London close: Stocks drop as stronger pound, miners weigh

London stocks ended in the red on Tuesday, weighed down by weakness in the mining sector and a stronger pound, as investors mulled updates from the likes of StanChart, BP and Whitbread.

The FTSE 100 closed down 0.3% at 7,418.22, as sterling rose 0.7% against the dollar to 1.3033. The pound was also firmer against the euro, trading up 0.5% to 1.1626 despite better-than-expected first-quarter eurozone GDP.

Spreadex analyst Connor Campbell said there appeared to be a confluence of factors causing cable's increase.

"Lingering disappointment on behalf of the greenback regarding the underlying softness of last Friday’s better-than-forecast US Q1 GDP figure may be playing its part, ditto the increased chatter of a rate cut from the Federal Reserve at some point later this year.

"On the sterling side of things, reports of ‘a new optimism about a change in tone’ regarding the cross-party Brexit talks may be boosting the currency - though there are those, like Jeremy Hunt, who appear keen to throw a spanner in the works - as well as the fact it has, all told, had a terrible April."

Investors were digesting the latest data out of China, which fell short of expectations and revealed a softer start to the second quarter.

The official manufacturing PMI fell to 50.1 in April from 50.5 in March, missing expectations for an unchanged reading.

Meanwhile, the official non-manufacturing PMI also fell, to 54.3 from 54.8.m, with the sub-index for the services sector edging down and a sharp decline in the sub-index for construction.

Capital Economics said: "Admittedly, we are wary of putting too much weight on the official PMIs given that they have provided false signals in the past. We will have a better idea of how the economy has performed recently when the April reading of the Caixin manufacturing PMI, a better guide to cyclical trends than the official index, is published on Thursday. But for now, the official PMIs suggest that Q2 got off to a weaker start and reinforce our view that there are still some downside risks to near-term activity."

On home turf, the latest survey from GfK showed consumer confidence remained steady at April. The long-running consumer confidence index came in at -13, unchanged from March.

Joe Staton, client strategy director at Gfk, said: "It appears it’s a case of ‘Keep Calm’ when it comes to how confident consumers are feeling right now.

"Despite political carry-on in the Westminster bubble with the clock ticking on Britain’s eventual departure from the EU, consumers are holding firm and remain unshaken by the daily headlines of turmoil and intrigue, although we remain in negative territory."

In equity markets, Micro Focus tanked as its stock went ex-dividend.

Premier Inn owner Whitbread was also in the red as it posted a 39% drop in full-year profit and highlighted market weakness across both business and leisure.

Russ Mould, investment director at AJ Bell, said: "A weak fourth quarter, a gloomy start to the new financial year and a cautious outlook isn’t a great situation to be in. It is understandable that Whitbread’s investors might be disappointed with the situation yet it isn’t reason to start panicking about the business."

Glencore retreated as it cut its full-year copper production guidance after posting a 7% drop in first-quarter output due to several factors, including flooding in Australia and safety-related stoppages and smelter outages in Zambia.

Mining stocks were weaker in general after the Chinese manufacturing figures, with Rio, BHP and Anglo American all lower.

Sirius Minerals suffered heavy losses as it launched a heavily-discounted $3.8bn capital raising to fund the development of its Woodsmith potash project in Yorkshire and posted a narrowing of its full-year losses.

Specialty chemicals company Elementis lost ground as it said it expects further progress this year, albeit slightly below expectations, as global market conditions remains "challenging".

Shares in pub group Greene King slumped after a trading statement, with analysts noting that sales momentum slowed towards the end of FY19. Fellow pub company EI Group also ended lower.

On the upside, Asia-focused lender Standard Chartered was the standout gainer on the FTSE 100 as it posted a 10% jump in adjusted pre-tax profits to $1.38bn, beating the $1.1bn anticipated by analysts at UBS. It also unveiled a $1.0bn share repurchase programme.

Oil major BP rose as it reported better-than-expected first-quarter profits and cash flows, together with higher output. Underlying replacement cost profit for the first three months of 2019 fell to $2.36bn from $2.57bn in the comparable year ago period, driven by lower prices and margins, although "strong" supply and trading results acted as a partial offset. That was better than the company compiled consensus for $2.3bn.

Rentokil Initial gained after the Competition and Markets Authority said it might accept the remedies put forward by the company to address the watchdog's concerns about its acquisition of Mitie Pest Control.

In broker note action, Intu Properties was weaker after a downgrade at AlphaValue, while Rightmove was knocked lower by a downgrade to 'hold' from 'buy' at Deutsche Bank.

Market Movers

FTSE 100 (UKX) 7,418.22 -0.30%
FTSE 250 (MCX) 19,824.81 -0.43%
techMARK (TASX) 3,613.75 -0.32%

FTSE 100 - Risers

Standard Chartered (STAN) 700.00p 4.57%
Hikma Pharmaceuticals (HIK) 1,765.50p 2.23%
Fresnillo (FRES) 753.20p 1.70%
Halma (HLMA) 1,799.50p 1.38%
BP (BP.) 559.00p 1.18%
Unilever (ULVR) 4,655.00p 0.98%
Spirax-Sarco Engineering (SPX) 8,250.00p 0.92%
Royal Dutch Shell 'A' (RDSA) 2,449.65p 0.81%
Rentokil Initial (RTO) 390.00p 0.78%
Royal Dutch Shell 'B' (RDSB) 2,464.50p 0.63%

FTSE 100 - Fallers

Micro Focus International (MCRO) 1,937.80p -16.29%
Whitbread (WTB) 4,471.00p -5.95%
Smurfit Kappa Group (SKG) 2,245.00p -4.26%
Smith (DS) (SMDS) 357.00p -4.21%
Glencore (GLEN) 303.10p -3.02%
NMC Health (NMC) 2,822.00p -2.79%
Antofagasta (ANTO) 906.40p -2.66%
Mondi (MNDI) 1,680.50p -2.32%
ITV (ITV) 136.65p -2.29%
Anglo American (AAL) 1,972.20p -2.00%

FTSE 250 - Risers

Acacia Mining (ACA) 147.00p 5.00%
Tate & Lyle (TATE) 767.60p 4.55%
Hochschild Mining (HOC) 183.20p 3.62%
FirstGroup (FGP) 110.03p 3.61%
Amigo Holdings (AMGO) 249.00p 3.53%
Cairn Energy (CNE) 171.20p 3.32%
Contour Global (GLO) 218.00p 3.07%
Entertainment One Limited (ETO) 476.60p 2.54%
Polypipe Group (PLP) 440.80p 2.32%
Provident Financial (PFG) 531.00p 2.23%

FTSE 250 - Fallers

Sirius Minerals (SXX) 17.42p -20.46%
Elementis (ELM) 162.50p -8.24%
Greene King (GNK) 641.00p -7.45%
Metro Bank (MTRO) 750.00p -6.54%
EI Group (EIG) 212.80p -4.49%
Intu Properties (INTU) 94.28p -4.44%
Wood Group (John) (WG.) 470.50p -3.72%
CYBG (CYBG) 203.20p -3.65%
Weir Group (WEIR) 1,665.50p -3.39%
IG Group Holdings (IGG) 509.60p -2.97%