London midday: Stocks extend drop as scrutiny of Trump contacts with Russia intensifies

Thu 18 May 2017

LONDON (SHARECAST) - (ShareCast News) - London stocks are near their worst levels of the day on the heels of a report that advisers to US president Donald Trump had multiple contacts with Russian officials and others with ties to the Kremlin in the run-up to the 2016 elections.
As of 1200 BST the Footsie was down by 102.97 points at 7,400.54 and the second-tier FTSE 250 off by 0.99% at 19,576.13.

With investors already waiting for the proverbial 'other shoe' to drop, Reuters reported that former national Security adviser Michael Flynn and other Trump advisers sent at least 18 calls and e-mails to Russian officials or related people during the last seven months of the presidential elections.

Overnight, the US Department of Justice appointed former FBI director Robert Mueller as special counsel to lead the investigation into Russian interference into the 2016 presidential elections.

On a cautionary note, Craig Erlam, senior market analyst at Oanda, wrote: "While I don't believe at this stage that these reports regarding Trump will jeopardise his agenda, markets must reflect the challenges he now faces which ultimately make it more difficult.

"At the very least, this distraction may delay the implementation of his plans which the markets won't like."

Adding to the headwinds faced by investors in equities, ONS reported that UK retail sales soared by 2.3% month-on-month in April, speeding past analysts' forecasts for an increase of 1.1%.

Analysts at Barclays - who had penciled in a rise of just 0.8% - warned of distortions in the data due to the shift in the timing of Easter this year, as well as conspicuously strong sales in the 'other' component of non-store retail sales.

Nevertheless, the data was enough to send the pound higher by 0.5% to 1.3032.

As if that were not enough, a drop of 1.8% for Brent to $51.27 saw investors book profits on the largest listed oil outfits, such as BP and Shell.

Base metals prices were also weaker, with three-month LME copper trading lower from $5,624 a metric tonne on Wednesday to $5,540 a tonne.

GlaxoSmithKline shares fell slightly after it said its mepolizumab treatment met co-primary efficacy endpoints and all secondary endpoints in a double-blind, placebo-controlled study on patients who have a form of vasculitis.

Patients treated with mepolizumab had a significantly greater accrued time in remission over the 52-week treatment period compared to placebo, with 28% of patients on mepolizumab achieving remission for at least 24 weeks versus 3% on placebo, GSK said.

Financial services provider Hargreaves Lansdown led the fallers after it said assets under administration rose 10% to 77bn as it reported a trading update for the four months to April 30 and announced that chairman Mike Evans was stepping down.

Evans said he would leave HL once a successor was found.

HL said net new business for the period came in at 3.3bn, with year to date net new business at 5.6bn, driven by a recovery in investor confidence ahead of the end of the tax year, new product launches, higher annual ISA allowance and the launch of Lifetime ISA.

Energy network operator National Grid posted its final results for the year to 31 March, with its operating profit rising 14% to 4.67bn on an adjusted basis, and its profit before tax improving 13% to 3.56bn.

The company said total adjusted earnings per share were 73p, a rise of 16%, while its total adjusted earnings per share excluding timing were up 6% at 66.1p.

Total group return on equity was 11.7%, dropping from 12.3% in the 2016 financial year.

Investec reported a 18.5% increase in full-year statutory operating profits to 599.1m which drove a 6.3% rise in statutory earnings per share to 48.3p. That was despite the macroeconomic uncertainty impacting its two key markets, according to the company.

Third party assets under management rose 23.9% to 150.7bn on a currency neutral basis. Capital remained in excess of current regulatory requirements, Investec said, adding that it is comfortable with its common equity tier 1 ratio target of 10.0%. The board proposed a final dividend of 13.0p, taking the full-year payout to 23.0p.

Burberry shares were up as the company reported annual profits at the upper end of expectations and promised investors a new 300m share buyback.

On revenue of 2.8bn in the year to 31 March, which had already been announced, the beige-checked fashion house delivered adjusted profits of 462m, which were up 10% at the reported level and down 21% at the underlying level.

Market Movers

FTSE 100 (UKX) 7,403.65 -1.33%
FTSE 250 (MCX) 19,584.11 -0.96%
techMARK (TASX) 3,555.93 -1.19%

FTSE 100 - Risers

Burberry Group (BRBY) 1,680.00p 2.38%
Royal Mail (RMG) 440.10p 2.16%
Merlin Entertainments (MERL) 513.50p 1.38%
Centrica (CNA) 195.90p 1.29%
Whitbread (WTB) 4,169.00p 1.04%
Next (NXT) 4,340.00p 0.93%
Marks & Spencer Group (MKS) 378.80p 0.88%
Rolls-Royce Holdings (RR.) 849.00p 0.77%
SSE (SSE) 1,477.00p 0.61%
Severn Trent (SVT) 2,412.00p 0.50%

FTSE 100 - Fallers

Ashtead Group (AHT) 1,484.00p -4.87%
Provident Financial (PFG) 3,048.00p -3.42%
Royal Dutch Shell 'B' (RDSB) 2,174.00p -3.40%
Royal Dutch Shell 'A' (RDSA) 2,111.50p -3.36%
Antofagasta (ANTO) 778.50p -3.35%
Mondi (MNDI) 1,960.00p -3.16%
Experian (EXPN) 1,643.00p -3.01%
Standard Chartered (STAN) 728.40p -2.89%
British Land Company (BLND) 633.00p -2.84%
HSBC Holdings (HSBA) 660.80p -2.58%

FTSE 250 - Risers

Berendsen (BRSN) 1,037.00p 20.09%
Euromoney Institutional Investor (ERM) 1,182.00p 5.63%
JRP Group (JRP) 134.70p 4.66%
Sophos Group (SOPH) 409.30p 3.52%
TalkTalk Telecom Group (TALK) 180.70p 3.49%
Cairn Energy (CNE) 204.10p 3.19%
SSP Group (SSPG) 469.70p 2.60%
Dunelm Group (DNLM) 602.00p 1.78%
Nex Group (NXG) 619.50p 1.56%
Thomas Cook Group (TCG) 94.95p 1.01%

FTSE 250 - Fallers

Mitchells & Butlers (MAB) 243.70p -5.54%
Keller Group (KLR) 872.00p -4.86%
Bodycote (BOY) 751.00p -4.76%
Kaz Minerals (KAZ) 456.80p -4.57%
Ferrexpo (FXPO) 160.40p -4.52%
IMI (IMI) 1,202.00p -4.22%
Petrofac Ltd. (PFC) 675.00p -3.78%
Vesuvius (VSVS) 533.50p -3.61%
Petra Diamonds Ltd.(DI) (PDL) 129.70p -3.57%
Dairy Crest Group (DCG) 595.00p -3.41%
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