday that a Brexit could materially alter its economic growth forecasts. The central bank warned there were increasing signs that uncertainty surrounding the referendum has started to weigh on activity.

The BoE slashed its economic growth forecasts to 2% for 2016 from a previous estimate of 2.2% in its Quarterly Inflation Report.

Amid concerns surrounding a possible Brexit, the Monetary Policy Committee also announced it would keep interest rates at 0.50% and the size of the asset purchase programme at £375bn. The vote was unanimous and was expected by analysts.

In economic data, UK construction output fell more than expected in March. Output dropped 3.6% month-on-month in March compared to a 0.9% fall in February and analysts’ forecasts for a 3.2% decline. Year-on-year output plunged 4.5% in March following a 0.4% fall in February and worse than estimates for a 2.7% decrease.

“March’s construction figures confirmed the sector’s recovery has gone into reverse, leaving GDP growth precariously unbalanced,” according to Capital Economics. “What’s more, recent evidence points to continuing weakness in the near term.”

In the eurozone, the economy grew less than expected in the first quarter, according to the flash estimate from Eurostat. Euro-area gross domestic product rose 0.5% in the first three months of the year compared to the fourth quarter. Analysts had pencilled in 0.6% quarter-on-quarter growth in the first quarter following a 0.3% gain in the previous three months.

Still to come, US retail sales at 1330 BST and the University of Michigan’s consumer confidence index at 1500 BST.

Meanwhile, oil prices slid with Brent crude down 1.45% to $47.39 per barrel and West Texas Intermediate dropped 1.6% to $45.96 per barrel at 1158 BST.

On the company front, Coca-Cola HBC was in the red after reporting a 2.7% fall in first quarter sales revenues to €1.3bn, reflecting weak emerging market currencies against a strong euro.

ITV declined as Deutsche Bank cut its target price to 185p from 200p and reiterated a ‘sell’ rating on the stock, saying the broadcaster’s first quarter results were worse than expected.

Mining stocks rallied as metal prices rose with Antofagasta and Fresnillo leading the way.

Market Movers

FTSE 100 (UKX) 6,072.04 -0.53%
FTSE 250 (MCX) 16,569.39 -0.54%
techMARK (TASX) 3,028.92 -0.49%

FTSE 100 - Risers

Fresnillo (FRES) 1,099.00p 2.23%
Antofagasta (ANTO) 415.00p 2.19%
Standard Chartered (STAN) 499.30p 1.88%
Tesco (TSCO) 157.65p 1.32%
ARM Holdings (ARM) 917.00p 0.99%
HSBC Holdings (HSBA) 426.95p 0.80%
Smith & Nephew (SN.) 1,156.00p 0.78%
Morrison (Wm) Supermarkets (MRW) 188.00p 0.70%
BHP Billiton (BLT) 811.10p 0.47%
Worldpay Group (WI) (WPG) 263.70p 0.46%

FTSE 100 - Fallers

Inmarsat (ISAT) 734.00p -7.56%
Coca-Cola HBC AG (CDI) (CCH) 1,322.00p -5.37%
ITV (ITV) 203.90p -2.90%
Direct Line Insurance Group (DLG) 363.40p -2.70%
Mondi (MNDI) 1,323.00p -2.58%
Mediclinic International (MDC) 856.50p -2.39%
RSA Insurance Group (RSA) 465.90p -2.10%
TUI AG Reg Shs (DI) (TUI) 1,037.00p -1.89%
Admiral Group (ADM) 1,834.00p -1.87%
easyJet (EZJ) 1,433.00p -1.65%

FTSE 250 - Risers

Vedanta Resources (VED) 368.90p 6.93%
Polypipe Group (PLP) 304.90p 5.14%
Ibstock (IBST) 205.00p 5.07%
DFS Furniture (DFS) 300.80p 3.23%
Hikma Pharmaceuticals (HIK) 2,275.00p 2.43%
Clarkson (CKN) 2,307.00p 2.12%
HICL Infrastructure Company Ltd (HICL) 163.40p 2.06%
John Laing Group (JLG) 215.30p 2.04%
JRP Group (JRP) 140.50p 1.89%
Barr (A.G.) (BAG) 541.50p 1.50%

FTSE 250 - Fallers

Amec Foster Wheeler (AMFW) 443.80p -4.00%
Jimmy Choo (CHOO) 113.50p -3.81%
Cairn Energy (CNE) 200.80p -3.65%
TalkTalk Telecom Group (TALK) 259.80p -3.46%
esure Group (ESUR) 268.00p -3.14%
Just Eat (JE.) 404.50p -3.09%
Mitchells & Butlers (MAB) 261.60p -2.71%
Micro Focus International (MCRO) 1,521.00p -2.69%
Restaurant Group (RTN) 287.80p -2.64%
Entertainment One Limited (ETO) 180.00p -2.60%