London midday: Stocks retreat as Pearson, Whitbread updates disappoint

Thu 16 Jan 2020

LONDON (SHARECAST) - (Sharecast News) - London stocks had fallen into the red by midday on Thursday following disappointing updates from the likes of Pearson and Whitbread, as investors continued to mull over the 'phase one' trade deal between the US and China.
At 1215 GMT, the FTSE 100 was down 0.4% at 7,610.07.

CMC Markets analyst David Madden said: "The long-awaited interim trade deal between the US and China was signed yesterday and now it seems that traders don't know what to do with themselves. The trade story dragged on for more than 18 months.

"The economic tussle injected major volatility into the markets, but now the dust has settled, and the mood has dampened down. Now that phase one of the agreement has been made official, people are talking about the second-phase, but Mr Trump might keep that up his sleeve for the presidential campaign."

On home shores, the latest survey from the Royal Institution of Chartered Surveyors showed that greater political clarity following December's general election helped boost sentiment across the UK's property market.

According to the RICS UK Residential Market Survey for December, sales expectations for the next 12 months rose to a net balance of +66%, compared to +35% in November.

The survey also reported +17% more respondents saw a rise rather than a fall in enquiries from new buyers, compared to -5% in November, while the number of agreed sales edged up to +9%, the first positive number since May.

Regarding house prices, the survey's headline net balance came in at -2%, compared to -11% previously, which RICS said signalled a "broadly flat national trend". Looking further ahead, however, and near-term price expectations were revised higher in all parts of the UK.

Simon Rubinsohn, RICS chief economist, said: "The signals from the latest survey provides further evidence that the housing market is seeing some benefit from the greater clarity provided by the decisive election outcome.

"Whether the improvement in sentiment can be sustained remains to be seen, given that there is so much work to be done over the course of this year in determining the nature of the eventual Brexit deal. However, the sales expectations indicators clearly point to the prospect of more upbeat trend in transactions emerging with potential purchases being more comfortable in following through on initial enquiries."

On the corporate front, Pearson slumped after the education publisher said full-year adjusted operating profit was set to come in at the bottom end of its guidance of between 590m and 640m and announced the departure of its chief financial officer.

Whitbread was on the back foot after it said like-for-like third-quarter sales fell 1.3% as weak accommodation demand offset a good performance in food and beverages.

Recruiter Hays fell as it warned of a lower first-half operating profit as its main markets were hit by economic uncertainty. Hays cited Brexit-related worries in the UK, the Australian bushfires, a slowdown in Germany and French strikes for a fall in fees as companies delay hiring staff. The US/China trade war and Hong Kong protests have also impacted sentiment.

SSE and Compass were both in the red as their stock went ex-dividend, while GlaxoSmithKline and Spirent Communications were hit by rating downgrades at Barclays.

On the upside, Associated British Foods rallied as the Primark owner said group revenue in the 16 weeks to 4 January 2020 rose 4%.

Oilfield services provider Wood Group and gambling company Rank gained on the back of well-received trading updates, while Electrocomponents was boosted by an upgrade to 'overweight' at JPMorgan.

Market Movers

FTSE 100 (UKX) 7,610.07 -0.43%
FTSE 250 (MCX) 21,654.94 -0.27%
techMARK (TASX) 4,237.06 -0.73%

FTSE 100 - Risers

NMC Health (NMC) 1,395.00p 3.68%
Associated British Foods (ABF) 2,629.00p 2.90%
Persimmon (PSN) 2,853.00p 1.64%
BHP Group (BHP) 1,821.80p 1.13%
Anglo American (AAL) 2,180.50p 0.88%
Land Securities Group (LAND) 970.40p 0.68%
Admiral Group (ADM) 2,322.00p 0.65%
BP (BP.) 498.40p 0.65%
Glencore (GLEN) 242.90p 0.64%
Smith (DS) (SMDS) 360.70p 0.56%

FTSE 100 - Fallers

Pearson (PSON) 583.40p -5.66%
Whitbread (WTB) 4,601.00p -4.88%
DCC (DCC) 6,504.00p -2.20%
Barclays (BARC) 174.76p -2.10%
Johnson Matthey (JMAT) 2,843.00p -2.03%
Melrose Industries (MRO) 232.00p -2.03%
Morrison (Wm) Supermarkets (MRW) 186.75p -1.97%
GlaxoSmithKline (GSK) 1,803.00p -1.75%
SSE (SSE) 1,461.00p -1.72%
Hikma Pharmaceuticals (HIK) 1,942.00p -1.67%

FTSE 250 - Risers

Tullow Oil (TLW) 53.06p 6.38%
Wood Group (John) (WG.) 391.90p 5.92%
Diploma (DPLM) 1,942.00p 5.14%
Rank Group (RNK) 278.50p 4.31%
IP Group (IPO) 67.40p 3.37%
Helios Towers (HTWS) 151.30p 2.93%
Hochschild Mining (HOC) 173.10p 2.73%
Centamin (DI) (CEY) 124.70p 2.59%
William Hill (WMH) 189.20p 2.24%
Watches of Switzerland Group (WOSG) 386.80p 1.79%

FTSE 250 - Fallers

Spirent Communications (SPT) 230.50p -7.06%
Dechra Pharmaceuticals (DPH) 2,900.00p -5.48%
Galliford Try (GFRD) 144.68p -4.73%
Airtel Africa (AAF) 70.00p -4.11%
TI Fluid Systems (TIFS) 238.50p -3.83%
Hays (HAS) 166.90p -3.30%
Marshalls (MSLH) 806.00p -3.07%
Just Group (JUST) 68.90p -2.41%
C&C Group (CCR) 393.00p -2.36%
Vesuvius (VSVS) 455.80p -2.31%
Archived Stories

18 Sep London midday: Travel stocks pace decline amid Covid concerns
17 Sep London midday: Stocks maintain losses as BoE stands pat
16 Sep London midday: Stocks little changed ahead of Fed announcement
15 Sep London midday: Stocks extend gains as miners rally on China data
14 Sep London midday: Stocks turn a touch lower despite M&A flurry, vaccine hopes