London midday: Investors remain on sidelines ahead of US data

Investors stayed on the sidelines ahead of the release of a fresh batch of economic data Stateside in the afternoon, despite optimistic calls from many strategists.

As of 1143 BST the Footsie was 2.95 points lower to 6,198.93 and Germany´s Dax-30 off by 0.65% to 10,248.60. Overnight, the Shanghai Stock Exchange Composite Index finished the session with gains of 4.82% to reach 3,232.35 points.

On Friday morning, strategists at Credit Suisse reiterated their “constructive” view on US and European equities as “too much of a slowdown in growth is being priced in” and “the normal pre-conditions for an equity bear market are not in place.

Nonetheless, they did lower their price targets for both the S&P 500 and Euro Stoxx 50.

Meanwhile, Bank of America-Merrill Lynch´s Michael Hartnett pointed out how gauges of investor fear had reached 'extremes' earlier in the week. Indeed, outflows from equity funds on 25 August were a “massive” $19bn – the second worst reading since 2007 - Hartnett said.

Moody´s cut its forecast for economic growth in the G-20 space next year to 2.8% from 3.1%, reflecting the slowdown in China and the impact of lower commodity prices on producing countries.

“Current equity and bond yields suggest that investors are shifting towards pricing in a global recession. While not complacent, we think that such fears are premature,” Citi´s global strategy team told clients.

Traders were keeping an eye out for any remarks coming from the US Federal Reserve´s Jackson Hole Economic Policy Symposium.

Governor Mark Carney was scheduled to participate on a panel on global inflation dynamics on Saturday.

Consumers in the UK were at their most upbeat in August since January 2000 according to consultancy GfK, thanks to recent low inflation and improved wage growth.

ONS confirmed that gross domestic product expanded at a 0.7% quarter-on-quarter pace in the second quarter, as expected by the consensus, although a bout of destocking by firms offset a strong jump in exports.

Destocking subtracted 1.1 percentage points from the quarterly rate of GDP while net trade added 1.0 percentage points.

Oil and commodity stocks pace gains

Commodity and oil stocks such as Glencore and BG Group paced gains on the top flight index in the wake of the previous day´s sharp rise in the oil price. That, in turn, was driven by short covering after a stronger than expected US GDP report and Royal Dutch Shell´s announcement of 'force majeure' on Bonny Light exports from Nigeria.

Utility group Pennon's shares have underperformed strongly this year, analysts at Deutsche Bank told clients. “It now offers an attractive dividend yield. It either discounts peer group leading returns for the water business or a bear case for Viridor.” The shares were upgraded to buy.

Shares in retailer Debenhams were under pressure after UBS downgraded the stock to ‘sell’ from ‘neutral’ and cut its price target to 70p from 90p. The Swiss bank said its ‘Evidence Lab’ survey suggests customer intention to purchase in the next 12 months has seen the most significant decline among peers.

Industrial components manufacturer Rotork took advantage of the depressed market environment by acquiring what it described as a leading manufacturer of components for the oil and gas industry. The Bath-based outfit will pay a total consideration of up to £125m for Manchester-based Bifold, on a cash-free and debt-free basis, which has expertise in a number of niche sectors such as subsea and wellhead control systems.

Restaurant Group posted a 10% lift in first half pre-tax profits to £36.9m as margins improved. Total revenues were up by 8% to £334m from £308m, which management said showed the company’s resilience in tough trading conditions.

John Laing Infrastructure Partners registered a slight drop in its net asset value at the half-year stage but management waxed optimistic on the opportunities for growth and diversification which were now available to the company. In the six months ending on 30 June the company´s net asset value dropped 1.4% to 10.7.8p per share, mainly due to negative exchange rate movements.

Rentokil Initial announced the acquisition of Chicago-based Anderson Pest Solutions for an undisclosed sum. The pest control company said the deal was in line with its strategy of continued acceleration of its pest control business and pursuing acquisition targets in higher growth markets.

Market Movers
techMARK 3,059.46 -0.02%
FTSE 100 6,188.63 -0.05%
FTSE 250 16,916.82 -0.03%

FTSE 100 - Risers
Glencore (GLEN) 148.75p +2.34%
BG Group (BG.) 980.90p +1.99%
Royal Dutch Shell 'B' (RDSB) 1,691.00p +1.90%
Royal Dutch Shell 'A' (RDSA) 1,683.00p +1.78%
Diageo (DGE) 1,716.50p +1.27%
ARM Holdings (ARM) 926.50p +0.93%
Pearson (PSON) 1,116.00p +0.90%
Hargreaves Lansdown (HL.) 1,108.00p +0.82%
Relx plc (REL) 1,042.00p +0.68%
BP (BP.) 353.50p +0.65%

FTSE 100 - Fallers
Admiral Group (ADM) 1,511.00p -2.01%
Antofagasta (ANTO) 599.50p -1.96%
Marks & Spencer Group (MKS) 516.00p -1.43%
Shire Plc (SHP) 4,944.00p -1.42%
Aviva (AV.) 480.00p -1.40%
Weir Group (WEIR) 1,375.00p -1.29%
Morrison (Wm) Supermarkets (MRW) 166.10p -1.19%
Land Securities Group (LAND) 1,247.00p -1.11%
Tesco (TSCO) 189.40p -1.07%
Barclays (BARC) 259.80p -1.07%

FTSE 250 - Risers
Tullow Oil (TLW) 217.70p +6.51%
Marshalls (MSLH) 334.00p +5.53%
Lonmin (LMI) 34.54p +4.57%
Allied Minds (ALM) 478.30p +4.50%
Pennon Group (PNN) 763.00p +4.45%
Petrofac Ltd. (PFC) 878.50p +2.93%
Premier Oil (PMO) 104.20p +2.76%
Computacenter (CCC) 759.00p +2.50%
Amec Foster Wheeler (AMFW) 782.50p +2.49%
Grafton Group Units (GFTU) 735.00p +2.37%

FTSE 250 - Fallers
Debenhams (DEB) 76.25p -6.44%
Go-Ahead Group (GOG) 2,494.00p -3.30%
Wizz Air Holdings (WIZZ) 1,795.00p -2.71%
Restaurant Group (RTN) 662.00p -2.43%
Greggs (GRG) 1,129.00p -2.25%
Enterprise Inns (ETI) 115.50p -2.20%
Riverstone Energy Limited (RSE) 850.00p -2.19%
Genesis Emerging Markets Fund Ltd Ptg NPV (GSS) 440.20p -2.18%
Jimmy Choo (CHOO) 163.10p -2.10%
St. Modwen Properties (SMP) 442.60p -2.04%