London midday: Equities fall as UK slips into deflation

The UK equities market was under the cosh as the nation unexpectedly slipped into deflation in September.

The Office for National Statistics revealed the consumer price index fell 0.1% year-on-year last month, compared to analysts’ estimates for a flat reading in line with August.

On a month-on-month comparison, CPI also dropped 0.1% in September following a 0.2% increase in August. Analysts had predicted 0% growth.

The main driver of deflation was discounting at clothing stores and falling petrol and diesel prices.

“Although ‘no-flation’ may be starting to feel like it's here to stay, Cebr expects price growth to pick up in the next few months,” said Cebr's managing economist Rob Habron.

“The oil price won’t fall again by the same magnitude as last year, meaning that petrol and energy prices are likely to begin to stabilise. As such, their downward effect on inflation will diminish, and CPI growth could reach nearer to 1% by December.”

Weak Chinese trade data also weighed on markets, adding to worries about the country’s flagging economy.

Chinese exports decreased 3.7% in September from a year earlier in US dollar terms following a 5.5% drop in August, the General Administration of Customs revealed. Analysts had expected a 6% slide.

Imports plunged 20.4% last month, worse than the 15.9% dip predicted, after a 13.8% fall in August.

The trade balance, however, unexpectedly widened to $60.34bn in September from $60.24bn a month earlier when a surplus of $47.90bn had been forecast.

“Chinese trade figures have been a source of concern for some time now, with both dollar-denominated exports and imports having contracted for most of the year when compared to 12 months previous,” said Craig Erlam, senior market analyst at Oanda.

“The biggest concern is the huge decline in imports and while a large part of this can be attributed to the collapse in commodity prices and should therefore ease of in the coming months, there does also appear to be a domestic demand problem as well.”

Among corporate stocks, Royal Mail was in the red on news the government has sold its remaining stake in the postal service group to professional investors.

Glencore slumped as the mining continued to sell off assets, confirming the sales of mines in Australia and Chile.

Barclays edged lower on reports the bank may name US investment banker Jes Stanley as its new chief executive.

Going the other way, SABMiller jumped after the brewer agreed to a possible £44 per share takeover offer from AB InBev.

Housebuilders rallied, including Barratt Developments, Taylor Wimpey and Berkley Group Holdings, as the ONS said UK house price growth remained at 5.2% in the year to August.

Market Movers

techMARK 3,032.99 -0.05%

FTSE 100 6,327.44 -0.69%

FTSE 250 16,932.09 -0.32%

FTSE 100 - Risers

SABMiller (SAB) 3,947.50p +9.00%

Barratt Developments (BDEV) 637.00p +1.76%

easyJet (EZJ) 1,733.00p +1.64%

Taylor Wimpey (TW.) 193.80p +1.63%

Persimmon (PSN) 1,965.00p +1.50%

Berkeley Group Holdings (The) (BKG) 3,252.00p +1.31%

GlaxoSmithKline (GSK) 1,322.50p +1.26%

Inmarsat (ISAT) 926.00p +1.09%

Hargreaves Lansdown (HL.) 1,286.00p +1.02%

TUI AG Reg Shs (DI) (TUI) 1,230.00p +0.82%

FTSE 100 - Fallers

Royal Mail (RMG) 449.10p -4.89%

Glencore (GLEN) 116.10p -4.17%

Johnson Matthey (JMAT) 2,505.00p -3.43%

Anglo American (AAL) 670.00p -3.14%

Standard Chartered (STAN) 739.90p -2.99%

Tesco (TSCO) 196.00p -2.90%

Barclays (BARC) 249.20p -2.86%

Aberdeen Asset Management (ADN) 336.30p -2.38%

Old Mutual (OML) 206.00p -2.28%

Morrison (Wm) Supermarkets (MRW) 175.30p -2.07%

FTSE 250 - Risers

Sophos Group (SOPH) 232.90p +3.70%

Spire Healthcare Group (SPI) 369.20p +3.65%

Bellway (BWY) 2,453.00p +3.50%

Barr (A.G.) (BAG) 530.00p +3.31%

Crest Nicholson Holdings (CRST) 540.00p +2.76%

BTG (BTG) 575.00p +2.68%

Michael Page International (MPI) 474.40p +2.20%

Dechra Pharmaceuticals (DPH) 949.00p +2.10%

Regus (RGU) 313.40p +1.98%

Auto Trader Group (AUTO) 326.60p +1.90%

FTSE 250 - Fallers

Evraz (EVR) 86.75p -8.15%

Tullow Oil (TLW) 230.30p -4.87%

Weir Group (WEIR) 1,284.00p -4.75%

Home Retail Group (HOME) 143.30p -4.59%

Kaz Minerals (KAZ) 138.10p -4.43%

Premier Oil (PMO) 85.90p -3.75%

IMI (IMI) 1,020.00p -3.41%

Entertainment One Limited (ETO) 214.90p -3.20%

Vedanta Resources (VED) 587.00p -2.73%

Drax Group (DRX) 276.00p -2.65%

FTSE TechMARK - Risers

NCC Group (NCC) 256.50p +2.60%

XP Power Ltd. (DI) (XPP) 1,523.00p +0.86%

Sepura (SEPU) 173.50p +0.73%

Skyepharma (SKP) 337.50p +0.37%

Dialight (DIA) 657.00p +0.31%

Consort Medical (CSRT) 928.00p +0.16%

IShares Euro Gov Bond 7-10YR UCITS ETF (IEGM) € 203.59 +0.10%

FTSE TechMARK - Fallers

Sarossa (SARS) 1.82p -4.71%

SDL (SDL) 388.25p -2.94%

Spirent Communications (SPT) 75.00p -0.66%

Innovation Group (TIG) 39.50p -0.63%

BATM Advanced Communications Ltd. (BVC) 19.75p -0.63%

Oxford Instruments (OXIG) 679.50p -0.37%

KCOM Group (KCOM) 90.75p -0.27%

Oxford Biomedica (OXB) 7.27p -0.14%