London midday: Stocks up slightly despite dire Japan GDP, Sino-US worries
London stocks were in the black by midday on Monday but gains were unspectacular as investors weighed up dire Japanese GDP data and growing tensions between the US and China against a liquidity boost from the People's Bank of China.
The FTSE 100 was up 0.3% at 6,107.49, helped along by gains in the mining sector after the PBOC delivered a bigger-than-expected 700 billion yuan ($101bn) short-term liquidity injection.
Oanda analyst Jeffrey Halley said: "More importantly, the rate was unchanged at 2.95%, implying that there will be no cuts to China's one and five-year loan prime rates on Thursday. The PBOC seems determined to avoid inflating bubbles in the economy but resisting the urge to follow the rest of the world and flood the financial system with liquidity.
"In the longer-term, that may be a wise policy move, especially with the economy on a recovery trajectory."
Investors were also mulling the latest data out of Japan, which showed the economy suffered its worst contraction on record in the second quarter as the coronavirus pandemic took its toll.
GDP shrank by 7.8% on the quarter, accelerating from a 0.6% contraction in the first quarter, coming in worse than the 7.5% decline expected by economists and wiping all the growth since 2011. On an annualised basis, the economy contracted by 27.8%.
Miguel Chanco, senior Asia economist at Pantheon Macroeconomics, said the damage was broad-based as expected, with the nationwide state of emergency that enveloped most of Q2 "killing domestic demand and the near-global lockdown dealing a body-blow to exports".
Relations between the US and China were in focus after trade talks between the two - which had been due to take place on Saturday - were postponed.
Spreadex analyst Connor Campbell said: "Reuters is reporting that the delay has come about due to scheduling conflicts and the need to allow Beijing more time to buy up American exports as dictated by the phase one deal. It’s hard to know had to take the delay - in a sense, given the chaos of the last couple of months it has at least prevented things from getting any worse."
On home shores, the latest survey from property website Rightmove showed July was the busiest month for home buying in 10 years.
Rightmove director and housing market analyst Miles Shipside said: "Rather than just a release of existing pent-up demand due to the suspension of the housing market during lockdown, there’s an added layer of additional demand due to people’s changed housing priorities after the experience of lockdown. This is also keeping up the momentum of the unexpected mini-boom, which is now going longer and faster."
In equity markets, Persimmon was the top performer on the FTSE 100 as Davy upped its stance on shares of the housebuilder to ‘neutral’ from ‘underperform’ following its "impressive" response to the Covid-19 crisis. It said Persimmon has driven the best operational rebound post-Covid of any builder in the sector.
Elsewhere, food producer Cranswick rallied as it said saying full-year results are set to be ahead of expectations after first-quarter revenues rose by almost a quarter as more Britons ate at home during lockdown.
On the downside, British Airways and Iberia owner IAG, InterContinental Hotels, travel company TUI, Premier Inn owner Whitbread and cruise operator Carnival were all weaker as it emerged that Greece and Croatia, along with six other countries, could be next on the UK quarantine list. The UK already added France, the Netherlands and Malta - among others - last week.
The sector was also hit by Germany’s decision to add Spain, excluding the Canary Islands, to its list of high-risk coronavirus areas.
Market Movers
FTSE 100 (UKX) 6,107.49 0.29%
FTSE 250 (MCX) 17,754.97 0.11%
techMARK (TASX) 3,861.35 0.10%
FTSE 100 - Risers
Melrose Industries (MRO) 104.95p 2.14%
M&G (MNG) 183.35p 2.03%
Fresnillo (FRES) 1,245.50p 1.84%
Persimmon (PSN) 2,579.00p 1.78%
Anglo American (AAL) 1,911.60p 1.72%
Associated British Foods (ABF) 1,993.50p 1.71%
Johnson Matthey (JMAT) 2,376.00p 1.67%
Polymetal International (POLY) 2,007.00p 1.52%
Imperial Brands (IMB) 1,293.00p 1.45%
Ashtead Group (AHT) 2,727.00p 1.38%
FTSE 100 - Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 188.85p -2.93%
InterContinental Hotels Group (IHG) 4,033.00p -2.77%
GVC Holdings (GVC) 753.20p -2.16%
British Land Company (BLND) 358.80p -2.05%
JD Sports Fashion (JD.) 680.60p -1.85%
Pennon Group (PNN) 1,043.00p -1.42%
Whitbread (WTB) 2,411.00p -1.35%
Land Securities Group (LAND) 562.60p -1.30%
ITV (ITV) 61.56p -1.16%
Informa (INF) 408.00p -0.99%
FTSE 250 - Risers
Cranswick (CWK) 4,042.00p 5.70%
Chemring Group (CHG) 269.50p 4.66%
AJ Bell (AJB) 449.50p 4.53%
Petropavlovsk (POG) 32.90p 4.28%
Capital & Counties Properties (CAPC) 133.90p 4.12%
Greencore Group (GNC) 124.70p 3.49%
PureTech Health (PRTC) 271.50p 2.84%
Hochschild Mining (HOC) 279.20p 2.72%
Centamin (DI) (CEY) 206.00p 2.44%
Balfour Beatty (BBY) 236.40p 2.25%
FTSE 250 - Fallers
TUI AG Reg Shs (DI) (TUI) 300.40p -4.82%
Aston Martin Lagonda Global Holdings (AML) 66.00p -3.65%
Cineworld Group (CINE) 49.03p -3.37%
Oxford Instruments (OXIG) 1,508.00p -3.33%
Mitchells & Butlers (MAB) 165.20p -3.28%
SSP Group (SSPG) 232.80p -3.24%
Coats Group (COA) 53.00p -2.93%
Carnival (CCL) 951.20p -2.78%
Bank of Georgia Group (BGEO) 808.00p -2.77%
Ascential (ASCL) 292.80p -2.59%