London midday: Stocks fall on China data, Fed minutes

London stocks fell on Thursday as analysts weighed weak China trade data and the Federal Reserve’s meeting minutes.

China’s trade surplus unexpectedly shrank in September as exports plunged more than anticipated.

The trade surplus came to $41.99bn last month, down from $52.05bn in August and compared to forecasts of $53bn.

Exports in dollar terms fell 10% year-on-year in September, far more than the 3.3% decline expected, following a 2.8% dip the previous month. Imports slid 1.9% in September, below estimates for a 0.7% increase and after a 1.5% rise in August.

“The continued underwhelming performance of Chinese exports adds weight to our view that the People’s Bank will maintain its recent policy of gradual trade-weighted renminbi depreciation in coming quarters,” said Julian Evans-Pritchard, China economist at Capital Economics.

In the US, the minutes of the central bank’s 20-21 September meeting suggested a December rate hike could be on the cards. The minutes showed it was a close call to keep rates on hold, with policymakers generally of the view that a move higher could happen within months if the economy keeps on track.

Investors are now looking ahead to speeches by Fed officials including Patrick Harker and Neel Kashkari. They are not voting members of the Fed this year but will be in 2017.

“Their views will therefore be of great interest to traders, with markets currently not pricing in another rate hike after December up to September next year. We’ll also get the latest jobless claims data from the US,” said Oanda’s Craig Erlam.

On this side of the pond, the Royal Institution for Chartered Surveyors said surveyors reported an unexpected increase in house prices in the last three months as demand outstripped supply. The headline balance of firms reporting that house prices have risen over the last three months increased to +17% in September from +13% in August and beating the City consensus, which had predicted a slide to +12%.

Still to come on the data front, US initial jobless claims at 1330 BST and the Energy Information Administration’s US weekly crude inventories report at 1600 BST.

Meanwhile, oil prices climbed ahead of the EIA data with Brent crude up 0.15% to $51.89 per barrel and West Texas Intermediate crude up 0.02% to $50.19 per barrel at 1202 BST. Prices fell earlier after OPEC said production had risen to the highest level in at least eight years in September, while data from the American Petroleum Institute showed an increase in US weekly crude inventories.

In company news, United Utilities got a boost as Societe Generale upgraded the stock to ‘buy’ from ‘hold’, noting that recent share price weakness now implies a total shareholder return of 18%.

Prudential shares fell as Societe Generale lowered its rating on the stock to ‘sell’ from ‘hold’ and cut its target price to 1,250p from 1,400p.

Housebuilders rallied following the RICS data with Persimmon, Taylor Wimpey and Barratt Developments in the black.

Mining stocks, including BHP Billiton and Rio Tinto, were under pressure on the disappointing China trade data.

Unilever was in the red after a storm broke over a supermarket pricing dispute over Marmite and several other of its brands, although the group reported solid underlying sales amid tough third-quarter conditions. As a result, Tesco, whose chief executive Dave Lewis is an ex Unilever director, has withdrawn many of its fellow FTSE 100 constituent's products from sale.

Market Movers

FTSE 100 (UKX) 6,981.80 -0.60%
FTSE 250 (MCX) 17,938.43 -0.10%
techMARK (TASX) 3,530.31 -0.15%

FTSE 100 - Risers

Fresnillo (FRES) 1,696.00p 3.67%
Persimmon (PSN) 1,750.00p 3.49%
Taylor Wimpey (TW.) 147.80p 2.85%
Polymetal International (POLY) 864.00p 2.25%
Randgold Resources Ltd. (RRS) 7,080.00p 2.16%
Barratt Developments (BDEV) 484.20p 2.15%
British Land Company (BLND) 592.00p 1.72%
United Utilities Group (UU.) 930.50p 1.69%
Intu Properties (INTU) 287.90p 1.62%
Land Securities Group (LAND) 982.50p 1.39%

FTSE 100 - Fallers

Standard Life (SL.) 333.70p -4.36%
Rio Tinto (RIO) 2,601.50p -3.92%
Prudential (PRU) 1,393.50p -3.86%
BHP Billiton (BLT) 1,196.50p -3.39%
Mondi (MNDI) 1,605.00p -3.08%
Centrica (CNA) 209.40p -2.83%
Unilever (ULVR) 3,624.00p -2.67%
Royal Bank of Scotland Group (RBS) 172.50p -2.49%
Legal & General Group (LGEN) 211.70p -2.44%
Hargreaves Lansdown (HL.) 1,207.00p -2.43%

FTSE 250 - Risers

Capital & Counties Properties (CAPC) 277.60p 3.85%
Acacia Mining (ACA) 474.90p 3.74%
Hochschild Mining (HOC) 260.50p 3.37%
WH Smith (SMWH) 1,576.00p 3.34%
Booker Group (BOK) 181.40p 3.30%
Galliford Try (GFRD) 1,352.00p 2.81%
Centamin (DI) (CEY) 150.70p 2.38%
Unite Group (UTG) 603.50p 2.29%
Tullow Oil (TLW) 269.90p 2.16%
Big Yellow Group (BYG) 727.00p 2.11%

FTSE 250 - Fallers

Close Brothers Group (CBG) 1,325.00p -4.61%
Evraz (EVR) 206.80p -4.57%
Hays (HAS) 136.40p -3.26%
CMC Markets (CMCX) 194.30p -3.19%
Brown (N.) Group (BWNG) 194.10p -3.14%
Allied Minds (ALM) 358.80p -2.76%
Mitie Group (MTO) 200.90p -2.66%
Domino's Pizza Group (DOM) 344.30p -2.60%
Aberdeen Asset Management (ADN) 329.50p -2.51%
Riverstone Energy Limited (RSE) 1,185.00p -2.47%