London open: Stocks nudge lower as traders eye G20; US rate cut expectations tempered

At 0830 BST, the FTSE 100 was off 0.1% at 7,414.27, while the pound was down 0.1% against the dollar and the euro at 1.2674 and 1.1149, respectively.

CMC Markets analyst David Madden said: "Some traders are getting nervous ahead of the meeting between President Trump and China’s Xi Jinping.

"The relationship between the US and China has been volatile in recent months and traders are viewing the fact the meeting is taking place as a positive sign, but the gulf between the two sides is large. The Trump administration have major concerns about intellectual property protection, and on the other side of the debate, the Chinese government think the Huawei ban is unfair. Should things not work out, both sides have economic tools to put pressure on the other one."

Also weighing on sentiment were comments from Fed chairman Jerome Powell and St Louis Fed President James Bullard on Tuesday. Speaking at the Council of Foreign Relations, Powell said that while there is greater uncertainty about trade and the global economy, there is no indication of how serious this might be or how long it might last.

"The question my colleagues and I are grappling with is whether these uncertainties will continue to weigh on the outlook and thus call for additional policy accommodation," Powell said.

Meanwhile, Bullard said on Bloomberg TV that a 50 basis points rate cut would be "overdone".

Neil Wilson, chief market analyst at Markets.com, said: "Stocks dropped after the Fed chair Jay Powell asserted the central bank’s independence from politics and cautioned against short-termism affecting monetary policy, in a speech that appeared to try and temper expectations for a rate cut in July.

"At least it looked like he was saying the Fed is by no means sure to cut - we should remember the recent dot plot did not suggest a cut would come until 2020.

"On top of this we had uber-dove James Bullard, who lest we forget was the sole dissenter at the June meeting in voting for a cut, saying that he did not think a 50-basis point cut in July was warranted. This left the market less confident in getting the two-for-one 50bps cut in July - expectations down from around 40% to 26%."

In corporate news, Wood Group rallied as it said its performance in the first half was up on the prior year

BCA Marketplace was on the rise after private equity firm TDR Capital confirmed that it has made a £1.9bn offer for the car auctioneer and WeBuyAnyCar.com owner, as it posted a jump in full-year revenue and profit.

Distribution and outsourcing group Bunzl ticked lower as it said expectations for 2019 remain unchanged, with overall trading consistent with the slowing underlying revenue growth indicated at the first-quarter trading update.

Bus and rail operator Stagecoach was a little weaker as it reported a 30% increase in full-year pre-tax profit and said it has no plans to bid for any new UK rail franchises after operations end in November. The company also announced that deputy chairman Will Whitehorn will step down in June 2020 after nine years in the job.

In broker note action, Ted Baker was hit by a downgrade to 'sector perform' at RBC Capital Markets.

Hargreaves Lansdown was upgraded to 'hold' at Deutsche Bank and Jupiter Fund Management was upgraded to 'buy' at Peel Hunt.

Elementis was initiated at 'hold' by Stifel. United Utilities and Pennon were started at 'hold' by Jefferies, while Severn Trent was initiated at 'buy'.

Market Movers

FTSE 100 (UKX) 7,414.27 -0.11%
FTSE 250 (MCX) 19,259.82 -0.14%
techMARK (TASX) 3,624.92 -0.18%

FTSE 100 - Risers

Admiral Group (ADM) 2,215.00p 0.96%
Rio Tinto (RIO) 4,812.00p 0.82%
TUI AG Reg Shs (DI) (TUI) 735.40p 0.60%
Hargreaves Lansdown (HL.) 1,924.00p 0.58%
Carnival (CCL) 3,430.00p 0.53%
Royal Dutch Shell 'B' (RDSB) 2,618.00p 0.44%
BP (BP.) 553.40p 0.44%
Royal Dutch Shell 'A' (RDSA) 2,606.50p 0.40%
BHP Group (BHP) 1,998.00p 0.39%
Evraz (EVR) 641.40p 0.38%

FTSE 100 - Fallers

Fresnillo (FRES) 877.55p -1.73%
Smurfit Kappa Group (SKG) 2,373.00p -1.13%
Imperial Brands (IMB) 1,847.40p -0.95%
SEGRO (SGRO) 738.40p -0.81%
Diageo (DGE) 3,396.00p -0.79%
Ocado Group (OCDO) 1,140.00p -0.74%
Micro Focus International (MCRO) 2,083.00p -0.74%
Pearson (PSON) 812.20p -0.61%
Schroders (SDR) 3,055.00p -0.59%
Just Eat (JE.) 621.20p -0.58%

FTSE 250 - Risers

BCA Marketplace (BCA) 242.00p 2.80%
Premier Oil (PMO) 76.60p 2.65%
Hochschild Mining (HOC) 191.28p 2.45%
Stagecoach Group (SGC) 119.80p 1.87%
Plus500 Ltd (DI) (PLUS) 615.00p 1.65%
Petrofac Ltd. (PFC) 411.60p 1.63%
Jupiter Fund Management (JUP) 418.00p 1.46%
Entertainment One Limited (ETO) 398.66p 1.34%
Morgan Advanced Materials (MGAM) 271.60p 1.27%
FirstGroup (FGP) 99.45p 1.23%

FTSE 250 - Fallers

Ted Baker (TED) 777.00p -3.78%
Euromoney Institutional Investor (ERM) 1,280.00p -2.14%
Card Factory (CARD) 170.00p -2.13%
IP Group (IPO) 73.00p -2.01%
Polypipe Group (PLP) 433.55p -1.56%
Coats Group (COA) 79.09p -1.39%
FDM Group (Holdings) (FDM) 914.85p -1.31%
McCarthy & Stone (MCS) 129.17p -1.17%
Mediclinic International (MDC) 294.00p -1.14%
Rank Group (RNK) 159.40p -0.99%