London midday: FTSE flops as Trump-risk aversion hits global markets

London's FTSE 100 index fell below a key technical level as Friday's session wore on, with travel stocks leading the retreat after the terror attacks in Barcelona and the large cabal of overseas focused companies hit by the dollar's weakness amid renewed concerns about the US Presidency.

Not long after midday the blue chip benchmark was down 73 points or 0.99% to 7,314.48, with only four names in positive territory.

The pound was up 0.1% on the dollar at 1.2881 and flat against the euro at 1.0968.

Fanning the selling, according to traders, were the increased political uncertainty in the US due to the deterioration of relations between President Donald Trump and the business community as reports emerged that a third White House panel of business leaders is to be scrapped.

Analysts at Accendo Markets noted that the Footsie had fallen below its 200-day moving average but was closing in on a return to four-month support at 7,300.

“European equities are sharply negative as another major risk-off move grips global markets. Concerns that the White House has burnt bridges with the business sector, hurting the US dollar, has adversely affected UK and German stocks, the majority of which are reliant on foreign earnings," said Accendo's Henry Croft.

With only a handful of FTSE 100 stocks higher, the index was being pulled lower by its heavy weighting of risk-orientated sectors including oil companies, miners and banks, plus a mix of heavily-weighted foreign-focused defensives.

Commenting on the increasingly divisive political backdrop on Capitol Hill, Michael Hewson, chief market analyst at CMC Markets, said: "With support peeling away from all sides' investors appear to be coming to the conclusion that the US President is likely to find it even more difficult to achieve anything close to what was expected than was the case at the beginning of this year.

"This of course then begs the question as to whether he'll be able to achieve anything at all, at a time when the political cost of continuing to support him rises with each passing day and each tweet storm."

No significant data releases are scheduled in the UK at the end of the week.

In the States, the University of Michigan's preliminary reading on consumer confidence for the month of August is expected a 1500 BST.

Company news was extremely thin on the ground.

Initially leading the fallers were British Airways and Iberia owner IAG and EasyJet as both shed 3% in early trading before paring losses. "As we’ve seen over the last couple of years in Europe, these kinds of atrocities affect tourism and will hit airline earnings. Investors are concerned that demand will fall over the rest of the year, which was already looking like it would be a tough patch for the industry," said analyst Neil Wilson at ETX Capital.

Tour operators Thomas Cook, Dart Group, and to a lesser extent Thomson Holidays parent TUI, were also hit by the expectations of a dip in demand, as was Merlin Entertainments, owner of Madame Tussauds and various other tourist attractions around Europe.

The stock leaderboard was topped by precious metals miners Randgold Resources and Fresnillo. The risk-off trading sentiment and the softening US yield environment is conducive for gold, analysts noted, with the Federal Reserve’s indecision having removed a major barrier to the positive gold trend.

Gold was up half a percent to trade close to $1,300, with analyst Craig Erlam noting there seemed to be a number of factors driving the bullish case for the yellow metal: a weak dollar, US political risk, geopolitical risk. He said the resignation of Gary Cohn, a key figurehead in Trump’s tax reform and spending initiatives, could be the straw that breaks the camels back and drives it through $1,300.

Drugmakers AstraZeneca and Merck have been given approval by the US drug administrator to sell Astra's Lynparza ovarian cancer drug in a new tablet form and to a wider range of cancer sufferers, as the pair begin a new partnership on the front foot. The US Food and Drug Administration granted approval for the drug, which is a PARP inhibitor, meaning it stops the actions of the poly ADP-ribose polymerase protein that helps damaged cells to repair themselves.

Reckitt Benckiser said on it had completed the $4.2bn sale of its food business, including the French's, Frank's RedHot and Cattlemen's brands, to McCormick & Company. RB said it would use the net proceeds to cut debt.

Mondi and RSA Insurance were two of the few risers after their shares received broker upgrades. Paper maker Mondi was lifted to 'buy' from 'neutral' by Citi, where analysts hiked their target price to 2,580p from 2120p. RSA was moved to 'outperform' from 'sector perform' by RBC Capital Markets, which hoisted the target to 750p from 625p.

Market Movers

FTSE 100 (UKX) 7,314.48 -0.99%
FTSE 250 (MCX) 19,604.68 -0.85%
techMARK (TASX) 3,371.12 -1.11%

FTSE 100 - Risers

Randgold Resources Ltd. (RRS) 7,490.00p 1.15%
Rentokil Initial (RTO) 294.50p 0.86%
Mondi (MNDI) 2,074.00p 0.63%
RSA Insurance Group (RSA) 651.50p 0.31%
Hargreaves Lansdown (HL.) 1,343.00p -0.00%
Sky (SKY) 954.50p -0.10%
BT Group (BT.A) 292.95p -0.22%
Worldpay Group (WPG) 421.90p -0.26%
Vodafone Group (VOD) 219.45p -0.27%
Taylor Wimpey (TW.) 192.60p -0.36%

FTSE 100 - Fallers

Shire Plc (SHP) 3,769.50p -2.62%
Provident Financial (PFG) 1,848.00p -2.17%
Babcock International Group (BAB) 823.00p -2.02%
WPP (WPP) 1,564.00p -2.01%
Paddy Power Betfair (PPB) 7,330.00p -1.94%
International Consolidated Airlines Group SA (CDI) (IAG) 612.50p -1.84%
Glencore (GLEN) 338.75p -1.81%
Ashtead Group (AHT) 1,552.00p -1.77%
Imperial Brands (IMB) 3,168.00p -1.77%
Scottish Mortgage Inv Trust (SMT) 418.10p -1.76%

FTSE 250 - Risers

Hochschild Mining (HOC) 276.30p 1.58%
Ferrexpo (FXPO) 273.10p 1.00%
Telecom Plus (TEP) 1,155.00p 0.96%
CLS Holdings (CLI) 215.80p 0.94%
Metro Bank (MTRO) 3,462.00p 0.84%
Clarkson (CKN) 2,721.00p 0.78%
Redrow (RDW) 588.00p 0.68%
Rank Group (RNK) 226.50p 0.67%
Ted Baker (TED) 2,466.00p 0.65%
Just Eat (JE.) 639.00p 0.63%

FTSE 250 - Fallers

Hikma Pharmaceuticals (HIK) 1,120.00p -5.88%
IP Group (IPO) 133.30p -3.89%
Nostrum Oil & Gas (NOG) 404.20p -3.53%
Millennium & Copthorne Hotels (MLC) 449.40p -2.90%
Restaurant Group (RTN) 343.80p -2.83%
Vedanta Resources (VED) 737.00p -2.77%
Acacia Mining (ACA) 177.30p -2.74%
Balfour Beatty (BBY) 271.50p -2.65%
Ocado Group (OCDO) 284.50p -2.60%
FDM Group (Holdings) (FDM) 921.50p -2.54%