London midday: Stocks fall after Merkel remarks, before US non-farm paryolls
London stocks declined on Thursday following remarks from German Chancellor Angela Merkel on Brexit and as investors erred on the side of caution ahead of Friday’s US non-farm payrolls report.
Merkel on Thursday stressed that if Britain wants access to the single market in the European Union it must comply with the rules for free movement. Her remarks come after UK Prime Minister Theresa May said formal Brexit negotiations would begin by March 2017, sending the pound to a 31-year low against the dollar.
"If we don't say that full access to the single market is linked to full acceptance of freedom of movement, then everyone in Europe will start doing what they want," Merkel told an industry event in Berlin.
Connor Campbell, financial analyst at Spreadex, said Merkel’s comments have helped “sour the tone” in Thursday trade as she has confirmed that Brexit negotiations won’t be easy.
The pound fell another 0.38% against the dollar to $1.2701 at midday.
Meanwhile, traders are looking ahead to the all-important US non-farm payrolls report on Friday, which is expected to show employers added 170,000 jobs in September.
“Despite an incredible start to the week, we are seeing hesitancy creep in ahead of the week’s main event, with the chances of a December hike likely to be dictated by forthcoming data,” said IG market analyst Joshua Mahony.
In corporate news, shares in low-cost carrier easyJet tanked after it warned that profits for the year would be hit by the weakening of the pound.
BAE Systems was in the black after it reiterated its confidence about hitting full-year targets and supplied encouraging platitudes about ongoing long-term contracts, including the government's politically sensitive talks about the next defence export contract with Saudi Arabia.
Furniture retailer DFS reversed earlier gains after it reported a rise in full-year profit as revenue grew and the company lifted its dividend.
Dunelm was also under the cosh after it posted a drop in first-quarter revenue due to unseasonably warm weather
Shares in SVG Capital retreated after it said it had agreed the terms of the sale of its investment portfolio to funds managed by Goldman Sachs and Canada Pension Plan Investment Board for £748m.
Market Movers
FTSE 100 (UKX) 7,029.79 -0.05%
FTSE 250 (MCX) 18,169.95 -0.17%
techMARK (TASX) 3,549.57 -0.14%
FTSE 100 - Risers
TUI AG Reg Shs (DI) (TUI) 1,135.00p 1.89%
GKN (GKN) 336.60p 1.63%
Carnival (CCL) 3,842.00p 1.51%
Royal Bank of Scotland Group (RBS) 186.40p 1.41%
Rolls-Royce Holdings (RR.) 764.50p 1.33%
ITV (ITV) 186.10p 1.31%
Experian (EXPN) 1,590.00p 1.15%
Randgold Resources Ltd. (RRS) 7,120.00p 1.14%
Barclays (BARC) 174.35p 1.10%
Provident Financial (PFG) 3,292.00p 1.01%
FTSE 100 - Fallers
easyJet (EZJ) 954.50p -4.84%
Smith & Nephew (SN.) 1,224.00p -3.24%
Marks & Spencer Group (MKS) 327.50p -3.02%
Capita (CPI) 638.00p -2.67%
Travis Perkins (TPK) 1,529.00p -2.43%
International Consolidated Airlines Group SA (CDI) (IAG) 388.40p -2.12%
Tesco (TSCO) 202.75p -2.10%
Aviva (AV.) 444.10p -2.05%
BT Group (BT.A) 374.45p -1.78%
Centrica (CNA) 221.40p -1.73%
FTSE 250 - Risers
BTG (BTG) 679.50p 5.02%
Tullow Oil (TLW) 273.50p 4.47%
GVC Holdings (GVC) 755.00p 1.62%
William Hill (WMH) 310.40p 1.60%
Smith (DS) (SMDS) 397.90p 1.58%
CLS Holdings (CLI) 1,567.00p 1.42%
Croda International (CRDA) 3,601.00p 1.21%
Victrex plc (VCT) 1,655.00p 1.16%
Fidelity China Special Situations (FCSS) 185.10p 1.15%
Aggreko (AGK) 977.50p 1.14%
FTSE 250 - Fallers
Dunelm Group (DNLM) 818.50p -4.55%
Ted Baker (TED) 2,460.00p -3.23%
Entertainment One Limited (ETO) 225.50p -3.05%
Ocado Group (OCDO) 257.60p -2.83%
IP Group (IPO) 164.60p -2.55%
Countrywide (CWD) 210.90p -2.54%
Restaurant Group (RTN) 370.80p -2.52%
DFS Furniture (DFS) 271.00p -2.52%
Polypipe Group (PLP) 282.30p -2.39%
Hansteen Holdings (HSTN) 114.70p -2.38%