London midday: Stocks fall as OECD warns on Brexit risks

London stocks dropped on Wednesday as the Organisation for Economic Co-operation and Development (OECD) warned on the impact of a possible Brexit on the UK economy.

In its latest economic outlook, the OECD estimated that if Britain voted to leave the European Union in the 23 June referendum, the nation’s economy would suffer “a large negative shock”.

The think tank said by 2020 gross domestic product could be 3% below the level it might be otherwise if it voted to remain in the EU.

In its wider assessment of the global economy the OECD said the recovery remains weak due to subdued trade and problems in emerging markets.

The OECD forecast global GDP growth of 3% in 2016, unchanged from last year, with "only a modest improvement foreseen in 2017".

Meanwhile, a poll on the EU referendum by The Times/YouGov showed that 41% support the Remain camp while 41% are in favour of leaving.

The pound fell to a two-week low of 1.4439 against the dollar.

Two ICM/Guardian polls on Tuesday showed the Leave camp was ahead.

In another hit to trading sentiment, oil prices dropped on the prospect of rising production from major Middle East exporters ahead of the Organization of the Petroleum Exporting Countries meeting on Thursday.

At 1156 BST, Brent crude fell 1.2% to $49.26 per barrel and West Texas Intermediate slid 1.2% to 448.50 per barrel.

Economic data

The Markit/CIPS UK manufacturing purchasing managers’ index came in a little better than expected for May.

The index pushed up to 50.1 from 49.4 in April, back above the 50 mark that separates contraction from expansion and ahead of economists’ expectations of a reading of 49.6.

The official China manufacturing PMI came in at 50.1 in May, unchanged from the previous month but slightly better than the reading of 50.0 economists were expecting

The official non-manufacturing PMI fell to 53.1 in May from 53.5 a month earlier.

Separately, the private Caixin China manufacturing PMI dropped to 49.2 in May from 49.4 in April, as expected, marking the 15th consecutive month of contraction. It was the lowest figure since February.

UK mortgage lending in April slowed to its lowest monthly level since August 2012, according to the latest figures from the Bank of England. Mortgage lending increased £281m compared with a £7.41bn rise in March, missing expectations of £3.8bn. The March figures were boosted by the fact that buyers were rushing to complete to beat the stamp duty hike that came into effect in April, whereby anyone buying an additional property has to pay an extra 3% stamp duty.

Nationwide data showed UK house price growth stagnated in May. Prices rose 0.2% on the month, in line with April’s increase and worse than forecasts for a 0.3% gain.

Year-on-year house prices increased 4.7% in May, slowing from April’s 4.9% rise and missing estimates for a 4.8% climb.

Still to come, Markit’s US manufacturing PMI at 1445 BST, ISM’s manufacturing index at 1500 BST, US construction spending figures at 1500 BST and the Federal Reserve’s Beige Book at 1900 BST.

Companies

Halfords shares declined as the company revealed full year numbers were largely flat but ahead of market expectations.

Wolseley plunged as it reported its third quarter results and said recent revenue growth trends “have been weaker and we have continued to manage costs and productivity very carefully” amid a challenging market.

Tesco shares jumped as Kantar Woldpanel data for the 12 weeks to 22 May showed the supermarket’s market share rebound to 28.3% from 28.0% a month ago while its sales performance beat the UK’s three other major supermarkets in the Big Four.

Market Movers

FTSE 100 (UKX) 6,185.51 -0.73%
FTSE 250 (MCX) 17,077.31 -0.63%
techMARK (TASX) 3,114.80 -0.05%

FTSE 100 - Risers

Shire Plc (SHP) 4,364.00p 2.44%
Fresnillo (FRES) 1,029.00p 1.98%
Mediclinic International (MDC) 882.00p 1.79%
Randgold Resources Ltd. (RRS) 5,890.00p 1.55%
Paddy Power Betfair (PPB) 9,275.00p 1.20%
Pearson (PSON) 846.00p 0.89%
Unilever (ULVR) 3,173.50p 0.87%
Tesco (TSCO) 166.45p 0.82%
DCC (DCC) 6,340.00p 0.79%
Relx plc (REL) 1,258.00p 0.64%

FTSE 100 - Fallers

Wolseley (WOS) 3,770.00p -6.94%
Antofagasta (ANTO) 411.20p -4.15%
Royal Bank of Scotland Group (RBS) 237.20p -3.77%
Glencore (GLEN) 126.45p -3.55%
Rio Tinto (RIO) 1,874.50p -3.50%
Anglo American (AAL) 579.70p -3.40%
Rolls-Royce Holdings (RR.) 599.50p -3.15%
Taylor Wimpey (TW.) 199.10p -3.07%
BHP Billiton (BLT) 798.90p -2.93%
Barratt Developments (BDEV) 575.00p -2.87%

FTSE 250 - Risers

Centamin (DI) (CEY) 99.90p 3.68%
Acacia Mining (ACA) 314.70p 3.01%
Polypipe Group (PLP) 326.80p 2.67%
Euromoney Institutional Investor (ERM) 929.00p 2.09%
Melrose Industries (MRO) 390.50p 1.61%
Cobham (COB) 165.50p 1.53%
Spire Healthcare Group (SPI) 355.80p 1.48%
Electrocomponents (ECM) 287.10p 1.16%
P2P Global Investments (P2P) 878.00p 0.92%
esure Group (ESUR) 286.80p 0.91%

FTSE 250 - Fallers

Halfords Group (HFD) 417.20p -4.88%
Millennium & Copthorne Hotels (MLC) 420.60p -4.13%
Aberdeen Asset Management (ADN) 268.60p -3.76%
Henderson Group (HGG) 259.50p -3.21%
Aldermore Group (ALD) 209.30p -3.15%
Sports Direct International (SPD) 363.30p -3.09%
Paragon Group Of Companies (PAG) 299.90p -3.01%
Card Factory (CARD) 360.50p -2.86%
Ibstock (IBST) 201.70p -2.70%
Bellway (BWY) 2,663.00p -2.56%