London midday: UK stocks sink 1.4% as investors scale back risk
- RBS underwhelms with Q2 results
- Mining stocks fall as investors scale back risk
- Rexam, IAG, Smith & Nephew gain after results
- Gaza fighting, US data keeps investors cautious
techMARK 2,732.54 -1.17%
FTSE 100 6,635.42 -1.41%
FTSE 250 15,313.02 -1.18%
UK stocks were in the red for the third straight day on Friday with the FTSE 100 sinking 1.4% as investors scale back their appetite for risk amid a wave of corporate earnings, economic data and geopolitical tensions.
Heavy falls from Royal Bank of Scotland and the heavyweight mining sector were weighing on markets. London's benchmark index was trading nearly 95 points lower at 6,635 with just eight constituents making gains by midday. It has not closed below this level since mid-April.
Israel said it was resuming military operations today, claiming that Hamas broke the planned ceasefire within hours of it being agreed. According to reports, nearly 30 were killed in Gaza from an Israeli attack on Friday morning.
"With last night's 72-hour humanitarian Gaza ceasefire having already been ignored and some mixed macro data publications, global equities have resumed their southerly course, weighed down by myriad geopolitical/sovereign risk," said Michael van Dulken, head of research at Accendo Markets.
Friday afternoon's US employment report was also keeping investors cautious in London. The consensus forecast is for a 231,000 gain in non-farm payrolls in July, down from an impressive 288,000 in June. The unemployment rate is expected to remain unchanged after falling to 6.1%, its lowest since September 2008.
However, any 'beat' could cause a volatile reaction on global financial markets. Recent US figures - rising wage inflation and a sharp rebound in economic growth in particular - have sparked speculation that robust data could prompt the Federal Reserve to tighten policy sooner than expected after the end of quantitative easing later this year.
In other economic data, the final revision to Eurozone manufacturing in July was unexpectedly revised lower, while UK manufacturing growth slowed to lowest level for a year.
From a technical point of view, Van Dulken said that the Footsie is now testing a rising support level from February at 6,670. "Having fallen below this and now testing July lows of 6,640, any further weakness could take us all the way to March-April lows of 6,500."
RBS, miners lead markets lower
RBS managed to beat forecasts with a 367% increase in first-half operating profits to £2.6bn, but the market was left underwhelmed with the stock under pressure in morning trade. The shares had surged last week when the company pre-released its results, but have given up gains ever since with Investec downgrading the stock on Friday to 'sell'.
Mining stocks were trading in the red with Glencore among the worst performers. The company announced that it has completed the $7bn sale of its Las Bambas copper project in Peru, proceeds of which will be used to "immediately and materially de-gear [the] balance sheet".
Sector peers Rio Tinto, Randgold Resources and Anglo American were also out of favour.
British Airways and Iberia owner International Airlines Group was flying higher as it moved into the black in the first half, said cost-cutting should help it boost annual profits and announced it was buying 16 Airbus jets.
Beverage can maker Rexam edged higher after saying it was on track after an in-line first half despite foreign exchange and high aluminium prices impacting interim results.
Medical devices manufacturer Smith & Nephew also rose as it reported 13% earnings growth in its second quarter, which its said was down to the rebalancing of the business towards higher growth markets.
Capita and United Utilities were heavy fallers after Credit Suisse downgraded its rating on the stocks to 'neutral' and 'underperform', respectively.
FTSE 100 - Risers
Smith & Nephew (SN.) 1,045.00p +1.85%
International Consolidated Airlines Group SA (CDI) (IAG) 335.10p +1.30%
BG Group (BG.) 1,179.50p +0.64%
Rexam (REX) 502.00p +0.20%
Petrofac Ltd. (PFC) 1,099.00p +0.18%
easyJet (EZJ) 1,297.00p +0.15%
Tullow Oil (TLW) 729.50p +0.14%
Royal Mail (RMG) 417.70p +0.07%
FTSE 100 - Fallers
United Utilities Group (UU.) 858.00p -3.60%
Schroders (SDR) 2,312.00p -3.26%
Capita (CPI) 1,164.00p -3.16%
Johnson Matthey (JMAT) 2,874.00p -2.87%
Anglo American (AAL) 1,554.00p -2.81%
Glencore (GLEN) 350.10p -2.76%
Rio Tinto (RIO) 3,300.00p -2.71%
Randgold Resources Ltd. (RRS) 4,982.00p -2.70%
Royal Bank of Scotland Group (RBS) 346.60p -2.45%
Severn Trent (SVT) 1,890.00p -2.33%
FTSE 250 - Risers
Just Eat (JE.) 208.40p +3.42%
Direct Line Insurance Group (DLG) 294.40p +3.30%
Afren (AFR) 112.50p +2.27%
Halfords Group (HFD) 486.40p +1.33%
JD Sports Fashion (JD.) 385.00p +1.29%
Fisher (James) & Sons (FSJ) 1,326.00p +0.84%
Tate & Lyle (TATE) 628.50p +0.72%
Dignity (DTY) 1,391.00p +0.72%
Balfour Beatty (BBY) 239.30p +0.59%
Premier Oil (PMO) 323.70p +0.59%
FTSE 250 - Fallers
Ashmore Group (ASHM) 333.60p -5.98%
Man Group (EMG) 112.70p -5.29%
Infinis Energy (INFI) 221.30p -4.82%
RPS Group (RPS) 243.20p -4.81%
Centamin (DI) (CEY) 69.00p -4.37%
Foxtons Group (FOXT) 258.00p -4.12%
Kazakhmys (KAZ) 312.50p -3.79%
Jupiter Fund Management (JUP) 368.50p -3.74%
ITE Group (ITE) 193.60p -3.54%
DCC (DCC) 3,272.00p -3.37%
BC