London midday: Stocks fall ahead of BoE inflation report hearing

London stocks declined on Tuesday as investors awaited the Bank of England’s inflation report hearing.

In the absence of any hard UK economic data, traders continued to digest Monday’s better-than-expected UK services purchasing mangers’ index and what it means for monetary policy ahead of BoE Governor Mark Carney’s testimony to the Treasury select committee on Wednesday.

“Early FTSE gains have faded for the second consecutive day this week, with the monetary policy implications of yesterday’s services PMI reading continuing to cast a shadow over UK stocks ahead of tomorrow’s inflation report hearing,” said IG market analyst Joshua Mahony.

“The Treasury select committee are renowned for their tough approach to these events, and with Mark Carney having enacted the biggest batch of stimulus for years, the rapid rebound suggests he may have been a little hasty to act.”

Meanwhile, the only notable release in the UK on Tuesday was the British Retail Consortium’s retail sales figures. The report showed retail spending fell 0.3% in August compared to the same month a year ago, down from a 1.9% jump in July. On a like-for-like basis, excluding changes in the amount of retail space open to shoppers over the past year, sales dropped 0.9% year-on-year following a 1.1% rise in July.

“August’s BRC report shows that consumer spending is not as resilient to the consequences of the Brexit vote as July’s official retail sales figures implied,” said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

“Growth in retail sales likely will pick up again in the near-term, but we expect a fundamental slowdown in volumes growth next year, when retailers will pass on the rise in import prices to consumers in earnest and firms will still be holding back from hiring due to uncertainty about the UK’s future trading relationships.”

In the eurozone, gross domestic product growth for the second quarter was confirmed by Eurostat at 0.3% quarter-on-quarter, compared to 0.5% in the first quarter.

German factory orders fell 0.7% in July compared to a year ago, more than the 0.2% drop expected and following a 3% decrease in June, Destatis revealed.

Still to come, US services PMI from Markit at 1445 BST and ISM’s non-manufacturing index at 1500 BST.

On the company front, Berkeley led housebuilder shares higher after saying the property market in August stabilised after a jump in cancellations in the wake of Brexit. Berkeley, which is set to fall out of London’s FTSE 100 next week after just one year, said it was on track to deliver £2bn in profits over the three years to April 2018.

Sector peer Redrow also rallied as it reported a 23% rise in pre-tax profits to £250m in the year to 30 June and a 17% increase in legal completions, supported by the government’s Help to Buy scheme.

easyJet flew higher as it increased passenger numbers by 6.4% in August, compared to the same month the previous year.

On the downside, Standard Chartered’s shares slumped after Barclays downgraded the stock to ‘underweight’ from ‘equalweight’, saying the valuation is overshooting its earnings power, but lifted the price target to 520p from 500p.

Market Movers

FTSE 100 (UKX) 6,859.64 -0.29%
FTSE 250 (MCX) 18,042.15 0.09%
techMARK (TASX) 3,467.22 -0.11%

FTSE 100 - Risers

Berkeley Group Holdings (The) (BKG) 2,785.00p 3.53%
Anglo American (AAL) 833.80p 2.43%
easyJet (EZJ) 1,150.00p 1.68%
Persimmon (PSN) 1,868.00p 1.63%
Mondi (MNDI) 1,582.00p 1.48%
International Consolidated Airlines Group SA (CDI) (IAG) 397.90p 1.43%
Mediclinic International (MDC) 1,043.00p 1.36%
Barratt Developments (BDEV) 505.00p 1.32%
Fresnillo (FRES) 1,695.00p 1.32%
Taylor Wimpey (TW.) 163.50p 1.24%

FTSE 100 - Fallers

Provident Financial (PFG) 2,969.00p -1.95%
Standard Chartered (STAN) 646.70p -1.79%
Standard Life (SL.) 361.60p -1.74%
Sage Group (SGE) 728.00p -1.15%
Carnival (CCL) 3,465.00p -1.06%
Schroders (SDR) 2,795.00p -1.03%
Compass Group (CPG) 1,459.00p -1.02%
Unilever (ULVR) 3,615.50p -0.93%
Merlin Entertainments (MERL) 483.50p -0.86%
BP (BP.) 431.30p -0.80%

FTSE 250 - Risers

Redrow (RDW) 411.50p 7.08%
Sports Direct International (SPD) 350.30p 5.42%
Hochschild Mining (HOC) 273.90p 3.59%
Renishaw (RSW) 2,735.00p 3.52%
Debenhams (DEB) 62.85p 3.12%
Crest Nicholson Holdings (CRST) 488.00p 2.80%
Bellway (BWY) 2,407.00p 2.60%
Kaz Minerals (KAZ) 186.30p 2.31%
CLS Holdings (CLI) 1,562.00p 2.16%
Galliford Try (GFRD) 1,171.00p 2.09%

FTSE 250 - Fallers

Grainger (GRI) 228.20p -3.18%
IP Group (IPO) 187.60p -2.95%
Computacenter (CCC) 727.00p -2.15%
Greencore Group (GNC) 356.90p -2.11%
Woodford Patient Capital Trust (WPCT) 91.80p -2.08%
Sophos Group (SOPH) 251.70p -1.99%
Restaurant Group (RTN) 374.40p -1.73%
Softcat (SCT) 326.80p -1.48%
Paysafe Group (PAYS) 440.70p -1.41%
Spire Healthcare Group (SPI) 364.20p -1.35%