London midday: Stocks extend losses amid trade uncertainty; GDP in focus

Tue 10 Dec 2019

LONDON (SHARECAST) - (Sharecast News) - London stocks were sharply lower by midday on Tuesday, with sentiment undermined by weak UK economic growth figures and uncertainty over a potential China-US trade deal.
The FTSE 100 was down 1.2% at 7,144.99, extending earlier gains, while the pound was up 0.2% against the dollar at 1.3174 and 0.1% firmer versus the euro at 1.1889.

Data released earlier by the Office for National Statistics showed that Britain's economy flatlined in October as growth in services was offset by declines in construction and manufacturing, official figures showed.

GDP grew by 0.0% in October and was flat for the three months to the end of October. The result for the month of October pushed the annual growth rate down to 0.7%, the weakest in almost eight years.

Services, which make up about three quarters of the UK economy, expanded by 0.2% but manufacturing, construction and agriculture all shrank. The biggest decline was the 2.3% drop in construction output, caused by what the ONS said was a "notable drop in housebuilding and infrastructure".

Paul Dale, chief UK economist at Capital Economics, said: "The stagnation in GDP in October is unlikely to influence many people's vote in Thursday's election, but it could prompt some more MPC members to consider voting for lower interest rates in the coming months."

Investors were also wary ahead of interest rate decisions by the European Central Bank and the US Federal Reserve this week, the general election in the UK and the US tariff deadline on China. The US is due to implement tariffs on more than $150bn of Chinese imports on 15 December.

According to the South China Morning Post, it is increasingly unlikely that a trade deal between the US and China will be reached this week. However, it also cited sources as saying that the tariffs planned to kick in this week are unlikely to come into force.

IG market analyst Joshua Mahony said: "While many believe that we will see that deadline delayed, the default option remains another ramp-up in tariffs, and thus markets had to take it into account soon enough."

In equity markets, equipment rental firm Ashtead lost ground as it posted a slump in first-half profit at its UK business, A-Plant, and warned of "challenging" trading conditions.

Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "As the UK is currently demonstrating all too well, renting out construction equipment is a cyclical business. When times are bad construction activity grinds to a halt and unsurprisingly rental demand disappears too. This affects both rental volumes and rental rates at the same time, exacerbating the pain.

"That's part and parcel of the business, but it becomes more concerning when borrowing climbs, since debt holders must be paid regardless of the economic conditions. So far strong results in the US are more than offsetting weakness in the UK, and Ashtead is keen to point to the not insignificant proportion of activity that falls into the 'vital maintenance' category.

"Nonetheless, with conditions in the UK looking set to remain tough for some time and debt still climbing, we'll be keeping a close eye on performance going forwards."

Rolls-Royce was under pressure as the aerospace and defence company announced the departure of non-executive director Bradley Singer, a representative of its largest shareholder, ValueAct Capital.

Morrisons was in the red as data from research firm Kantar showed that sales at the supermarket retailer fell 2.9% in the 12 weeks to 1 December.

Hunting was knocked lower by a downgrade to 'neutral' at Credit Suisse, while Shaftesbury was hit by a downgrade to 'underweight' at Barclays.

In small caps, shares of fashion retailer Ted Baker tumbled after it announced the departure of its chief executive officer and chairman, scrapped its dividend payments and warned on profits.

Going the other way, Tullow Oil gushed higher, having suffered heavy losses in the previous session on the back of a disappointing update.

Computacenter surged after saying that results for 2019 would be "well ahead" of current market expectations in terms of profitability and earnings per share.

Market Movers

FTSE 100 (UKX) 7,144.99 -1.23%
FTSE 250 (MCX) 20,718.90 -0.97%
techMARK (TASX) 3,985.47 -0.96%

FTSE 100 - Risers

Evraz (EVR) 363.80p 0.78%
Ocado Group (OCDO) 1,209.00p 0.37%
GlaxoSmithKline (GSK) 1,734.00p 0.32%
Fresnillo (FRES) 560.00p 0.32%
Just Eat (JE.) 780.40p -0.08%
Hikma Pharmaceuticals (HIK) 1,905.50p -0.18%
Reckitt Benckiser Group (RB.) 5,931.00p -0.19%
British Land Company (BLND) 607.80p -0.20%
Rentokil Initial (RTO) 428.60p -0.28%
Hiscox Limited (DI) (HSX) 1,359.00p -0.29%

FTSE 100 - Fallers

Ashtead Group (AHT) 2,197.00p -7.14%
Bunzl (BNZL) 2,030.00p -3.65%
Rolls-Royce Holdings (RR.) 699.60p -3.50%
Morrison (Wm) Supermarkets (MRW) 196.85p -3.41%
Mondi (MNDI) 1,602.00p -2.73%
Glencore (GLEN) 213.50p -2.58%
Barclays (BARC) 167.32p -2.54%
ITV (ITV) 139.85p -2.48%
International Consolidated Airlines Group SA (CDI) (IAG) 540.20p -2.39%
TUI AG Reg Shs (DI) (TUI) 936.20p -2.26%

FTSE 250 - Risers

Tullow Oil (TLW) 45.62p 14.22%
Computacenter (CCC) 1,620.00p 5.68%
Bodycote (BOY) 888.00p 2.96%
PureTech Health (PRTC) 261.00p 2.76%
Barr (A.G.) (BAG) 578.00p 2.48%
TBC Bank Group (TBCG) 1,306.00p 1.71%
AJ Bell (AJB) 406.00p 1.63%
BMO Commercial Property Trust Limited (BCPT) 116.00p 1.05%
Pets at Home Group (PETS) 264.20p 0.99%
Lancashire Holdings Limited (LRE) 720.00p 0.98%

FTSE 250 - Fallers

Hunting (HTG) 370.00p -5.03%
IP Group (IPO) 59.40p -4.04%
Senior (SNR) 182.90p -3.94%
Micro Focus International (MCRO) 1,061.60p -3.74%
GVC Holdings (GVC) 824.60p -3.33%
NewRiver REIT (NRR) 196.40p -3.25%
Card Factory (CARD) 153.10p -3.22%
Stagecoach Group (SGC) 129.20p -3.15%
Quilter (QLT) 147.55p -2.86%
OneSavings Bank (OSB) 399.80p -2.68%
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