London midday: Stocks flat ahead of Trump's presidential inauguration
London stocks were flat on Friday as traders assessed UK retail sales and China trade data while looking ahead to the inauguration of Donald Trump later in the day.
At 1159 GMT, the FTSE 100 fell 0.03% to 7,206.29 points.
The pound reversed gains from the previous session, falling 0.49% versus the dollar to $1.2281 and 0.22% against the euro to €1.1549. Meanwhile, oil prices advanced with Brent crude up 1.2% to $54.71 per barrel and West Texas Intermediate up 0.95% to $52.62 per barrel.
“The day of Donald Trump’s inauguration has arrived and financial markets are displaying exactly the kind of caution you would expect given his incredible ability to send investors into a frenzy,” said Craig Erlam, senior market analyst at Oanda.
“Throughout his campaign and since winning the presidency back in November, we’ve repeatedly seen two sides to Trump; the market friendly pro-growth, low regulation side and the protectionist, combative side that makes investors extremely uneasy. With it being unclear which side he’ll lean more towards today, traders are currently opting to sit on the fence but I imagine this will change dramatically later one once the ceremony gets underway.”
Mining shares, including Rio Tinto and Anglo American, were under the cosh after some uninspiring economic growth figures out of China. Figures from the National Bureau of Statistics showed China's GDP expanded 6.8% on the year in the fourth quarter of 2016. This was ahead of the 6.7% forecasts by economists.
For 2016 as a whole, however, the economy grew 6.7%, within the government’s 6.5% to 7% target but marking the weakest growth in 26 years.
China industrial production climbed an annualised 6% in December, slightly less than the forecast for a 6.1% increase and following a 6.2% gain in November.
Retail sales in the nation jumped 10.9% year-on-year in December, beating expectations for a 10.7% rise and following a 10.8% increase the previous month.
On this side of the pond, UK retail sales fell the most since April 2012 as an increase in average store prices deterred shoppers.
The Office for National Statistics said retail sales, including auto fuel, declined 1.9% in December compared to a month ago, far worse than the 0.1% decrease expected by analysts and following a 0.2% month-on-month rise in November.
Compared to the same month a year ago, retail sales rose 4.3% in December, missing forecasts for a 7.5% increase and following a 6.6% year-on-year gain in November.
Despite a decline between November and December - removing the effects of Christmas spending - fourth quarter retail sales growth was 5.6% on the same period last year and 1.2% compared to the previous quarter.
Howard Archer, chief market analyst at IHS Global Insight, said given the strong fourth quarter growth it “still looks probable that consumers made a decent contribution to fourth quarter GDP growth” albeit likely less than in the third quarter when retail sales grew 1.8% quarter-on-quarter. “This is consistent with our view that GDP growth likely edged back to 0.5% quarter-on-quarter in the fourth quarter from 0.6% in the third quarter.”
Among corporate stocks, Royal Mail continued to slump a day after reporting flat revenues on deteriorating letter volumes for the nine months to 25 December, as Jefferies reiterated an ‘underperform’ rating and cut the target price to 360p from 390p.
Whitbread gained after Barclays lifted its rating on the stock to ‘equal weight’ from ‘underweight’ and raised the target price to 4,150p from 3,340p.
Tesco was on the back foot after Exane BNP Paribas cut the supermarket’s rating to ‘underperform’ from ‘neutral’ and lowered the target price to 175p from 200p.
BNP said ‘less bad’ was the theme for supermarkets in 2016 and the UK economic outlook looks set to worsen in 2017 as a weaker pound pushes up import costs. Tesco’s shares are the most exposed, the French bank said.
Sainsbury’s also dropped as BNP reduced its rating to ‘neutral’ from ‘buy’ given the “sector risks and limited upside to our unchanged 255p target price”.
Pets at Home shares fell after HSBC downgraded the stock to ‘hold’ from ‘buy’ and lowered the target price to 230p from 290p after the company reported its third quarter trading update.
Market Movers
FTSE 100 (UKX) 7,213.12 0.06%
FTSE 250 (MCX) 18,181.49 -0.23%
techMARK (TASX) 3,348.72 -0.33%
FTSE 100 - Risers
Smurfit Kappa Group (SKG) 2,141.00p 2.49%
Whitbread (WTB) 4,134.00p 1.55%
CRH (CRH) 2,831.00p 1.40%
BT Group (BT.A) 383.20p 1.36%
London Stock Exchange Group (LSE) 3,050.00p 1.33%
Royal Dutch Shell 'A' (RDSA) 2,231.50p 1.04%
Lloyds Banking Group (LLOY) 65.39p 1.00%
Royal Dutch Shell 'B' (RDSB) 2,322.50p 0.96%
St James's Place (STJ) 1,063.00p 0.95%
Mondi (MNDI) 1,780.00p 0.91%
FTSE 100 - Fallers
Royal Mail (RMG) 409.80p -3.01%
AstraZeneca (AZN) 4,385.50p -1.86%
Tesco (TSCO) 198.85p -1.85%
Sainsbury (J) (SBRY) 263.70p -1.60%
Rio Tinto (RIO) 3,414.50p -1.27%
Anglo American (AAL) 1,285.50p -1.27%
Barratt Developments (BDEV) 499.30p -1.23%
Mediclinic International (MDC) 784.00p -1.13%
Provident Financial (PFG) 2,789.00p -1.13%
Taylor Wimpey (TW.) 167.70p -1.06%
FTSE 250 - Risers
Synthomer (SYNT) 417.90p 10.70%
Amec Foster Wheeler (AMFW) 470.50p 3.86%
Zoopla Property Group (ZPLA) 351.40p 3.81%
NMC Health (NMC) 1,658.00p 2.60%
Petrofac Ltd. (PFC) 937.50p 2.12%
Hochschild Mining (HOC) 226.90p 1.98%
TP ICAP (TCAP) 443.80p 1.56%
UDG Healthcare Public Limited Company (UDG) 660.00p 1.54%
3i Infrastructure (3IN) 192.30p 1.53%
Grainger (GRI) 239.20p 1.31%
FTSE 250 - Fallers
AA (AA.) 250.40p -7.57%
Allied Minds (ALM) 402.00p -3.41%
Evraz (EVR) 217.40p -3.38%
Ferrexpo (FXPO) 129.70p -3.28%
Vedanta Resources (VED) 1,001.00p -2.34%
Cobham (COB) 137.60p -2.20%
Pets at Home Group (PETS) 208.50p -2.07%
Beazley (BEZ) 394.10p -2.01%
SSP Group (SSPG) 390.80p -1.81%
Pennon Group (PNN) 776.50p -1.77%