London close: FTSE moves sideways but outshines European stocks

An up-and-down day for London stocks on Thursday ended up only slightly below water, as the extra buoyancy from a weaker pound helped even out worries over President Trump's trade plans.

The FTSE 100 finished just below the Plimsoll line at 7,615.63, leaking just 6.06 point or 0.08%, which was a major outperformance of its continental cousins, with the Dax down 1.4%, the CAC 40 down 1%, Spain's IBEX down 0.7% and Italy's FTSE MIB down 0.6%.

Helping the London benchmark, sterling earlier fell to its lowest level against the euro since early May down to its weakest against the dollar since mid-November, but by late afternoon was down 0.4% versus the euro at 1.1306 and 0.2% versus the dollar at 1.3092. A weaker pound tends to lift the top-flight index as around 70% of its constituents derive most of their earnings from overseas.

Currency traders have been fretting that Brexit will be pushed down the agenda by the issues of asylum and migration at the EU summit beginning in Brussels. The dollar fell later after US GDP figures came out lower than expected.

Bank of England chief economist Andy Haldane later stated a 0.25% rise in interest rates would still leave the monetary conditions ‘extraordinarily accommodative’, setting up a potential hike in August.

Speaking at the Academy of Social Sciences, the BoE's policymaker said that his decision to vote for a 25bp hike at the last MPC meeting should not be considered "radical" given how a decade had passed since Bank had adopted its emergency policies. He also mentioned the lifting of the public sector pay cap for NHS, saying it may well have 'knock-on' effects, both in the remainder of the public sector as well as in the private sector, given how tight the jobs market was.

Stocks had fallen earlier on the back of a Wall Street slide when the apparent softening of President Trump's stance on China was turned on its head by White House economic adviser Larry Kudlow, who said Trump's announced plan was "going to be very comprehensive and very effective at protecting our technological family jewels in the United States".

Oanda analyst Craig Erlam said: "With Trump picking fights on multiple fronts and no sides showing any willingness to back down, we may have to get used to this risk averse environment in the near-term. Markets have a tendency to move on though if we go a few weeks without any further escalation and gradually become less sensitive to the rants and reactions of those involved."

On the data front, the European Commission’s economic sentiment indicator for the UK fell to 106.9 in June from 107.4 in May, well below its 12-month average of 109.2.

The fall was driven by a decline in confidence among services firms to a seven-month low, while the seasonally adjusted consumer confidence indicator, which comes a day ahead of GfK’s UK-specific index, also weakened to its lowest level since December.

Meanwhile, the Bank of England's latest survey of business conditions revealed that retail sales picked up in the second quarter but demand for consumer services was held back by squeezed incomes and political uncertainty.

In corporate news, Shire rallied after a group of Takeda Pharmaceutical shareholders failed in its bid to try to block the Japanese company's $62bn takeover of the London-listed biopharmaceutical group.

Banks were noticeable on the leaderboard on rate hike expectations. While 'save haven' stocks such as tobacco companies were also well represented in the upper echelons.

On the upside, retailer JD Sports Fashion reversed earlier losses to trade up as it said it continues to be on track to deliver a full year in line with consensus market expectations.

BAE Systems was up after winning a contract with the Australian government, which has selected Type 26 anti-submarine warfare frigate design for their SEA5000 programme.

Train and bus operator Stagecoach chuffed higher despite posting a drop in full-year profit as it took a £85.6m hit from the loss of the East Coast rail contract and cut its full-year dividend.

Market analyst Lee Wild at Interactive Investor noted that the shares trade on just single-digit earnings multiples, and the dividend yield remains in excess of 5%, but he questioned whether investors would be tempted with no improvement in profit expected this year.

BCA Marketplace pushed up as it reported a 19.8% jump in full-year revenue and a 17.6% increase in adjusted earnings before interest, taxes, depreciation and amortisation.

Just Eat was also on the front foot, rebounding from heavy losses in the previous session when the company delivered a more cautious than expected outlook at its capital markets day. A number analysts said the investment in the company that might lead to a dent in short-term profits would be worth it to deliver medium-term revenue growth.

Wood Group gained after saying it was on track to deliver growth in 2018 and maintaining its full-year outlook.

Greene King leaked lower even though it said the World Cup and warm weather helped to revive sales at its pubs after squeezed household budgets and rising costs contributed to falling profit in its last financial year.

Tullow Oil gushed lower despite a positive update which saw the group lift its production guidance, while Hunting retreated as it highlighted a strong US performance in the first half, but said Europe and Canada remain challenging.

Rentokil Initial retreated as the Competition and Markets Authority said it has referred its proposed acquisition of Cannon Hygiene for an in-depth investigation after the companies failed to address its competition concerns.

In broker note action, oil giant BP was upgraded to 'buy' at Kepler Cheuvreux, while Kaz Minerals was lifted to 'outperform' at BMO. Primark owner Associated British Foods was under the cosh as Credit Suisse cut its estimates on the outperform-rated stock in response to the "dramatic" declines in the world sugar prices this year.

British American Tobacco, British Land, Burberry, Coca-Cola HBC, International Consolidated Airlines Group, B&M European Value Retail, Babcock, JD Sports and Renewi were among the companies whose stock went ex-dividend.

Market Movers

FTSE 100 (UKX) 7,615.63 -0.08%
FTSE 250 (MCX) 20,668.92 -0.84%
techMARK (TASX) 3,486.55 -0.45%

FTSE 100 - Risers

Shire Plc (SHP) 4,216.00p 2.97%
Imperial Brands (IMB) 2,811.50p 2.83%
British American Tobacco (BATS) 3,877.00p 2.51%
Just Eat (JE.) 770.80p 2.07%
Severn Trent (SVT) 1,976.50p 1.54%
Randgold Resources Ltd. (RRS) 5,760.00p 1.48%
United Utilities Group (UU.) 763.80p 1.27%
BAE Systems (BA.) 632.00p 1.25%
Barclays (BARC) 190.16p 1.15%
Lloyds Banking Group (LLOY) 62.55p 1.15%

FTSE 100 - Fallers

Micro Focus International (MCRO) 1,274.00p -3.70%
Melrose Industries (MRO) 208.10p -3.21%
Johnson Matthey (JMAT) 3,576.00p -2.96%
Antofagasta (ANTO) 977.80p -2.95%
Glencore (GLEN) 358.80p -2.80%
Ocado Group (OCDO) 1,032.00p -2.73%
Associated British Foods (ABF) 2,740.00p -2.53%
CRH (CRH) 2,678.00p -2.30%
Old Mutual Limited NPV (DI) (OMU) 153.22p -2.10%
Prudential (PRU) 1,731.00p -2.07%

FTSE 250 - Risers

Stagecoach Group (SGC) 139.65p 4.14%
Charter Court Financial Services Group (CCFS) 328.00p 3.08%
FirstGroup (FGP) 81.50p 2.32%
Petrofac Ltd. (PFC) 565.00p 2.21%
Great Portland Estates (GPOR) 715.90p 1.88%
BCA Marketplace (BCA) 220.00p 1.85%
esure Group (ESUR) 215.00p 1.80%
Riverstone Energy Limited (RSE) 1,270.00p 1.60%
Virgin Money Holdings (UK) (VM.) 365.70p 1.36%
CLS Holdings (CLI) 229.00p 1.33%

FTSE 250 - Fallers

Greene King (GNK) 581.00p -9.02%
Renewi (RWI) 74.50p -7.45%
Intermediate Capital Group (ICP) 1,075.00p -5.70%
Ferrexpo (FXPO) 184.60p -4.55%
Sanne Group (SNN) 653.00p -4.53%
Alfa Financial Software Holdings (ALFA) 175.40p -3.84%
Crest Nicholson Holdings (CRST) 388.00p -3.82%
Man Group (EMG) 175.30p -3.68%
Aveva Group (AVV) 2,630.00p -3.66%
Renishaw (RSW) 5,180.00p -3.27%