London midday: Stocks flat ahead of US GDP, May-Trump meeting

London stocks were flat on Friday ahead of US economic growth figures and a meeting between Prime Minister Theresa May and US President Donald Trump.

At 1158 GMT the FTSE 100 was drifting down 0.07% to 7,156.11 points.

The pound fell 0.42% versus the dollar to $1.2544 and declined 0.49% against the euro to €1.1731.

“Today is crucial for the pound, the Prime Minister’s retort that ‘opposites attract’ added to the warm welcome yesterday from Philadelphia and Republicans and could set the pound on a stable course,” said Paresh Davdra, chief executive of foreign exchange provider Rational FX.

“The Reagan-Thatcheresque touch to this new geopolitical picture is hard to miss. Positive discussions are highly anticipated and a dialogue over progress and future development could forge true market dynamics.”

Ahead of Friday’s meeting between May and Trump in Washington, the UK Prime Minister said she believed she could forge a strong relationship with the US leader, arguing that “sometimes opposites attract”. May used a speech to Republican leaders in Philadelphia to say that the two nations have a responsibility to lead and argued that a new “special relationship” should be made. She said the relationship would be nothing like the one between Tony Blair and George W Bush, which saw the pair collaborate to invade Iraq and Afghanistan.

“The days of Britain and America intervening in sovereign countries in an attempt to remake the world in our own image are decisively over,” May said.

Investors are also looking ahead to US gross domestic product figures at 1330 GMT, which are expected to show the economy grew 2.2% year-on-year in the fourth quarter, compared to 3.5% in the previous three-month period. Personal consumption is forecast to rise 2.5% in the fourth quarter.

The US also sees the release of durable goods orders data at 1330 GMT followed by the University of Michigan’s consumer confidence index at 1500 GMT.

Among corporate stocks, shares soared in Tesco and wholesaler Booker Group – which owns Londis and Budgens – after the two announced an agreement on the terms of a recommended share and cash merger to create the UK's leading food business. Under the terms of the merger, each Booker scheme shareholder would receive 0.861 new Tesco shares and 42.6p in cash, representing a value of £3.7bn for Booker’s ordinary share capital. Shares in both companies rallied.

Elsewhere, telecoms company BT Group was a little weaker after it said third-quarter revenue rose but profit fell as it deals with an accounting scandal at its Italian business, and faces a “challenging” outlook in the UK. For the quarter ended 31 December 2016, revenue was up 32% to £6.12bn, compared to the previous year, while pre-tax profit fell 37% to £526m.

Specialist lender Paragon Group was in the black as it reported first-quarter underlying operating profit of £33.1m, in line with management's expectations and supported by good underlying trends in volumes, margins, cost control and bad debts.

Easyjet flew lower as Goldman Sachs and Davy downgraded their stances on the stock.

Goldman downgraded easyJet to ‘neutral’ from ‘buy’ and cut the price target to 970p from 1,160p, citing a deteriorating free cash flow outlook. Davy cut its rating on the airline to ‘neutral’ from ‘outperform’ and lowered the target price to 850p from 1,100p.

Iberia and British Airways parent International Consolidated Airlines Group was faring a lot better, however, after Goldman upgraded it to ‘buy’ from ‘neutral’ and lifted the price target to 580p from 490p, citing an attractive valuation and strong free cash flow yield. Davy reiterated its ‘outperform’ on IAG, bumping up the price target to 610p from 460p.

Market Movers

FTSE 100 (UKX) 7,158.36 -0.04%
FTSE 250 (MCX) 18,141.39 -0.01%
techMARK (TASX) 3,217.28 -0.39%

FTSE 100 - Risers

Tesco (TSCO) 204.90p 8.41%
Fresnillo (FRES) 1,404.00p 2.33%
Convatec Group (CTEC) 246.10p 1.82%
International Consolidated Airlines Group SA (CDI) (IAG) 499.40p 1.67%
Mediclinic International (MDC) 820.00p 1.61%
Sage Group (SGE) 608.00p 1.50%
Associated British Foods (ABF) 2,426.00p 1.42%
Glencore (GLEN) 324.75p 1.34%
Diageo (DGE) 2,247.50p 1.33%
DCC (DCC) 6,150.00p 1.32%

FTSE 100 - Fallers

AstraZeneca (AZN) 4,198.00p -2.33%
easyJet (EZJ) 973.50p -2.16%
Sainsbury (J) (SBRY) 252.90p -2.01%
Antofagasta (ANTO) 823.00p -1.67%
Shire Plc (SHP) 4,369.50p -1.54%
Rolls-Royce Holdings (RR.) 682.50p -1.37%
Land Securities Group (LAND) 993.00p -1.29%
Ashtead Group (AHT) 1,628.00p -1.27%
Intertek Group (ITRK) 3,436.00p -1.15%
Lloyds Banking Group (LLOY) 65.48p -1.04%

FTSE 250 - Risers

Booker Group (BOK) 212.80p 16.22%
Ferrexpo (FXPO) 144.50p 3.07%
Zoopla Property Group (ZPLA) 358.80p 2.46%
Kaz Minerals (KAZ) 450.20p 2.43%
Centamin (DI) (CEY) 146.60p 2.23%
Acacia Mining (ACA) 401.70p 1.93%
Renishaw (RSW) 2,846.00p 1.82%
Crest Nicholson Holdings (CRST) 494.20p 1.67%
JPMorgan Indian Investment Trust (JII) 635.00p 1.60%
Rentokil Initial (RTO) 225.50p 1.35%

FTSE 250 - Fallers

Restaurant Group (RTN) 284.40p -3.17%
Petra Diamonds Ltd.(DI) (PDL) 147.50p -3.02%
Rank Group (RNK) 193.20p -2.87%
Berendsen (BRSN) 831.50p -2.86%
Carillion (CLLN) 220.80p -2.86%
Nostrum Oil & Gas (NOG) 456.40p -2.81%
Vectura Group (VEC) 129.00p -2.12%
Moneysupermarket.com Group (MONY) 327.20p -2.09%
Workspace Group (WKP) 743.50p -2.04%
McCarthy & Stone (MCS) 164.30p -2.03%