London midday: Stocks slide as sterling rallies; Shell and Lloyds disappoint

London stocks had extended losses by midday on Thursday, dragged lower by a stronger pound, as fresh uncertainty over a potential Sino-US trade deal and disappointing results from the likes of Shell and Lloyds spooked investors.

It was a veritable Halloween horror show for the FTSE 100, which slid 1% to 7,260.55 as sterling rose 0.5% against the dollar to 1.2962 and 0.4% versus the euro to 1.1620. A firmer pound tends to dent the top-flight index, as around 70% of its constituents derive most of their earnings from overseas.

Stocks had kicked off the session slightly lower but losses intensified as sterling gained ground and following a report that Chinese officials have doubts about reaching a comprehensive trade deal with the US.

Bloomberg cited people familiar with the matter as saying that Chinese officials have warned in private conversations with visitors to Beijing and other interlocutors in recent weeks that that they won’t budge on the thorniest issues.

They remain concerned about US President Donald Trump’s impulsive nature and the risk he may back out of even the limited deal both sides say they want to sign in the coming weeks, Bloomberg said.

David Cheetham, chief market analyst at XTB, said the market’s sensitivity to this kind of news was revealed on Wednesday, when a smaller but similar move occurred following reports that the APEC summit in Chile where the US and China were expected to sign phase one of their trade deal was cancelled.

"Traders and headline-scanning algos rushed to sell stocks on it before the realisation that the cancellation was solely due to civil unrest in the country at present and not because of a breakdown in US-Sino negotiations saw the moves reversed.

"Phase one is still set to be signed next month, in Macau, but the latest remarks suggest it could be presumptuous to believe that this will lead to phases two, three and possibly more in short order.

"It is worth noting that market sentiment had gotten very upbeat on trade in recent months despite only a little tangible progress and those who were extrapolating the recent events into a long-term deal may now start to question that hypothesis."

Dismal growth figures out of Hong Kong did little to help the mood, as it emerged the economy plunged into a recession in the third quarter following months of pro-democracy protests.

On home shores, uninspiring third-quarter numbers from Royal Dutch Shell and Lloyds were a drag.

Shell was the worst performer on the top-flight index after it reported a 15% decline in third-quarter earnings, due in part to lower energy prices.

Lloyds Banking Group was also down after it said third-quarter profits slumped as it took a £1.8bn hit from payment protection insurance claims. This was at the top end of the £1.6bn to £1.8bn guidance it gave in September.

FTSE 250 housebuilder Crest Nicholson tumbled after it warned on full-year profits, highlighting a "volatile" sales environment in some of its regional businesses in the second half, driven mainly by Brexit-related uncertainty and the economic outlook in the UK.

Miners fell on the trade news, with Glencore, Antofagasta and Anglo American all down, while Go-Ahead, Ashmore, Dunelm and Morgan Advanced Materials all lost ground as their stock went ex-dividend.

On the upside, precious metals miner Fresnillo was sitting pretty at the top of the FTSE 100 as gold prices rallied to trade near the week's highs. Polymetal was also up.

BT Group rose as investors welcomed the fact that it maintained its interim dividend of 4.62p a share even as revenues fell and profits were flat in the first half.

Shares of British Airways and Iberia parent International Airlines Group managed a flat performance after the company's third-quarter operating profit came in as expected at €1.4bn, having taken a hit from pilot strikes.

Market Movers

FTSE 100 (UKX) 7,260.55 -0.96%
FTSE 250 (MCX) 20,067.68 -0.24%
techMARK (TASX) 3,935.29 -0.19%

FTSE 100 - Risers

Fresnillo (FRES) 710.40p 2.69%
BT Group (BT.A) 205.40p 1.71%
Mondi (MNDI) 1,610.50p 1.42%
Flutter Entertainment (FLTR) 7,870.00p 1.29%
Polymetal International (POLY) 1,261.00p 1.29%
United Utilities Group (UU.) 871.00p 1.16%
InterContinental Hotels Group (IHG) 4,679.00p 0.88%
Compass Group (CPG) 2,063.00p 0.78%
NMC Health (NMC) 2,200.00p 0.78%
Smurfit Kappa Group (SKG) 2,614.00p 0.69%

FTSE 100 - Fallers

Royal Dutch Shell 'B' (RDSB) 2,230.82p -3.95%
Royal Dutch Shell 'A' (RDSA) 2,242.00p -3.74%
Glencore (GLEN) 231.20p -2.61%
Antofagasta (ANTO) 862.20p -2.22%
Evraz (EVR) 370.90p -2.09%
Melrose Industries (MRO) 211.37p -2.01%
Standard Chartered (STAN) 700.80p -1.68%
Berkeley Group Holdings (The) (BKG) 4,390.00p -1.68%
Lloyds Banking Group (LLOY) 56.64p -1.67%
Anglo American (AAL) 1,965.20p -1.64%

FTSE 250 - Risers

Future (FUTR) 1,466.65p 7.84%
Kainos Group (KNOS) 522.00p 3.98%
Hilton Food Group (HFG) 1,040.00p 2.36%
Finablr (FIN) 163.20p 2.00%
Clarkson (CKN) 2,830.00p 1.62%
PureTech Health (PRTC) 254.00p 1.60%
Contour Global (GLO) 213.86p 1.60%
4Imprint Group (FOUR) 2,990.00p 1.36%
Pantheon International (PIN) 2,284.00p 1.29%
Sirius Minerals (SXX) 3.01p 1.17%

FTSE 250 - Fallers

Crest Nicholson Holdings (CRST) 379.20p -7.38%
Dunelm Group (DNLM) 802.50p -4.92%
Hunting (HTG) 390.00p -3.51%
Convatec Group (CTEC) 196.75p -2.98%
Ashmore Group (ASHM) 463.80p -2.73%
Go-Ahead Group (GOG) 2,062.00p -2.64%
Aston Martin Lagonda Global Holdings (AML) 418.50p -2.56%
Man Group (EMG) 143.35p -2.55%
Kaz Minerals (KAZ) 466.20p -2.49%
Plus500 Ltd (DI) (PLUS) 808.20p -2.41%