London midday: FTSE falls as traders sift through corporate earnings

London stocks were under the cosh on Thursday as traders waded through a flood of corporate earnings on the FTSE 350.

Smith & Nephew led the fallers on the FTSE 100 after reporting a drop in first half pre-tax profit and trading profits, hit by currency headwinds.

Royal Dutch Shell shares slid as it reported a sharp fall in second quarter earnings, blaming weak oil prices.

Lloyds Banking Group was also under pressure even as it reported a better-than-expected underlying pre-tax profit for the first half, as the lender ramped up its job-cutting scheme with a further 3,000 jobs on the chopping block.

On the upside, Rolls-Royce rallied as is posted first half underlying revenues that beat analysts’ estimates.

Sky was a high riser as it reported an increase in full year operating profit that topped forecasts.

BT Group gained as it posted quarterly profit that beat market expectations, helped by a healthy contribution from the continuing integration of mobile arm EE since January's acquisition.

On the macro-economic front, Nationwide said UK house price rose 0.5% month-on-month and 5.2% year-on-year in July but the effect of Brexit on the housing market may take months to become clear.

German unemployment fell 7,000 in July, more than the 4,000 drop expected by economists. The jobless rate remained at 6.1%, as forecast.

The European Commission’s eurozone economic confidence index rose to 104.6 in July from 104.4 in June. It surprised analysts who had estimated a decline to 103.6 following the UK’s decision to leave the European Union on 24 June.

Still to come, German inflation at 1300 BST and US initial jobless claims at 1330 BST.

Meanwhile, the market continued to digest a hawkish statement from the Federal Reserve on Wednesday night.

The Federal Open Market Committee decided to keep rates unchanged at its policy meeting on Wednesday evening. However, the central bank noted that hiring conditions had improved and the economy had been growing at a moderate rate, which was seen as a sign that the Fed was not too worried about the UK’s vote to leave the European Union on 24 June.

The Fed added that near-term risks to the economic outlook had diminished, signalling that interest rates could rise in coming months.

“A striking change to the statement was the acknowledgment of US labour markets strengthening which consequently elevated the bullish sentiment towards the US economy,” said FXTM Research Analyst Lukman Otunuga.

“With domestic economic activity expanding at a moderate pace, the Fed may have been provided yet another compelling reason to break the trend of central bank caution.”

The attention now shifts to the Bank of Japan’s policy decision on Friday with economists expecting further stimulus.

Market Movers

FTSE 100 (UKX) 6,738.33 -0.18%
FTSE 250 (MCX) 17,364.35 0.57%
techMARK (TASX) 3,474.26 0.48%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 834.50p 14.00%
Fresnillo (FRES) 1,942.00p 5.14%
Anglo American (AAL) 836.60p 4.68%
Randgold Resources Ltd. (RRS) 9,030.00p 4.33%
Diageo (DGE) 2,214.00p 3.55%
Sky (SKY) 916.50p 3.27%
Relx plc (REL) 1,451.00p 3.20%
BT Group (BT.A) 414.75p 3.15%
Hikma Pharmaceuticals (HIK) 2,623.00p 2.42%
TUI AG Reg Shs (DI) (TUI) 958.50p 2.29%

FTSE 100 - Fallers

SSE (SSE) 1,556.00p -4.31%
Royal Dutch Shell 'B' (RDSB) 2,017.50p -4.16%
Smith & Nephew (SN.) 1,246.00p -4.15%
Lloyds Banking Group (LLOY) 53.47p -4.09%
Royal Dutch Shell 'A' (RDSA) 1,971.50p -3.52%
Informa (INF) 730.50p -2.73%
Standard Chartered (STAN) 613.60p -2.62%
Merlin Entertainments (MERL) 461.70p -2.59%
SABMiller (SAB) 4,285.00p -2.17%
Capita (CPI) 955.00p -2.05%

FTSE 250 - Risers

Countrywide (CWD) 282.20p 14.11%
Sports Direct International (SPD) 293.30p 13.90%
Polymetal International (POLY) 1,123.00p 7.26%
Centamin (DI) (CEY) 164.60p 7.23%
Thomas Cook Group (TCG) 64.00p 6.67%
Sophos Group (SOPH) 242.50p 6.08%
Kaz Minerals (KAZ) 150.10p 5.85%
Countryside Properties (CSP) 241.00p 5.15%
Just Eat (JE.) 507.50p 4.88%
Acacia Mining (ACA) 599.00p 4.17%

FTSE 250 - Fallers

International Personal Finance (IPF) 270.70p -19.67%
Tullow Oil (TLW) 195.20p -4.69%
Weir Group (WEIR) 1,453.00p -4.66%
Virgin Money Holdings (UK) (VM.) 266.40p -3.41%
Investec (INVP) 448.40p -3.17%
Brewin Dolphin Holdings (BRW) 254.30p -2.79%
Shawbrook Group (SHAW) 180.70p -2.06%
Amec Foster Wheeler (AMFW) 462.80p -2.05%
Bodycote (BOY) 597.00p -1.73%
Indivior (INDV) 270.30p -1.53%