London midday: FTSE drops as CBI highlights UK manufacturing weakness

The CBI Industrial Trends Survey’s headline total orders balance fell from -7 in September to -18 in October, its lowest level in two-and-a-half years and well below the consensus expectation of -9.

The decline was driven by lower exports mainly due to a stronger pound and subdued foreign demand.

Economists said the UK's strong services sector should allow the overall economic recovery to maintain a decent pace.

“After all," said Scott Bowman, UK economist at Capital Economics, “the low-inflation environment is providing a significant boost to real wages, job growth has returned and consumer confidence is high. As such, we believe that any slowdown in GDP growth in the third quarter will prove temporary and the recovery should get back on track soon.”

There was a slightly brighter macroeconomic note from continental Europe as German business confidence fell less than expected in October. The IFO institute’s business confidence index dropped to 108.2 this month from September’s 108.5, compared to analysts’ estimates of 107.8.

The decline came amid the Volkswagen emissions scandal and poor data in China.

“A mild dip from 108.5 to 108.2 month-on-month can be chalked up as a win for the German index, and suggests that, whilst Volkswagen may still be in the gutter, the country’s wider economy may be less-damaged than first thought,” said Connor Campbell, financial analyst at Spreadex.

Later on Mondaya report on US new home sales is due at 1400 GMT, with analysts predicting a 0.4% dip to 550,000.

The main event in the US this week will be the Federal Reserve's interest rate decision on Wednesday. The consensus forecast is that rates will remain at 0.25% amid low inflation and risks arising from a slowdown in emerging markets.

“I personally think that the Federal Reserve completely missed the boat with an opportunity to begin raising US interest rates during its September policy meeting and that the chances of a US interest rate rise at all this year have weakened each passing week since,” said Jameel Ahmad, chief market analyst at FXTM.

“The reduced US interest rate expectations are not limited to just slowing US economic momentum, but because the central bank cited global economic weakness as a reason to leave US rates unchanged in September.”

Company-wise, WPP slumped after reporting a third quarter like-for-like sales that missed analysts’ estimates.

Aberdeen Asset Management was a high riser on reports that the firm might be sounding out possible buyers. However, a spokesman firmly denied the claims, saying "In his 32 years running Aberdeen, Martin Gilbert has never made a formal or informal approach to anyone about buying the business," the Press and Journal reported.

AstraZeneca climbed after the US Food and Drug Administration's Arthritis Advisory Committee recommended the approval of lesinurad tablets for the treatment of hyperuricemia with gout.

Mining stocks rallied, including Antofagasta, Glencore, BHP Billiton, Rio Tinto and Fresnillo, as metal prices gained.

TalkTalk was knocked back for the second time since Friday's cyber-heist, after hackers warned over the weekend that they were planning another attack.

Market Movers

FTSE 100 (UKX) 6,428.14 -0.25%
FTSE 250 (MCX) 17,185.17 -0.32%
techMARK (TASX) 3,101.91 -0.23%

FTSE 100 - Risers

Aberdeen Asset Management (ADN) 364.30p 3.67%
Glencore (GLEN) 121.50p 1.97%
Tesco (TSCO) 192.70p 1.10%
Antofagasta (ANTO) 580.50p 1.04%
BHP Billiton (BLT) 1,151.00p 0.92%
TUI AG Reg Shs (DI) (TUI) 1,218.00p 0.83%
Royal Mail (RMG) 452.10p 0.78%
Rio Tinto (RIO) 2,523.50p 0.68%
Fresnillo (FRES) 762.50p 0.59%
Rolls-Royce Holdings (RR.) 692.00p 0.58%

FTSE 100 - Fallers

WPP (WPP) 1,439.00p -2.77%
ITV (ITV) 251.60p -2.10%
Admiral Group (ADM) 1,630.00p -1.63%
Barratt Developments (BDEV) 643.50p -1.53%
Relx plc (REL) 1,157.00p -1.45%
Persimmon (PSN) 1,995.00p -1.43%
Sky (SKY) 1,104.00p -1.43%
Burberry Group (BRBY) 1,333.00p -1.33%
ARM Holdings (ARM) 1,059.00p -1.30%
Travis Perkins (TPK) 1,914.00p -1.29%

FTSE 250 - Risers

National Express Group (NEX) 286.20p 3.70%
Senior (SNR) 245.60p 3.63%
Wizz Air Holdings (WIZZ) 1,888.00p 3.45%
Home Retail Group (HOME) 115.50p 2.48%
Northgate (NTG) 425.00p 2.43%
Bodycote (BOY) 536.50p 2.39%
Weir Group (WEIR) 1,117.00p 2.38%
AA (AA.) 283.00p 2.31%
Indivior (INDV) 212.30p 1.87%
Electra Private Equity (ELTA) 3,691.00p 1.54%

FTSE 250 - Fallers

TalkTalk Telecom Group (TALK) 233.70p -9.00%
Millennium & Copthorne Hotels (MLC) 503.50p -3.27%
Brewin Dolphin Holdings (BRW) 255.20p -2.97%
Go-Ahead Group (GOG) 2,433.00p -2.91%
Riverstone Energy Limited (RSE) 852.00p -2.52%
Bank of Georgia Holdings (BGEO) 2,094.00p -1.92%
Euromoney Institutional Investor (ERM) 961.50p -1.89%
Jimmy Choo (CHOO) 139.10p -1.83%
Nostrum Oil & Gas (NOG) 466.40p -1.81%
Carillion (CLLN) 314.00p -1.78%