London midday: Miners drag equities lower after Chinese trade data

UK equities were on the back foot on Tuesday at midday as commodity stocks slumped after Chinese data showed a bigger-than-expected fall in exports.

Chinese exports dropped 6.8% last month compared to a year ago, marking the fifth consecutive month of decline. Analysts had predicted a 5% fall.

Imports decreased 8.7% in November, worse than the 11.8% drop expected.

The trade balance narrowed to $54.10bn from $61.64, missing estimates of $64.15bn.

“While the larger decline in exports is concerning, with weaker demand from abroad suggesting that the global slowdown is not abating, the imports data did offer cause for optimism,” said Craig Erlam, senior market analyst at Oanda.

“While the improvement may partially reflect last year’s sharp decline in commodity prices beginning to fall out of the annual comparison, it does also point to stronger domestic demand, a sign that fiscal and monetary stimulus measures are finally having the desired effect.”

Oil stocks also continued to decline, including BG Group, Royal Dutch Shell and BP, amid concerns about an oversupply in the market after OPEC decided to keep production unchanged on Friday. On Monday Brent crude hit a six-year low while West Texas Intermediate reached a near seven-year low.

At 1132 GMT on Tuesday, Brent regained strength by 1.3% to $41.30 per barrel and WTI increased 0.8% to $37.97 per barrel.

Eurozone GDP

The Eurozone economy expanded in line with expectations in the third quarter, bolstered by private consumption and government spending, Eurostat revealed.

Gross domestic product in the 19-country bloc grew 0.3% quarter-on-quarter in the three months to September, in line analysts' expectations for an unchanged reading but down from 0.4% the previous quarter. On a year-on-year basis, GDP grew 1.6%, in line with the previous quarter’s reading and with consensus.

“Growth is likely to pick up again in the first quarter, however, to around 0.4% on our estimates before edging up to 0.4-0.5% in the second half of 2016,” said Clemente De Lucia, Eurozone economist at BNP Paribas.

“We expect growth to average 1.5% in 2016 as a whole – an above-trend but unspectacular pace. “

On home turf, Halifax reported a 0.2% decline in UK house prices in November, compared to analysts’ expectations for a 0.2% increase and the previous month’s 1% rise.

Meanwhile, UK manufacturing production slid 0.4% month-on-month in October, compared with an upwardly revised 0.9% gain in September and with analysts’ expectations for a 0.2% decline, according to the Office for National Statistics.

Industrial production climbed 0.1% month-on-month in October compared with stagnant growth in the previous month and in line with analysts’ expectations.

Mining companies slide

Rio Tinto was in the red as the miner said 2016 group capital expenditure will be $1bn (£660m) less than forecast at $5bn (£3.3bn) as its cost cutting regime continues.

Anglo American plunged after saying it will suspend its dividend to investors this year and the next as it announced a "radical" portfolio restructuring and further material costs savings and capex reductions to combat declining commodity prices.

Fellow miners BHP Billiton, Glencore and Randgold Resources were also sitting lower on the FTSE as Chinese trade data added to concerns about the slowdown in the world’s second largest economy.

Going the other way, supermarkets rallied including J Sainsbury, Tesco and Morrison after a positive note from Bernstein. The broker said that where discount retailer Aldi isn't able to maintain price leadership, instead of running loss leaders, it is likely to reduce its branded range. “This is good news for the big-four for two reasons: firstly it demonstrates that Aldi will not cut prices forever and secondly it improves one of their major competitive advantages – you can get the brands you love.”

EasyJet and International Consolidated Airlines flew higher after oil prices hit new lows.

Market Movers

FTSE 100 (UKX) 6,178.28 -0.73%
FTSE 250 (MCX) 17,265.64 -0.52%
techMARK (TASX) 3,206.79 -0.29%

FTSE 100 - Risers

Sainsbury (J) (SBRY) 247.40p 2.36%
Tesco (TSCO) 160.10p 1.97%
Morrison (Wm) Supermarkets (MRW) 148.50p 1.92%
International Consolidated Airlines Group SA (CDI) (IAG) 593.50p 1.11%
easyJet (EZJ) 1,720.00p 0.88%
Wolseley (WOS) 3,929.00p 0.41%
Vodafone Group (VOD) 218.75p 0.34%
Standard Chartered (STAN) 525.40p 0.23%
British American Tobacco (BATS) 3,842.00p 0.17%
Associated British Foods (ABF) 3,555.00p 0.14%

FTSE 100 - Fallers

Glencore (GLEN) 77.96p -8.67%
Anglo American (AAL) 339.15p -8.09%
Mondi (MNDI) 1,408.00p -5.44%
Rio Tinto (RIO) 1,956.50p -5.30%
BHP Billiton (BLT) 726.40p -5.07%
Antofagasta (ANTO) 456.30p -4.52%
Royal Bank of Scotland Group (RBS) 291.30p -2.74%
Babcock International Group (BAB) 1,005.00p -2.52%
Pearson (PSON) 760.00p -2.38%
Randgold Resources Ltd. (RRS) 4,124.00p -2.21%

FTSE 250 - Risers

Vedanta Resources (VED) 346.40p 3.56%
Lancashire Holdings Limited (LRE) 599.50p 3.45%
CLS Holdings (CLI) 1,785.00p 2.47%
Brown (N.) Group (BWNG) 353.10p 1.99%
Croda International (CRDA) 2,961.00p 1.82%
Cairn Energy (CNE) 141.90p 1.79%
Moneysupermarket.com Group (MONY) 327.20p 1.55%
Spire Healthcare Group (SPI) 309.80p 1.51%
Vectura Group (VEC) 176.60p 1.49%
Booker Group (BOK) 183.70p 1.38%

FTSE 250 - Fallers

Entertainment One Limited (ETO) 152.00p -13.83%
AO World (AO.) 161.40p -5.00%
Serco Group (SRP) 104.10p -4.76%
Home Retail Group (HOME) 105.50p -4.44%
Drax Group (DRX) 217.70p -4.35%
Petra Diamonds Ltd.(DI) (PDL) 62.95p -2.93%
Man Group (EMG) 163.10p -2.57%
Foxtons Group (FOXT) 179.40p -2.55%
JD Sports Fashion (JD.) 1,047.00p -2.42%
Close Brothers Group (CBG) 1,350.00p -2.39%