London midday: Stocks slip sideways as Carillion collapse weighs

London stocks were flat by midday on Monday as the collapse of contractor Carillion and the potential repercussions among other listed firms weighed on investors' minds.

The FTSE 100 was broadly steady at 7,775.68, while the pound was up 0.3% against the dollar at 1.3771 but 0.2% weaker versus the euro at 1.1237.

David Cheetham, chief market analyst XTB, said sterling's gains versus the greenback are more down to weakness in the dollar than strength in the pound.

"The greenback is coming under fire from all angles whilst the US celebrates a bank holiday in memory of Martin Luther King, with a trade-weighted US dollar index hitting its lowest level since 2014.

"There’s little by the way of fresh catalysts for the latest bout of weakness, with the drop seemingly more a continuation of the downtrend that has driven the buck for the best part of a year. A Trump bump remains clearly evident in the stock market with records tumbling with almost alarming regularity on the NYSE and Nasdaq, but the surge higher in the US dollar that occurred in the weeks following his election has well and truly reversed, with the USD index set for a ninth monthly decline since his inauguration."

In corporate news, trading in the shares of Carillion was suspended after the company said it was going into liquidation. Balfour Beatty, Galliford Try and HICL Infrastructure were in the red due to their exposure.

Balfour, which is in joint venture with Carillion on three projects, said the cash impact on the group is likely to be an outflow in the range of £35m to £45m this year. Meanwhile, Galliford, which is in JV with Carillion and Balfour on the Aberdeen Western Peripheral Route contract, said it expects to pay up to £40m to complete the JV.

IG analyst Joshua Mahony said: "Carillion’s filing for compulsory liquidation marks the end of a journey which has seen the firm’s share price fall over 90% in six months. The decision by the UK government to award a whole host of notable contracts to a firm which had issued three back-to-back profit warnings is clearly coming back to haunt them, adding another headache for beleaguered Prime Minister Theresa May. The taxpayers are ultimately set to foot the bill for covering any costs arising from the firm’s inability to continue delivering on those contracts."

Rolls-Royce slipped as it confirmed recent press speculation that it might be looking to hive-off its l'Orange unit, but clarified that the strategic review now under way would have no impact on the rest of its Power Systems arm.

On the upside, engineer GKN rallied following reports that private equity firm Carlyle is considering bidding for the company after it last week rejected a £7bn offer from Melrose Industries. Meanwhile, Melrose was a little weaker after saying it is beginning a series of shareholder meetings to discuss the proposal.

Plumbing and heating company Ferguson gained as it said recent US tax cuts would provide a beneficial impact on the group's after tax earnings.

FTSE 250 heat treatment supplier Bodycote surged after saying it now expects full year 2017 headline operating profit to be towards the upper end of market expectations as it announced that US tax changes should have a positive one-off impact.

William Hill rose after saying it is undertaking a review of its Australian business, as it said 2017 adjusted profits were 11% than in the previous year, surpassing forecasts of £290m, while Acacia Mining shone after the release of its fourth-quarter production figures.

In broker note action, Johnson Matthey was boosted by an upgrade to ‘buy’ at Berenberg, while Land Securities was lifted by an upgrade to ‘overweight by JPMorgan. Barclays rose on the back of an upgrade to ‘buy’ at Investec.

There are no major UK data releases due on Monday but on Tuesday investors will eye the release of the latest inflation figures.

Market Movers

FTSE 100 (UKX) 7,775.68 -0.04%
FTSE 250 (MCX) 20,870.77 0.05%
techMARK (TASX) 3,544.32 -0.02%

FTSE 100 - Risers

GKN (GKN) 434.20p 3.38%
Ferguson (FERG) 5,596.00p 2.12%
ITV (ITV) 171.35p 1.99%
WPP (WPP) 1,379.00p 1.81%
Johnson Matthey (JMAT) 3,200.00p 1.14%
Randgold Resources Ltd. (RRS) 7,384.00p 1.12%
British American Tobacco (BATS) 5,020.00p 1.05%
Severn Trent (SVT) 2,033.00p 0.89%
Antofagasta (ANTO) 1,041.08p 0.88%
Mondi (MNDI) 1,939.50p 0.83%

FTSE 100 - Fallers

NMC Health (NMC) 3,028.00p -2.39%
Micro Focus International (MCRO) 2,233.00p -1.98%
Standard Chartered (STAN) 821.00p -1.44%
easyJet (EZJ) 1,511.00p -1.21%
International Consolidated Airlines Group SA (CDI) (IAG) 660.80p -1.20%
HSBC Holdings (HSBA) 784.30p -0.93%
Rolls-Royce Holdings (RR.) 854.33p -0.75%
CRH (CRH) 2,684.00p -0.74%
Intertek Group (ITRK) 5,176.00p -0.69%
Croda International (CRDA) 4,379.00p -0.68%

FTSE 250 - Risers

Vedanta Resources (VED) 958.20p 5.20%
Serco Group (SRP) 102.90p 4.84%
Vectura Group (VEC) 121.50p 4.47%
Vesuvius (VSVS) 622.00p 3.93%
Bodycote (BOY) 985.00p 3.52%
Acacia Mining (ACA) 199.40p 2.57%
Brown (N.) Group (BWNG) 294.60p 2.51%
Kaz Minerals (KAZ) 969.60p 2.49%
Dunelm Group (DNLM) 712.45p 2.36%
Card Factory (CARD) 220.00p 2.33%

FTSE 250 - Fallers

Galliford Try (GFRD) 1,231.67p -3.63%
Balfour Beatty (BBY) 299.21p -2.73%
Wood Group (John) (WG.) 675.20p -2.43%
Greggs (GRG) 1,301.00p -2.11%
Moneysupermarket.com Group (MONY) 347.30p -2.03%
Marshalls (MSLH) 449.20p -1.75%
Tullow Oil (TLW) 230.43p -1.65%
Shaftesbury (SHB) 1,000.00p -1.48%
Royal Mail (RMG) 456.10p -1.45%
Workspace Group (WKP) 947.00p -1.41%