London midday: FTSE and pound both fall after weak retail numbers

London stocks and the pound both ebbed lower by midday on Thursday after disappointing UK retail sales data and with ongoing concerns about stalled Brexit negotiations.

The FTSE 100 was down 0.58% to 7,499.21, the first time below 7,500 in eight sessions, while the pound was down 0.6% against the euro to 1.1137 and 0.25% weaker versus the dollar at 1.3172.

"Equities are on the back foot following disappointing results eBay, Unilever and Nestle and reports of Apple cutting iPhone8 orders due to low demand," said analyst Mike van Dulken at Accendo Markets.

"At home, soft UK retail sales and the overhang from stalled Brexit negotiations have sent GBP lower. Above all though, the Spanish standoff has legs, the Catalan president continuing to threaten a declaration of independence while the Spanish PM says Madrid is closer to triggering article 155 to suspend the region's autonomy."

Released mid-morning, UK retail sales in September fell 0.8% month on month, which was worse than the 0.1% consensus forecast and the figure for August, which was revised to growth of 0.9%.

This further muddied the waters over whether the Bank of England will hike interest rates next month.

Excluding petrol sales, retail revenues were down 0.7% in September compared to a month earlier, versus a consensus estimate for a 0.2% decline and a revised prior month's sales growth of 0.9%.

Analyst Laith Khalaf at Hargreaves Lansdown said the figures showed evidence of consumer belt tightening, with discretionary spending taking a particularly big hit, as shoppers prioritise more essential items as prices rise.

"This has given the pound a bit of a bloody nose on the currency markets, with investors scaling back their expectations of a rate rise from the Bank of England.

"Despite the drop in retail sales, it would be unwise to peg a consumer slowdown on one month’s figures alone, which can be affected by random events like the weather, or a big sporting event on the telly."

Investors were also digesting steady economic data out of China. According to the National Bureau of Statistics, third-quarter GDP growth was 6.8% compared to the same period a year ago, in line with expectations.

Meanwhile, September industrial production and retail sales from the People's Republic came in at 6.6% and 10.3% respectively, both beating expectations, while investment growth grew at its slowest rate in 18 years.

In corporate news, Unilever retreated as its sales growth fell short of expectations for the third quarter, with turnover negative, though the consumer goods colossus returned to volume growth after five quarters of price-driven expansion.

Advertising giant WPP, for which Unilever is a major client, was also underperforming, with disappointing numbers from French peer Publicis also weighing.

HSBC was another heavy weight on the Footsie as the Treasury ordered the Financial Conduct Authority and the Serious Fraud Office to investigate whether it and Standard Chartered were exposed to the corruption scandal in South Africa.

London Stock Exchange was in the red as it reported an 18% rise in third-quarter revenue and said chief executive officer Xavier Rolet will step down next year.

Property investment and development company Segro slipped despite saying it saw solid rental growth in the third quarter, while Schroders also lost some ground despite posting a 9% jump in assets under management and administration in the first nine months of the year.

Rentokil fell even though the royal ratcatcher reported a 13.7% rise in third-quarter ongoing revenue as the company’s pest control division performed well.

IWG, the company formerly known as Regus, took a battering after it warned that 2017 profit is now expected to be materially below market expectations and in a range of £160m to £170m. Peer Workspace Group was also dragged lower.

HomeServe edged lower after saying it plans to raise up to £125m to fund the acquisition of some of the trade and assets of the home assistance cover business of US-based Dominion.

NEX Group was hit by a downgrade to ‘underperform’ from ‘sector perform’ at at RBC Capital Markets, while BAE Systems and Intu were weaker as their shares were among those going ex-dividend.

On the upside, equipment rental company Ashtead was boosted by some well-received third-quarter earnings from US peer United Rentals.

Travis Perkins, the builders' merchant, rallied as it said it was on track to achieve full-year expectations despite a cautious outlook.

Marshalls was higher after announcing a bolt-on, earnings-enhancing acquisition.

Domino’s Pizza was slightly higher as it snapped up Germany's largest pizza chain Hallo Pizza into its local franchise joint venture.

N Brown was boosted by an upgrade from HSBC, while Softcat continued to prowl higher after strong results earlier in the week.

Market Movers

FTSE 100 (UKX) 7,498.83 -0.58%
FTSE 250 (MCX) 20,092.39 -0.83%
techMARK (TASX) 3,549.57 -0.22%

FTSE 100 - Risers

Ashtead Group (AHT) 1,916.00p 2.24%
Randgold Resources Ltd. (RRS) 7,490.00p 1.77%
Smurfit Kappa Group (SKG) 2,197.00p 1.62%
Merlin Entertainments (MERL) 374.80p 1.30%
Fresnillo (FRES) 1,416.00p 1.07%
Direct Line Insurance Group (DLG) 379.10p 0.82%
BT Group (BT.A) 273.35p 0.74%
Royal Bank of Scotland Group (RBS) 281.10p 0.68%
Admiral Group (ADM) 1,906.00p 0.63%
SSE (SSE) 1,395.00p 0.58%

FTSE 100 - Fallers

Unilever (ULVR) 4,357.50p -4.20%
WPP (WPP) 1,361.00p -3.34%
BAE Systems (BA.) 598.50p -2.76%
Coca-Cola HBC AG (CDI) (CCH) 2,597.00p -1.89%
NMC Health (NMC) 2,800.00p -1.75%
easyJet (EZJ) 1,294.00p -1.75%
Smiths Group (SMIN) 1,547.00p -1.65%
Kingfisher (KGF) 304.10p -1.52%
Marks & Spencer Group (MKS) 345.40p -1.43%
ITV (ITV) 176.20p -1.40%

FTSE 250 - Risers

Brown (N.) Group (BWNG) 327.70p 5.95%
Marshalls (MSLH) 466.20p 5.43%
Softcat (SCT) 481.40p 3.42%
Hochschild Mining (HOC) 231.30p 1.80%
Genus (GNS) 2,216.00p 1.65%
Travis Perkins (TPK) 1,496.00p 1.63%
CLS Holdings (CLI) 218.50p 1.58%
IP Group (IPO) 142.90p 1.42%
Centamin (DI) (CEY) 142.90p 1.20%
Grafton Group Units (GFTU) 835.50p 1.15%

FTSE 250 - Fallers

IWG (IWG) 211.10p -33.85%
Workspace Group (WKP) 895.50p -4.68%
Evraz (EVR) 311.90p -4.33%
Intu Properties (INTU) 225.10p -4.01%
Wood Group (John) (WG.) 690.50p -3.43%
Nex Group (NXG) 634.00p -3.35%
Pagegroup (PAGE) 452.40p -3.17%
Dixons Carphone (DC.) 183.60p -3.16%
Tullow Oil (TLW) 177.00p -3.01%
Kier Group (KIE) 1,083.00p -2.87%