London midday: Volatility continues to climb heading into the weekend

Stocks are holding near their worst levels of the session with traders still on edge and very wary heading into the weekend break due to the tense geopolitical situation in the Northern Pacific.

That was despite a possible indication that China might not back-up its errant neighbour if it carries out a missile strike that could threaten US territory.

According to the English-language Global Times, which was founded by the Communist Party's People's Daily, China should "make clear that if North Korea launches missiles that threaten US soil first and the US retaliates, China will stay neutral."

Despite that, as of 1207 BST the FTSE 100 was trading lower by 1.25% or 92.60 points to 7,297.51.

On the other hand, COMEX-traded gold futures were little changed, edging higher by 0.22% to $1,293.00/oz.. Yet the FTSE 100 volatility index continued to climb higher, adding 17.13% to 15.93, a clear reflection of investor caution.

Meanwhile, the pan-European Stoxx 600 was on track for a greater than 2% loss for the week, its worst showing since November.

Commenting on the situation in markets, LCG Head of Research Jasper Lawler said: "Love or loathe him, Trump isn’t one to back down from a confrontation so its perhaps not a surprise that things have escalated. North Korea responding with a threat to US territory after Trump warned them not to threaten the US was never going to go down well.

"We assume markets will move on if it remains purely a war of words but the sell-off looks durable. With earnings season almost over, worry over North Korea may have ignited a well-overdue period of greater market volatility."

The downwards pressure on the US stock market increased overnight after US president Donald Trump told journalists he stood by his warning made to the North Korean regime the day before. Indeed, Trump added that his warning may not have been "tough enough" and declined to take the option of a pre-emptive strike off the table.

On that note, the Global Times also pointed out that: "if the US and South Korea carry out strikes and try to overthrow the North Korean regime and change the political pattern on the peninsula, China will prevent them from doing so."

Back in the UK, in an interview with the Evening Standard the Monetary Policy Committee's Michael Saunders said Brexit would likely crimp the UK economy over the longer-term.

According to Saunders, Britain's gross domestic product may grow five percentage points less over the next 15 years.

On the economic calendar for Friday, US consumer price data for July are expected at 1330 BST, followed by speeches from the presidents of the Federal Reserve banks of New York and Minneapolis at 1440 BST and 1630 BST, respectively.

Exane hangs up on Dixons

Shares in Dixons Carphone sank after Exane BNP Paribas downgraded the stock from 'outperform' to 'underperform' on concerns about changes in the mobile phone market, including fewer customers upgrading to new phones and the unbundling of handset and network contracts.

Financial services group Old Mutual posted a sharp 37% rise in adjusted pre-tax profits to £969m, helped in part by £108m of proceeds from the sale of its OMAM unit although it did incur in a goodwill impairment charge of £71m linked to UAP-Old Mutualin East Africa. On an IFRS basis profits before tax surged from £534m in the year-ago period to £940m, for earnings per share of 10.6p, with the latter up by 33%. Despite that, its net asset value per share decreased from 228.6p to 220.1p. In line with its stated policy on payouts, the interim dividend was increased by 32% to 3.53p.

Domino's Pizza Group announced the creation of a partnership with its largest franchisee in London on Friday. The FTSE 250 company said that, as part of the transaction, it agreed to pay £24m for a 75% stake in a newly-formed company, whose assets will consist of all the franchisee's operations being 25 existing Domino's stores in London.

The Restaurant Group announced the appointment of Kirk Davis as Chief Financial Officer on Friday before the market open. Davis arrives having spent the previous three years in the same position for fellow FTSE 250-listed firm Greene King.

Pub operator and brewing company Greene King announced on Friday that Richard Smothers would be joining the firm in December 2017, and joining the board as chief financial officer in February 2018. The FTSE 250 firm said Smothers was joining from retailer Mothercare, where he was chief financial officer since March 2015.

Market Movers

FTSE 100 (UKX) 7,297.34 -1.25%
FTSE 250 (MCX) 19,482.28 -1.10%
techMARK (TASX) 3,343.70 -1.00%

FTSE 100 - Risers

Coca-Cola HBC AG (CDI) (CCH) 2,624.00p 1.23%
Smurfit Kappa Group (SKG) 2,202.00p 0.73%
Babcock International Group (BAB) 844.00p 0.72%
Reckitt Benckiser Group (RB.) 7,360.00p 0.67%
Centrica (CNA) 200.10p 0.45%
DCC (DCC) 6,830.00p 0.22%
Unilever (ULVR) 4,392.50p 0.22%
SSE (SSE) 1,392.00p 0.14%
Randgold Resources Ltd. (RRS) 7,480.00p 0.07%
Diageo (DGE) 2,474.50p 0.04%

FTSE 100 - Fallers

Anglo American (AAL) 1,218.00p -4.66%
Antofagasta (ANTO) 896.50p -4.48%
BHP Billiton (BLT) 1,320.50p -4.00%
Rio Tinto (RIO) 3,341.00p -3.98%
Glencore (GLEN) 318.90p -3.79%
Prudential (PRU) 1,772.50p -2.93%
Old Mutual (OML) 196.10p -2.68%
Convatec Group (CTEC) 286.00p -2.42%
Standard Chartered (STAN) 756.40p -2.41%
St James's Place (STJ) 1,158.00p -2.28%

FTSE 250 - Risers

PayPoint (PAY) 897.00p 2.40%
CLS Holdings (CLI) 205.60p 2.19%
Rathbone Brothers (RAT) 2,708.00p 2.03%
Sirius Minerals (SXX) 28.42p 1.94%
Supergroup (SGP) 1,551.00p 1.84%
Essentra (ESNT) 523.50p 1.06%
Syncona Limited NPV (SYNC) 171.50p 0.88%
Marston's (MARS) 115.20p 0.88%
TR Property Inv Trust (TRY) 364.30p 0.86%
Acacia Mining (ACA) 189.10p 0.85%

FTSE 250 - Fallers

Dixons Carphone (DC.) 242.70p -8.66%
Kaz Minerals (KAZ) 660.50p -8.26%
Vedanta Resources (VED) 695.00p -6.46%
Tullow Oil (TLW) 163.70p -6.14%
FDM Group (Holdings) (FDM) 881.50p -4.08%
Domino's Pizza Group (DOM) 269.90p -3.71%
Polypipe Group (PLP) 368.70p -3.68%
Aldermore Group (ALD) 216.00p -3.57%
Auto Trader Group (AUTO) 350.20p -3.42%
Wood Group (John) (WG.) 613.50p -3.08%