London midday: Miners cap gains even as pound slumps on retail sales

London stocks were up just a touch by midday on Thursday even as the pound took another beating, falling below $1.30 after the release of disappointing retail sales figures, as losses in the mining sector kept a lid on gains.

The FTSE 100 was up 0.1% to 7,685.53 as sterling fell 0.6% against the dollar to 1.2996 having dropped to a 10-month low just after data from the Office for National Statistics showed UK retail sales fell back in June as the World Cup and hot weather saw consumers abandon the high street.

The pound, which this week alone has been savaged by political woes, a drop in wage growth, stalling inflation and now retail sales, was down 0.2% against the euro at 1.1208.

In the three months to June 2018, retail sales increased 2.1%, the largest improvement since February 2015. Food stores saw the strongest three-month on three-month growth since May 2001, at 2.2%.

But in June, the upward trend came to an abrupt halt, with overall sales declining 0.5% against the previous month. Most analysts had been expecting a monthly rise of around 0.2%. Year-over-year growth declined to 2.9% from 4.1% in May, which was also below the consensus, of around 3.5%

Kathleen Brooks, research director at Capital Index, said: "Although retail sales figures can be volatile, there is a growing sense that the UK economy is slowing down sharply, and with the political backdrop deteriorating, the Bank of England needs to have a pretty solid reason for hiking rates when it meets next month."

She pointed out that GBP/USD is the weakest performer in the G10 for the second day, and said it is likely to remain under pressure for some time as momentum is to the downside. "Key support lies at $1.2774, the low of the year so far"," she said.

Meanwile, new Brexit secretary Dominic Raab, who was appointed when David Davis resigned in protest at the Prime Minister's trade and customs plans, will hold his first talks with the EU's chief negotiator Michel Barnier in Brussels. Theresa May will herself make a visit to the Irish border.

The weaker pound didn't do much in terms of injecting life into the FTSE, with mining stocks, which have a heavy weighting in the index, retreating as a stronger dollar weighed on metals prices. Antofagasta, Anglo American and BHP Billiton were all weaker.

SSE dropped after it said first-quarter operating profits would take an £80m hit due to Britain's hot summer and "persistently high gas prices" combining to cut renewable output, customers using less energy and increased costs. The utility added that fully year results could also be hit.

Anglo American slipped even as it reported a 6% year-on-year rise in total second-quarter output on a copper equivalent basis, excluding disruption after a leak at its Brazilian Minas-Rio iron ore project.

Babcock tumbled as the defence contractor cut its full-year revenue growth target, while Mike Ashley's Sports Direct slid after it reported a 73% slump in annual profits as it took an £85.4m hit on its Debenhams holding.

WPP suffered the heaviest losses fell after French advertising peer Publicis posted an unexpected decline in second-quarter sales.

Equipment rental firm Ashtead was lower even as US peer United Rentals' second-quarter earnings late on Wednesday beat expectations.

On the upside, Unilever reversed earlier losses to trade up after it said underlying sales growth slowed in the second quarter due to the impact of a truckers' strike in Brazil but the company remained confident of hitting full year targets.

Price comparison website Moneysupermarket surged as it posted a rise in interim profit and revenue and announced plans for a new mortgage business.

Big Yellow ticked a touch higher as the self-storage group said like-for-like revenues in the first quarter rose by 7.6% to £29.9m.

Hilton Food advanced as it said trading in the 28 weeks to 15 July was in line with its expectations, while Capita rallied after saying it has been awarded a five-year contract by Southern Water that will see the outsourcer become its new customer services managed service provider.

Vedanta Resources and Tritax Big Box were on the back foot as their stock went ex-dividend.

In broker note action, Shell was lifted to outperform' at Raymond James while Sports Direct was upgraded to 'buy' at Liberum.

Market Movers

FTSE 100 (UKX) 7,685.53 0.12%
FTSE 250 (MCX) 20,882.41 -0.49%
techMARK (TASX) 3,593.85 -0.13%

FTSE 100 - Risers

Unilever (ULVR) 4,282.00p 1.88%
Imperial Brands (IMB) 2,899.00p 1.63%
Royal Dutch Shell 'B' (RDSB) 2,746.50p 1.33%
British American Tobacco (BATS) 3,887.00p 1.28%
Royal Dutch Shell 'A' (RDSA) 2,659.50p 1.24%
Tesco (TSCO) 259.51p 1.21%
Marks & Spencer Group (MKS) 313.71p 0.84%
AstraZeneca (AZN) 5,647.00p 0.73%
Prudential (PRU) 1,788.75p 0.72%
Coca-Cola HBC AG (CDI) (CCH) 2,769.00p 0.69%

FTSE 100 - Fallers

WPP (WPP) 1,125.50p -4.25%
Evraz (EVR) 522.20p -2.97%
SSE (SSE) 1,349.25p -2.55%
Antofagasta (ANTO) 941.40p -2.45%
Randgold Resources Ltd. (RRS) 5,434.00p -2.16%
Mondi (MNDI) 2,053.00p -2.00%
Anglo American (AAL) 1,658.00p -1.95%
Melrose Industries (MRO) 221.40p -1.82%
Ashtead Group (AHT) 2,369.00p -1.78%
Smith (DS) (SMDS) 487.60p -1.48%

FTSE 250 - Risers

Moneysupermarket.com Group (MONY) 331.60p 7.21%
McCarthy & Stone (MCS) 105.00p 4.48%
Ferrexpo (FXPO) 168.40p 3.38%
Hikma Pharmaceuticals (HIK) 1,520.00p 3.02%
Rank Group (RNK) 180.00p 2.39%
Greene King (GNK) 538.60p 2.32%
Stagecoach Group (SGC) 167.30p 1.89%
esure Group (ESUR) 198.80p 1.64%
On The Beach Group (OTB) 470.00p 1.51%
Playtech (PTEC) 517.00p 1.29%

FTSE 250 - Fallers

Babcock International Group (BAB) 722.60p -10.01%
Sports Direct International (SPD) 406.56p -6.77%
Bank of Georgia Group (BGEO) 1,802.20p -5.05%
TalkTalk Telecom Group (TALK) 111.70p -3.54%
Thomas Cook Group (TCG) 97.90p -3.45%
Energean Oil & Gas (ENOG) 533.00p -3.09%
Clarkson (CKN) 2,350.00p -2.89%
Tullow Oil (TLW) 212.80p -2.83%
Elementis (ELM) 262.60p -2.81%
AA (AA.) 111.00p -2.72%