London midday: Stocks turn higher as investors digest retail sales, construction data

London stocks had popped into the green by midday on Tuesday, shaking off earlier losses thanks to strong performances from the likes of ITV and Standard Life Aberdeen.

The FTSE 100 was up 0.2% at 7,200.04 while the pound was 0.2% higher against the dollar at 1.2686 and 0.1% firmer versus the euro at 1.1276.

Equity markets had kicked off the session on the back foot, taking their cue from Wall Street, where the Nasdaq fell sharply as tech stocks took a beating amid concerns about antitrust scrutiny.

The US tech sector was hit on Monday following reports that the Department of Justice and the Federal Trade Commission have agreed to launch antitrust probes of Apple, Alphabet, Amazon and Facebook.

Neil Wilson, chief market analyst at Markets.com, said: "Whilst it’s far too early to say if any would, or could, be ripe to be broken up, there’s a real threat this will depress multiples and mean we need to reset expectations."

On home turf, investors were digesting the latest data on retail sales and construction activity.

According to the British Retail Consortium, retail sales fell in May at their fastest rate since 1995 amid political and economic uncertainty. The BRC also warned of further job losses and store closures.

Sales were down 2.7% last month on a total basis compared to a 4.1% increase in May last year. Excluding Easter distortions, this marked the biggest decline since the BRC began recording data in January 1995.

On a like-for-like basis retail sales fell 3% from May 2018, when they rose 2.8% from the previous year. Excluding Easter distortions, this was the steepest LFL drop since December 2008.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that while the slump in year-over-year growth in total sales is another sign that May was a terrible month for retailers, it looks like this was just a bad month in an otherwise solid year.

Elsewhere, the IHS Markit/CIPS construction total activity index for May fell to 48.6 from 50.5 in April, coming in below the 50 level that separates contraction from expansion and marking the lowest reading since March 2018, when the sector was hit by the Beast from the East. Economists were expecting an unchanged reading.

Commercial building was the weakest area of construction activity, with output falling the most since September 2017. Meanwhile, civil engineering activity declined for the fourth consecutive month. Survey respondents said clients were holding back on major spending decisions due to Brexit uncertainty and worries about the economic outlook.

The survey also showed that reduced workloads led to more cautious recruitment strategies and the non-replacement of departing staff last month. As a result, May saw the sharpest drop in construction employment for six and a half years. In addition, business optimism was at its weakest since October 2018.

In corporate news, Woodford Patient Capital Trust - run by Neil Woodford - was the worst performer as it emerged that his flagship Equity Income Fund had been suspended after "an increased level of redemptions".

Hargreaves Lansdown was also under the cosh, after saying it had removed the Woodford Equity Income and Income Focus funds from its Wealth 50 buy list.

Neil Wilson said: "Woodford has clearly made a series of poor investment decisions. Out-of-love UK stocks may have been ultra-cheap, but they’re still unloved and still cheap.

"Provident has been a disaster. Kier also a disaster. It’s been a tough few years for Woodford and things look like they will get worse still."

Woodford Investment Management is the biggest investor in Kier Group, which saw shares tumble 41% on Monday after it warned on profits. The Woodford Equity Income Fund also holds a large position in sub-prime lender Provident Financial, which issued three profit warnings last year and has been probed by the Financial Conduct Authority.

On the upside, Standard Life Aberdeen was the top riser on the FTSE 100, with traders suggesting that it could get inflows from platforms that will remove Woodford.

ITV was also on the rise as Goldman Sachs resumed coverage on shares of the broadcaster at 'neutral', saying it is better positioned structurally and more diversified than peers.

888 Holdings rallied after saying it remains on track to meet full-year expectations and posting a 6% increase in like-for-like revenue for the period between 1 January and 18 May.

Shell lost ground even as the oil giant said it expects to return $125bn or more to shareholders between 2021 and 2025 through dividends and buybacks. It also lifted its organic free cash flow outlook to around $35bn for 2025 at $60 per barrel.

FirstGroup was under pressure after hitting back at Coast Capital, saying that the US-based activist investor's proposal to remove six of the current directors and replace them with seven of its own nominees was not in the best interests of its shareholders. Despite its opposition, the train and bus operator will hold an extraordinary general meeting on 25 June to consider the resolutions.

Market Movers

FTSE 100 (UKX) 7,200.04 0.21%
FTSE 250 (MCX) 18,884.67 0.04%
techMARK (TASX) 3,503.38 -0.19%

FTSE 100 - Risers

ITV (ITV) 109.60p 4.23%
Standard Life Aberdeen (SLA) 271.10p 3.87%
BT Group (BT.A) 201.80p 3.59%
easyJet (EZJ) 880.20p 2.97%
CRH (CRH) 2,555.00p 2.61%
Royal Bank of Scotland Group (RBS) 217.70p 2.59%
Imperial Brands (IMB) 1,919.00p 2.57%
Persimmon (PSN) 2,000.00p 2.56%
Aviva (AV.) 413.10p 2.48%
Barclays (BARC) 153.02p 2.37%

FTSE 100 - Fallers

Hargreaves Lansdown (HL.) 2,135.00p -4.17%
Sage Group (SGE) 731.20p -2.61%
Ocado Group (OCDO) 1,146.00p -2.18%
Fresnillo (FRES) 782.40p -1.81%
Smith & Nephew (SN.) 1,653.19p -1.48%
Experian (EXPN) 2,368.00p -1.37%
InterContinental Hotels Group (IHG) 4,971.00p -1.35%
Rightmove (RMV) 561.30p -1.21%
Relx plc (REL) 1,832.50p -1.11%
Micro Focus International (MCRO) 1,860.80p -1.11%

FTSE 250 - Risers

Metro Bank (MTRO) 657.76p 5.16%
888 Holdings (888) 138.40p 4.77%
Saga (SAGA) 43.18p 4.70%
Wood Group (John) (WG.) 405.40p 3.98%
William Hill (WMH) 137.28p 3.49%
Aston Martin Lagonda Global Holdings (AML) 921.30p 3.44%
GVC Holdings (GVC) 606.00p 3.41%
Royal Mail (RMG) 201.00p 3.34%
Rank Group (RNK) 155.39p 3.18%
Babcock International Group (BAB) 457.00p 3.16%

FTSE 250 - Fallers

Woodford Patient Capital Trust (WPCT) 67.25p -12.09%
Kier Group (KIE) 155.27p -5.21%
NewRiver REIT (NRR) 194.70p -5.02%
Syncona Limited NPV (SYNC) 220.50p -4.55%
TBC Bank Group (TBCG) 1,528.00p -4.26%
Sophos Group (SOPH) 382.80p -3.92%
Stobart Group Ltd. (STOB) 103.90p -3.80%
Amigo Holdings (AMGO) 271.50p -3.04%
Contour Global (GLO) 191.80p -3.03%
Civitas Social Housing (CSH) 79.80p -2.80%