London open: Stocks in the red after US tech selloff; Woodford Trust slumps

At 0840 BST, the FTSE 100 was down 0.3% at 7,161.31 while the pound was up 0.1% against the dollar at 1.2676 and 0.2% lower versus the euro at 1.1248.

The US tech sector was hit on Monday following reports that the Department of Justice and the Federal Trade Commission have agreed to launch antitrust probes of Apple, Alphabet, Amazon and Facebook.

Neil Wilson, chief market analyst at Markets.com, said: "Fangs are under severe pressure amid fears they are in the crosshairs of trust busters. The DoJ and FTC are marking targets and loading up.

"Whilst it’s far too early to say if any would, or could, be ripe to be broken up, there’s a real threat this will depress multiples and mean we need to reset expectations. Given the Fangs have been at the front of the market expansion in recent years, this will act as a drag on sentiment as well."

On home turf, the latest figures from the British Retail Consortium did little to lift the mood as they showed that UK retail sales fell in May at their fastest rate since 1995 amid political and economic uncertainty. In addition, the BRC warned of further job losses and store closures.

Sales were down 2.7% last month on a total basis compared to a 4.1% increase in May last year. Excluding Easter distortions, this marked the biggest decline since the BRC began recording data in January 1995.

On a like-for-like basis retail sales fell 3% from May 2018, when they rose 2.8% from the previous year. Excluding Easter distortions, this was the steepest LFL drop since December 2008.

BRC chief executive Helen Dickinson said: "With the biggest decline in retail sales on record, the risk of further job losses and store closures will only increase. While May 2018 offered almost unbroken sunshine, topped off by the run-up to the World Cup and the marriage of Meghan and Harry, May 2019 delivered political and economic uncertainty. Food sales dropped for the first time since June 2016, with further declines in clothing, footwear and outdoor goods.

“With retail conditions the toughest they have been for a decade, politicians must act to support the successful reinvention of our high streets and local communities. Business rates remain a barrier, preventing many retailers from investing in their physical space. We have a broken tax system, which sees retailers paying vast sums of money regardless of whether they make a penny at the till, and yet the Government is failing to act. The legislation is falling behind the technological revolution."

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said the slump in year-over-year growth in total sales is another sign that May was a terrible month for retailers, but it looks like this was just a bad month in an otherwise solid year.

"The CBI’s reported sales balance also plunged in May, to a 20-month low of -27, from +13 in April. These year-over-year comparisons, however, have been depressed by the bounce in sales in May 2018 caused by the run-up to the World Cup and the Royal Wedding.

"Households still have the wind in their sails; consumers’ confidence recovered in May to its highest level since September, while disposable incomes were boosted in April by the unusually large increase in the income tax personal allowance. Surveys point to a slowdown in employment growth, but resilient wage gains that should continue to exceed CPI inflation comfortably. At this stage, then, May just looks like one bad month in an otherwise solid year for growth in consumers’ spending."

In corporate news, Shell lost ground even as the oil giant said it expects to return $125bn or more to shareholders between 2021 and 2025 through dividends and buybacks. It also lifted its organic free cash flow outlook to around $35bn for 2025 at $60 per barrel.

On the FTSE 250, Woodford Patient Capital Trust - run by Neil Woodford - was the worst performer as it emerged that his flagship Equity Income Fund had been suspended after "an increased level of redemptions".

Hargreaves Lansdown was also under the cosh, after saying it had removed the Woodford Equity Income and Income Focus funds from its Wealth 50 buy list.

Emma Wall, head of investment analysis at Hargreaves, said: "The suspension follows a period of underperformance and outflows for the Woodford Equity Income Fund. We are advocates of long-term investing and think Woodford’s multi-decade track record remains compelling - but we don’t underestimate the disappointment investors must feel with Woodford’s recent performance."

"The suspension is understandably frustrating, but it’s important to remember that the value of your investment will be dependent on the share prices of the portfolio’s underlying holdings, which are not directly impacted by the suspension."

"Because the fund has been suspended we’ve removed it from our Wealth 50 list of favourite funds. We have also removed the Woodford Income Focus Fund, as we would prefer to see a resolution to the dealing suspension before we conduct a review."

Low cost airline Wizz Air flew a touch lower even as it reported a 22.4% year-on-year rise in passengers for May as it continued to expand its network into Eastern Europe.

888 Holdings was in the red despite saying it remains on track to meet full-year expectations and posting a 6% increase in like-for-like revenue for the period between 1 January and 18 May.

Shopping centre owner Intu Properties retreated as it announced the appointment of Robert Allen - the former chief financial officer of Crest Nicholson - as its new CFO with effect from 10 June.

In broker note action, Great Portland Estates was hit by a downgrade to 'sell' at Goldman Sachs but Royal Mail was boosted by an upgrade to 'neutral' at JPMorgan.

NewRiver REIT was knocked lower by a downgrade to 'hold' at Berenberg and after the real estate investment trust said it had sold a 70,000 sq ft Asda foodstore and petrol filling station in Wales to a private investor for £17.9m.

Market Movers

FTSE 100 (UKX) 7,161.31 -0.33%
FTSE 250 (MCX) 18,835.07 -0.22%
techMARK (TASX) 3,493.02 -0.48%

FTSE 100 - Risers

Standard Life Aberdeen (SLA) 266.50p 2.11%
ITV (ITV) 107.20p 1.95%
Imperial Brands (IMB) 1,902.00p 1.66%
BT Group (BT.A) 197.76p 1.52%
easyJet (EZJ) 867.39p 1.47%
Royal Bank of Scotland Group (RBS) 215.20p 1.41%
Barclays (BARC) 151.28p 1.20%
International Consolidated Airlines Group SA (CDI) (IAG) 453.80p 1.05%
British American Tobacco (BATS) 2,792.50p 0.92%
Evraz (EVR) 607.60p 0.83%

FTSE 100 - Fallers

Hargreaves Lansdown (HL.) 2,097.00p -5.88%
Ocado Group (OCDO) 1,140.00p -2.69%
Barratt Developments (BDEV) 538.40p -2.60%
Sage Group (SGE) 733.60p -2.29%
Taylor Wimpey (TW.) 160.35p -2.20%
St James's Place (STJ) 1,006.00p -2.19%
Micro Focus International (MCRO) 1,841.60p -2.13%
Associated British Foods (ABF) 2,458.00p -1.68%
Halma (HLMA) 1,805.50p -1.50%
GlaxoSmithKline (GSK) 1,528.20p -1.36%

FTSE 250 - Risers

Metro Bank (MTRO) 651.35p 4.13%
Rank Group (RNK) 155.60p 3.32%
Royal Mail (RMG) 200.80p 3.24%
Wood Group (John) (WG.) 400.60p 2.74%
Contour Global (GLO) 203.00p 2.63%
Centamin (DI) (CEY) 100.12p 2.18%
Bakkavor Group (BAKK) 120.20p 1.86%
Hilton Food Group (HFG) 967.00p 1.79%
Hunting (HTG) 518.00p 1.77%
Sabre Insurance Group (SBRE) 259.00p 1.57%

FTSE 250 - Fallers

Woodford Patient Capital Trust (WPCT) 67.49p -11.78%
Kier Group (KIE) 150.95p -7.85%
NewRiver REIT (NRR) 194.41p -5.16%
Countryside Properties (CSP) 283.00p -4.39%
Ted Baker (TED) 1,342.84p -2.27%
Sophos Group (SOPH) 389.70p -2.18%
Civitas Social Housing (CSH) 80.40p -2.07%
Stobart Group Ltd. (STOB) 105.80p -2.04%
Herald Investment Trust (HRI) 1,290.00p -1.98%
AJ Bell (AJB) 410.00p -1.91%