London open: Stocks slip amid trade woes but sterling weakness limits losses

London stocks nudged lower in early trade on Wednesday amid ongoing worries about Sino-US trade relations, as investors sifted through updates from the likes of ITV and Imperial Brands and mulled over a set of mixed Chinese trade data.

At 0830 BST, the FTSE 100 was down 0.1% at 7,253.66, while the pound was off 0.2% against the dollar at 1.3046 and 0.3% lower versus the euro at 1.1644.

Spreadex analyst Connor Campbell said "the sorry state of sterling" was helping to prevent another dive into the red for the top-flight index following heavy losses in the US and Asia, as the latest reports suggest cross-party talks on Brexit aren’t going very well.

"With Labour’s trust in the Tories hurt by leaks to the Sunday papers, and Theresa May under pressure to clarify her resignation date, there appears to be too much party politics at play to actually reach a compromise palatable to both sides," said Campbell.

"This week is meant to be the ‘deadline’ for these talks - talking of cut-off points, David Lidington has claimed July 2 as the latest government deadline for passing a Brexit deal - so an outcome, positive or negative, could be confirmed in the coming days."

As far as Sino-US relations are concerned, London Capital Group analyst Jasper Lawler said the overriding fear was that global growth would take a hit should the two fail to hash out a trade deal and do so sooner rather than later.

"Just as the global economy was starting to show tentative signs of stabilising, a bigger slowdown is now back on the cards," he said.

Investors will now shift their focus to the talks between US and Chinese officials that are due to take place on Thursday and Friday in Washington.

"Given the continued signs of risk aversion in the markets, investors are not holding their breath for any serious progress in these talks. The chances of the two powers resolving their issues over the coming two days of talks appears unlikely," said Lawler.

Market participants were digesting data out of China earlier which painted a mixed picture on trade. China’s exports dropped 2.7% in April, while imports grew by 4%, leaving a trade surplus of $13.84bn. Economists had pencilled in a 3% uptick in exports and a 2.1% drop in imports.

On home turf, the latest figures from the British Retail Consortium and KPMG showed that retail sales rose by 3.7% on a like-for-like basis in April compared with a 4.2% drop in the same month last year.

On a total basis, sales were up 4.1% in April following a 3.1% fall in April 2018. However, the two-year average growth, which corrects for the Easter distortion, was 0.4% per year, which is a slowdown from March's equivalent of 0.9%.

BRC chief executive Helen Dickinson said: "Retail sales were below expectation this month as the sunshine over the Easter weekend persuaded many to pursue recreational, rather than retail, activities. Department stores, as well as clothing and footwear shops, were harder hit by the warmer weather, while food-to-go fared much better from it."

In equity markets, broadcaster ITV was weaker as it said total external revenue declined 4% in the three months to the end of March to £743m.

Direct Line was in the red as the insurer posted a 2.1% dip in first-quarter gross written premiums as a reduction in the motor and home partnerships divisions offset increases elsewhere.

Imperial Brands retreated as it posted a 3.8% rise in net revenues for the first half of its fiscal year to £3.66bn, but a 0.2% dip in total adjusted operating profits to £1.62bn.

JD Wetherspoon was on the back foot despite saying that LFL sales rose 7.6% in the third quarter, while total sales were up 8.4%.

On the upside, builders' merchants were having a good day, with Grafton and Travis Perkins both higher after trading updates. Grafton reported a 6.1% increase in group revenue for the four months to 30 April, while Travis Perkins said first-quarter group LFL sales jumped 7.3% despite "uncertain market conditions".

BHP edged higher in the face of a £5bn lawsuit, after a class action was filed at the High Court in the UK over a 2015 dam collapse at its Brazilian joint venture that killed 19 people.

In broker note action, Paddy Power was upgraded to 'outperform' at Davy and Restaurant Group was cut to 'hold' at Peel Hunt.

Market Movers

FTSE 100 (UKX) 7,253.66 -0.09%
FTSE 250 (MCX) 19,451.69 -0.07%
techMARK (TASX) 3,567.81 -0.07%

FTSE 100 - Risers

Anglo American (AAL) 1,967.00p 1.20%
Royal Dutch Shell 'B' (RDSB) 2,400.64p 1.02%
Informa (INF) 767.40p 0.97%
Micro Focus International (MCRO) 1,761.20p 0.95%
Kingfisher (KGF) 254.40p 0.79%
Glencore (GLEN) 291.75p 0.78%
Royal Dutch Shell 'A' (RDSA) 2,393.00p 0.76%
Rolls-Royce Holdings (RR.) 918.60p 0.66%
British American Tobacco (BATS) 2,889.50p 0.56%
Fresnillo (FRES) 740.53p 0.53%

FTSE 100 - Fallers

TUI AG Reg Shs (DI) (TUI) 821.20p -3.57%
ITV (ITV) 128.75p -2.17%
Sainsbury (J) (SBRY) 210.00p -1.82%
Direct Line Insurance Group (DLG) 311.90p -1.73%
Admiral Group (ADM) 2,104.00p -1.68%
SSE (SSE) 1,138.00p -1.56%
Marks & Spencer Group (MKS) 272.80p -1.52%
Imperial Brands (IMB) 2,294.50p -1.42%
Carnival (CCL) 3,934.00p -1.35%
Taylor Wimpey (TW.) 178.00p -1.30%

FTSE 250 - Risers

Travis Perkins (TPK) 1,474.50p 5.02%
Premier Oil (PMO) 91.37p 3.03%
Grafton Group Units (GFTU) 891.50p 2.47%
Wood Group (John) (WG.) 448.00p 2.28%
Charter Court Financial Services Group (CCFS) 360.37p 2.23%
Acacia Mining (ACA) 144.94p 2.00%
Tullow Oil (TLW) 213.90p 1.95%
Hunting (HTG) 545.50p 1.68%
Sabre Insurance Group (SBRE) 273.00p 1.68%
Ascential (ASCL) 357.20p 1.53%

FTSE 250 - Fallers

Wetherspoon (J.D.) (JDW) 1,296.00p -3.64%
Hilton Food Group (HFG) 981.00p -2.49%
Telecom Plus (TEP) 1,440.00p -2.44%
Royal Mail (RMG) 237.20p -2.02%
Ted Baker (TED) 1,489.00p -1.97%
Restaurant Group (RTN) 139.00p -1.91%
Metro Bank (MTRO) 621.50p -1.82%
St. Modwen Properties (SMP) 402.50p -1.59%
Victrex plc (VCT) 2,266.00p -1.48%
TI Fluid Systems (TIFS) 203.50p -1.45%