London close: Stocks end near session lows, brush off bounce on Wall Street

Stocks ended near their session lows on Friday with traders still on edge and very wary heading into the weekend break due to the tense geopolitical situation in the Northern Pacific.

Despite that, the FTSE 100 closed Friday's session lower by 1.08% or 79.98 points to 7,309.96 and the more domestically focused FTSE 250 was down 154.63 points to 19,544.79. For the week, the top flight index was down by 2.69% or 201.75 points.

That was despite a possible indication that China might not back-up its errant neighbour if it carried out a missile strike that could threaten US territory.

According to the English-language Global Times, which was founded by the Communist Party's People's Daily, China should "make clear that if North Korea launches missiles that threaten US soil first and the US retaliates, China will stay neutral."

Nonetheless, and as IG's Joshua Mahony pointed out: "Today we have seen China step into the fray, promising to stay neutral if North Korea attacks first but to intervene if the US or South Korea attacks first. This essentially gives North Korea free reign to further develop their nuclear programme."

On the other hand, COMEX-traded gold futures were little changed, edging higher by 0.22% to $1,293.00/oz. while Wall Street was retracing a smidgen of Thursday's losses alongside - with the latter also benefitting from a weaker than expected reading on consumer price inflation in July.

Yet equity markets on the Continent all closed lower.

The downwards pressure on the US stock market increased overnight after US president Donald Trump told journalists he stood by his warning made to the North Korean regime the day before. Indeed, Trump added that his warning may not have been "tough enough" and declined to take the option of a pre-emptive strike off the table.

On that note, the Global Times also pointed out that: "if the US and South Korea carry out strikes and try to overthrow the North Korean regime and change the political pattern on the peninsula, China will prevent them from doing so."

The headline rate of US CPI printed at up by 1.7% year-on-year, a tenth of a percentage point less than economists had forecast.

This was followed by speeches from the presidents of the Federal Reserve banks of Dallas and Minneapolis.

Dallas Fed chief Robert Kaplan made comments regarding the US rate hike stating, "I was a strong advocate of the two rate hikes this year," adding "I want to see more evidence on hitting inflation target."

On a similar note, the Minneapolis Fed's Neel Kashkari said, "There may be more slack than we think in the labour market," adding "we're not exactly sure why inflation has been low."

Back in the UK, in an interview with the Evening Standard the Monetary Policy Committee's Michael Saunders said Brexit would likely crimp the UK economy over the longer-term.

According to Saunders, Britain's gross domestic product may grow five percentage points less over the next 15 years.

Exane hangs up on Dixons

Shares in Dixons Carphone sank after Exane BNP Paribas downgraded the stock from 'outperform' to 'underperform' on concerns about changes in the mobile phone market, including fewer customers upgrading to new phones and the unbundling of handset and network contracts.

Financial services group Old Mutual posted a sharp 37% rise in adjusted pre-tax profits to £969m, helped in part by £108m of proceeds from the sale of its OMAM unit although it did incur in a goodwill impairment charge of £71m linked to UAP-Old Mutual in East Africa. On an IFRS basis profits before tax surged from £534m in the year-ago period to £940m, for earnings per share of 10.6p, with the latter up by 33%. Despite that, its net asset value per share decreased from 228.6p to 220.1p. In line with its stated policy on payouts, the interim dividend was increased by 32% to 3.53p.

Domino's Pizza Group announced the creation of a partnership with its largest franchisee in London on Friday. The FTSE 250 company said that, as part of the transaction, it agreed to pay £24m for a 75% stake in a newly-formed company, whose assets will consist of all the franchisee's operations being 25 existing Domino's stores in London.

The Restaurant Group announced the appointment of Kirk Davis as Chief Financial Officer on Friday before the market open. Davis arrives having spent the previous three years in the same position for fellow FTSE 250-listed firm Greene King.

Pub operator and brewing company Greene King announced on Friday that Richard Smothers would be joining the firm in December 2017, and joining the board as chief financial officer in February 2018. The FTSE 250 firm said Smothers was joining from retailer Mothercare, where he was chief financial officer since March 2015.

Market Movers

FTSE 100 (UKX) 7,309.96 -1.08%
FTSE 250 (MCX) 19,544.79 -0.78%
techMARK (TASX) 3,356.68 -0.62%

FTSE 100 - Risers

Smurfit Kappa Group (SKG) 2,232.00p 1.74%
Persimmon (PSN) 2,501.00p 1.58%
DCC (DCC) 6,885.00p 1.03%
Barratt Developments (BDEV) 595.50p 1.02%
Reckitt Benckiser Group (RB.) 7,352.00p 0.56%
Whitbread (WTB) 3,829.00p 0.39%
Babcock International Group (BAB) 841.00p 0.36%
Mondi (MNDI) 1,995.00p 0.35%
Compass Group (CPG) 1,619.00p 0.31%
Morrison (Wm) Supermarkets (MRW) 247.00p 0.24%

FTSE 100 - Fallers

Standard Life (SL.) 410.80p -3.75%
Rio Tinto (RIO) 3,370.00p -3.15%
Old Mutual (OML) 195.30p -3.08%
Anglo American (AAL) 1,238.50p -3.05%
BHP Billiton (BLT) 1,336.00p -2.87%
Glencore (GLEN) 322.00p -2.85%
Standard Chartered (STAN) 753.60p -2.77%
Barclays (BARC) 199.35p -2.66%
Convatec Group (CTEC) 285.90p -2.46%
Prudential (PRU) 1,782.50p -2.38%

FTSE 250 - Risers

AA (AA.) 187.70p 3.08%
PayPoint (PAY) 901.00p 2.74%
Rathbone Brothers (RAT) 2,723.00p 2.60%
Hastings Group Holdings (HSTG) 323.30p 2.31%
Clarkson (CKN) 2,643.00p 2.24%
Supergroup (SGP) 1,555.00p 2.10%
Acacia Mining (ACA) 191.20p 1.97%
Carillion (CLLN) 56.85p 1.97%
Euromoney Institutional Investor (ERM) 1,132.00p 1.80%
IP Group (IPO) 138.90p 1.68%

FTSE 250 - Fallers

Kaz Minerals (KAZ) 663.00p -7.92%
Dixons Carphone (DC.) 246.70p -7.15%
Vedanta Resources (VED) 694.00p -6.59%
Tullow Oil (TLW) 163.50p -6.25%
Amec Foster Wheeler (AMFW) 437.00p -5.31%
Wood Group (John) (WG.) 602.00p -4.90%
TBC Bank Group (TBCG) 1,568.00p -4.29%
Coats Group (COA) 72.00p -4.26%
Ferrexpo (FXPO) 254.60p -4.00%
Cairn Energy (CNE) 167.50p -3.90%