London midday: Stocks turn lower as S&P warns of UK slowdown
London stocks gave up early gains to trade sharply lower by midday on Tuesday as the pound ticked up with investors awaiting rate hike hints from Bank of England policymakers, while Standard & Poor's warned of a looming slowdown in the UK economy.
The FTSE 100 was down 0.9% to 7,305.89, while the pound was up 0.2% against the euro and the pound at 1.1326 and 1.2906, respectively.
Spreadex analyst Connor Campbell said: "There hasn’t been anything yet from Bank of England MPC members Andy Haldane and Ben Broadbent (the latter’s speech in Aberdeen has been delayed until this afternoon), so there could still be some sterling drama before the day is over."
BoE chief economist Haldane - who turned more hawkish on interest rates last month - was due to make a speech at 1100 BST.
Meanwhile, investors were digesting a report from ratings agency Standard & Poor's suggesting that UK GDP will likely slow to 1.4% this year and 0.9% next year and that the BoE's current ultra-accommodative stance should continue over the medium term, with no rate hike before mid-2019.
"Growth is set to remain on a moderate trajectory as imported inflation squeezes household budgets and uncertainty about the outcome of the EU exit negotiations dampens investment," it said.
In corporate news, Marks & Spencer was under pressure after it said like-for-like sales remained negative in the first quarter. LFL clothing and homeware sales fell 1.2% in the 13 weeks to 1 July and food sales were down 0.1%, dragging UK LFL sales to 0.5%. However, total UK sales benefitted from store openings to rise 2.6%, lifting group sales to 2.7%.
Publishing house Pearson reversed earlier gains to trade lower after announcing the sale of a 22% stake in Penguin Random House to Bertelsmann and recapitalising the business, generating total net proceeds of about $1bn (£776m) with £300m ($386m) being returned to shareholders.
Recruitment company PageGroup fell despite posting record second-quarter profits, while Cairn Energy was in the red despite announcing that it has found oil at its latest well offshore Senegal.
Construction and support group Carillion tanked for the second day running as analysts picked apart the company's horrendous trading update at the start of the week.
On the upside, construction company Galliford Try rallied after saying its full-year profits would be at the upper end of analysts' forecasts of £46m to £59m.
Builders' merchant Grafton racked up healthy gains as it reported a 9% rise in first-half revenue, while Gocompare gained as it said it expects to report a 22% increase in first-half adjusted operating profit, driven mostly by an improvement in marketing margin.
On the data front, the monthly BRC-KPMG sales monitor released earlier revealed that hot weather helped UK retail sales pick up more than expected last month. Like-for-like retail sales in June were 1.2% higher than the same month last year, recovering well from a 0.4% fall in May and ahead of 0.8% City consensus.
Growth in total sales, which take account of new store openings, accelerated to 2.0% from 0.2%.
Market Movers
FTSE 100 (UKX) 7,315.19 -0.74%
FTSE 250 (MCX) 19,258.31 -0.51%
techMARK (TASX) 3,466.79 -0.84%
FTSE 100 - Risers
Anglo American (AAL) 1,079.00p 1.03%
Glencore (GLEN) 303.20p 0.71%
Morrison (Wm) Supermarkets (MRW) 244.20p 0.58%
TUI AG Reg Shs (DI) (TUI) 1,140.00p 0.53%
Severn Trent (SVT) 2,201.00p 0.50%
HSBC Holdings (HSBA) 741.60p 0.45%
Unilever (ULVR) 4,218.50p 0.33%
Tesco (TSCO) 171.60p 0.32%
Standard Chartered (STAN) 814.10p 0.21%
Antofagasta (ANTO) 825.50p 0.18%
FTSE 100 - Fallers
Pearson (PSON) 653.00p -5.43%
Marks & Spencer Group (MKS) 325.80p -3.89%
Convatec Group (CTEC) 295.60p -2.83%
Associated British Foods (ABF) 2,895.00p -2.39%
Prudential (PRU) 1,764.50p -1.89%
Land Securities Group (LAND) 1,002.00p -1.76%
British Land Company (BLND) 598.50p -1.72%
Legal & General Group (LGEN) 259.60p -1.70%
InterContinental Hotels Group (IHG) 4,221.00p -1.68%
Babcock International Group (BAB) 850.50p -1.62%
FTSE 250 - Risers
Galliford Try (GFRD) 1,264.00p 8.31%
Evraz (EVR) 225.40p 2.78%
Kaz Minerals (KAZ) 553.00p 2.31%
CYBG (CYBG) 284.00p 1.83%
Ascential (ASCL) 327.40p 1.74%
Computacenter (CCC) 888.00p 1.49%
FDM Group (Holdings) (FDM) 764.00p 1.39%
Grafton Group Units (GFTU) 718.00p 1.34%
Sports Direct International (SPD) 297.00p 1.26%
Renishaw (RSW) 3,731.00p 1.14%
FTSE 250 - Fallers
Carillion (CLLN) 95.95p -18.06%
Cobham (COB) 125.30p -3.17%
Pagegroup (PAGE) 478.30p -2.23%
Investec (INVP) 563.00p -2.17%
Bovis Homes Group (BVS) 929.50p -2.16%
Dairy Crest Group (DCG) 552.00p -1.95%
Man Group (EMG) 150.70p -1.95%
Cairn Energy (CNE) 167.10p -1.94%
Supergroup (SGP) 1,503.00p -1.83%
Sophos Group (SOPH) 445.50p -1.81%