London open: Stocks drop after more heavy falls in US and Asia; data eyed

Stocks in London fell in early trade on Friday following another selloff on Wall Street and in Asia, as investors eyed a slew of key UK data releases.

At 0835 GMT, the FTSE 100 was down 0.6% at 7,127.86, while the pound was up 0.3% against the dollar at 1.3957 and 01% firmer versus the euro at 1.1372, having surged in the previous session on the back of unexpectedly hawkish comments from the Bank of England, which signalled the need for interest rates to rise sooner and more than previously anticipated.

On Thursday, stocks in the US tumbled as worries about rising inflation and higher interest rates continued to plague investors. The Dow ended down 1,033 points, while the S&P 500 fell 101 points and the Nasdaq sank 275 points.

On the data front, UK industrial and manufacturing production figures for December are out at 0930 GMT, along with trade balance data.

Accendo Markets analyst Mike van Dulken said: "In focus today will be analysis of yet another volatile overnight session for US and Asian equities. Risk aversion returns to hamper what was a half-hearted recovery, with bullish conviction distinctly lacking while investors digest the reappearance of volatility and prospect of higher inflation."

Van Dulken said the industrial and manufacturing production, both expected to have slowed in December, will be of interest given Thursday's more hawkish BoE and the leaked Brexit impact assessment papers.

"The industrial metric is expected to have slowed most significantly, with month-on-month growth of -0.9% the slowest since Oct 2016 whilst 0.3% year-on-year is down sharply from 2.5% in Nov and the most pedestrian since 0.7% in May. As for manufacturing, 1.2% annual growth would mark the slowest pace since May’s 1.4%, and a far cry from October’s 4.7% best since Dec 2016."

Market participants will also be mulling news that the US government has officially shut down for the second time this year, as Congress failed to meet the midnight deadline to vote on a new budget after Republican Senator Rand Paul voiced some last-minute objections. The Senate passed a two-year budget agreement early on Friday morning that would boost spending by $300n and suspend the debt ceiling for a year but it still needs to be approved by the House of Representatives.

In corporate news, British Land nudged lower after announcing the acquisition of the Woolwich Estate, covering 4.9 acres in south east London, for a headline price £103m - representing a net initial yield of 4.1%.

Drax was in the red after the power company secured agreements worth a combined £10m to provide capacity from two existing coal units.

On the upside, plastics manufacturer Victrex rose after reporting a very strong start to the year, with industrial sales led by consumer electronics to offset a slightly weaker performance from medical customers.

Shaftesbury ticked up as the real estate investment trust said it has seen continuing high footfall and robust trading in the period from 1 October 2017 to 8 February 2018.

Outside of the FTSE 350, deal news helped to inject a little life into what was otherwise a fairly dull morning, as Trinity Mirror rallied after agreeing to buy the publishing assets of Northern & Shell, which include the Daily Express, the Daily Star and OK magazine.

In broker note action, Tate & Lyle was in the black after an upgraded to 'buy' at Societe Generale, while Metro Bank rose after an upgrade to 'hold' at Investec.

Big Yellow got a boost as Bank of America Merrill Lynch upped it to 'buy' 'neutral' and Relx was up after Deutsche Bank upgraded it to 'buy' from 'hold'.

Market Movers

FTSE 100 (UKX) 7,127.86 -0.60%
FTSE 250 (MCX) 19,221.30 -0.55%
techMARK (TASX) 3,234.37 -0.53%

FTSE 100 - Risers

Relx plc (REL) 1,485.00p 0.75%
Taylor Wimpey (TW.) 183.30p 0.74%
Reckitt Benckiser Group (RB.) 6,438.00p 0.59%
Smith & Nephew (SN.) 1,233.50p 0.45%
BAE Systems (BA.) 569.60p 0.28%
Diageo (DGE) 2,451.50p 0.25%
Rio Tinto (RIO) 3,766.00p 0.24%
Tesco (TSCO) 202.70p 0.15%
Smiths Group (SMIN) 1,507.50p 0.10%
Ferguson (FERG) 5,172.00p 0.08%

FTSE 100 - Fallers

Scottish Mortgage Inv Trust (SMT) 420.22p -3.04%
Johnson Matthey (JMAT) 3,168.00p -2.55%
United Utilities Group (UU.) 698.00p -1.88%
Mediclinic International (MDC) 560.20p -1.82%
Mondi (MNDI) 1,780.00p -1.60%
3i Group (III) 898.40p -1.60%
Evraz (EVR) 332.25p -1.35%
Prudential (PRU) 1,767.00p -1.34%
RSA Insurance Group (RSA) 593.00p -1.33%
Legal & General Group (LGEN) 251.35p -1.32%

FTSE 250 - Risers

Ascential (ASCL) 357.80p 1.94%
Millennium & Copthorne Hotels (MLC) 541.00p 1.88%
Stobart Group Ltd. (STOB) 255.00p 1.39%
Victrex plc (VCT) 2,444.00p 1.33%
Petrofac Ltd. (PFC) 420.93p 0.99%
Big Yellow Group (BYG) 839.00p 0.84%
Babcock International Group (BAB) 649.20p 0.81%
Intu Properties (INTU) 209.20p 0.77%
Dixons Carphone (DC.) 193.00p 0.73%
Royal Mail (RMG) 526.01p 0.65%

FTSE 250 - Fallers

F&C Global Smaller Companies (FCS) 1,281.20p -2.94%
Cairn Energy (CNE) 185.50p -2.88%
Fidelity China Special Situations (FCSS) 222.00p -2.84%
Hikma Pharmaceuticals (HIK) 866.20p -2.83%
Sanne Group (SNN) 603.75p -2.78%
Worldwide Healthcare Trust (WWH) 2,310.29p -2.72%
Vedanta Resources (VED) 710.00p -2.42%
Pershing Square Holdings Ltd NPV (PSH) 933.00p -2.30%
Saga (SAGA) 113.10p -2.16%
Virgin Money Holdings (UK) (VM.) 272.60p -2.12%