London midday: Stocks extend losses on trade war fears, ahead of Brexit speech
London stocks had fallen further into the red by midday on Friday following the release of a better-than-expected but still uninspiring reading on the UK construction sector, as worries about a global trade war and an upcoming Brexit speech by Prime Minister Theresa May rattled investors.
The FTSE 100 was off 1% to 7,104.14, while the pound was up 0.1% versus the dollar at 1.3788 and 0.2% lower against the euro at 1.1204.
Stocks on Wall Street ended down on Thursday after US President Donald Trump said he will impose steep tariffs on steel and aluminium imports, reviving worries of a trade war.
At a meeting with American steel and aluminium producers, Trump said he plans to sign off on measures next week to protect US companies, though domestic manufacturers said the tariffs would drive up prices.
CMC Markets analyst Michael Hewson said: "25% tariffs on steel and a 10% tariff on aluminium imports has raised concerns of counter-measures from China and the EU."
Investors were also eyeing a Brexit speech by May later.
Joshua Mahony, market analyst at IG, said: "With Labour shifting their policy goals towards a customs agreement, much of the focus will be on whether Theresa May can set out a stall that keeps both hardliner Brexiteers and soft-Brexit seekers happy."
"With the EU warning that Trump’s imposition of steel and aluminium tariffs would cause a trade war, Theresa May is likely to set out the benefits of negotiating our own deals with the likes of the US rather than being dragged into a trade war to further the economic goals of other EU nations."
On the economic front, the latest survey from IHS Markit showed UK construction companies reported little easing in subdued trading conditions, with confidence near five-year lows in February and the sector on track for a fourth consecutive quarter of reduced output.
The UK construction purchasing managers' index rose to 51.4 from the 50.2 four-month low from January, beating average of economist predictions for a modest rise to only 50.5.
Construction companies indicated that business confidence was at "one of the lowest levels seen in the past five years", Markit said.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Output in the construction sector remains on course to contract for a fourth consecutive quarter, despite the modest rise in the PMI in February. In practice, any PMI reading below 52 has been consistent with falling construction output in the past."
In corporate news, London Stock Exchange Group was in the red despite saying that full year operating profits rose 47% to £626m, while adjusted operating profit was up 18% to £812m.
Spire Healthcare lost ground as it posted a 69% drop in full-year pre-tax profit and announced the departure of chief finance officer Simon Gordon, after seven years in the role.
Takeaway food delivery marketplace Just Eat fell as it announced that its board has appointed Mike Evans to the role of non-executive chairman, with effect from 26 April.
Johnson Matthey declined as it appointed Jason Apter as sector chief executive of its health division.
Engineering group IMI slid even as it said full year pre-tax profits rose 9.4% to £180.9m as new products drove an improved performance in what it called a “mixed” trading environment.
ConvaTec was weaker after announcing the acquisition of Texas-based catheter-related supplies distributor J&R Medical for an undisclosed sum.
On the upside, GKN gained after the engineer, which is currently fending off a £7.4bn hostile by from turnaround specialist Melrose Industries, confirmed that it has engaged in talks with US-based Dana about a potential sale of its automotive division, Driveline, as part of a deal which would be effected mainly in equity.
South African packaging and paper group, Mondi, was on the front foot after saying it will pay out a bumper special dividend on top of its healthy payout for last year as it reported growth of 7% in revenues and 6% in underlying operating profits.
Land Securities nudged up after saying that chairman Alison Carnwath would retire from the board in 2018 after nine years in the role, while Essentra was trading lower after the release of its 2017 results.
In broker note action, Merlin Entertainment was lifted to ‘hold’ by Berenberg, while Moneysupermarket was upgraded to ‘buy’ at Peel Hunt.
Market Movers
FTSE 100 (UKX) 7,104.14 -1.00%
FTSE 250 (MCX) 19,437.50 -0.58%
techMARK (TASX) 3,291.27 -0.81%
FTSE 100 - Risers
Rentokil Initial (RTO) 272.70p 3.65%
Randgold Resources Ltd. (RRS) 5,900.00p 2.32%
Associated British Foods (ABF) 2,641.00p 2.17%
Mondi (MNDI) 1,878.00p 2.07%
Burberry Group (BRBY) 1,615.50p 1.48%
Fresnillo (FRES) 1,203.50p 1.18%
Standard Life Aberdeen (SLA) 368.70p 0.99%
Centrica (CNA) 142.70p 0.92%
Taylor Wimpey (TW.) 186.50p 0.89%
Barratt Developments (BDEV) 533.60p 0.87%
FTSE 100 - Fallers
CRH (CRH) 2,388.00p -2.33%
Rio Tinto (RIO) 3,695.00p -2.26%
Croda International (CRDA) 4,478.00p -2.25%
Anglo American (AAL) 1,702.60p -2.24%
InterContinental Hotels Group (IHG) 4,454.00p -2.22%
Glencore (GLEN) 367.55p -2.21%
Smith (DS) (SMDS) 458.60p -2.18%
Barclays (BARC) 206.75p -2.13%
Smurfit Kappa Group (SKG) 2,432.00p -2.09%
GKN (GKN) 426.13p -2.04%
FTSE 250 - Risers
Petrofac Ltd. (PFC) 453.70p 5.83%
Essentra (ESNT) 466.40p 5.47%
Drax Group (DRX) 265.20p 4.82%
Howden Joinery Group (HWDN) 494.00p 2.85%
Bovis Homes Group (BVS) 1,098.50p 2.81%
Coats Group (COA) 85.30p 2.77%
Greggs (GRG) 1,219.70p 2.50%
Hastings Group Holdings (HSTG) 281.40p 2.33%
Acacia Mining (ACA) 136.55p 2.28%
Hochschild Mining (HOC) 204.39p 2.14%
FTSE 250 - Fallers
IMI (IMI) 1,123.00p -8.62%
Galliford Try (GFRD) 842.50p -3.71%
Merlin Entertainments (MERL) 360.60p -3.06%
Melrose Industries (MRO) 216.60p -2.78%
Weir Group (WEIR) 1,926.50p -2.75%
Renishaw (RSW) 4,614.00p -2.70%
JPMorgan American Inv Trust (JAM) 387.05p -2.63%
Stagecoach Group (SGC) 138.00p -2.40%
Fisher (James) & Sons (FSJ) 1,552.00p -2.39%
Victrex plc (VCT) 2,480.00p -2.36%