London open: Stocks drop as nerves set in ahead of G7 summit
London stocks fell in early trade on Friday as investors adopted a risk-off strategy ahead of what could be a heated G7 summit in Canada.
At 0840 BST, the FTSE 100 was down 0.7% to 7,650.88, while the pound was 0.1% lower against the dollar at 1.3416 and up 0.1% versus the euro at 1.1389.
Spreadex analyst Connor Campbell said: "After ignoring the trade tensions for as long as they could, a rocky Asian session has left the European indices feeling rather tender.
"A likely feisty G7 meeting in Quebec appears to be the main thing driving the markets lower. Investors are either worried that nothing will get resolved, or Trump will become more entrenched in his aggressive approach to trade. Regardless, with little else to focus on the FTSE and co. seem intent on undoing a lot of the good work seen in the last week."
Investors are expecting US President Trump to find himself isolated from other leaders at the summit. French President Emmanuel Macron has already warned that he won’t sign the traditional joint statement unless progress is made on tariffs, while Germany’s Angela Merkel is expected to challenge Trump on trade, climate and security.
Market participants will also be mulling over figures that showed China’s trade surplus for May came in at $24.92bn compared to consensus expectations of $31.9bn, while imports were up 26% versus expectations for a more modest increase of 18.7%. Meanwhile, exports were up 12.6%, also beating forecasts for a 10% rise.
Mining stocks were being hit by a drop in copper prices, with US dollar strengthening fuelled by emerging market wobbles in the likes of Brazil, Mexico and Turkey, though safe-havens like gold are struggling, said analyst Mike van Dulken at Accendo Markets. He said this was "overpowering the benefit of a slightly weaker GBP as uncertainty prevails about UK PM Theresa May and Brexit."
In UK corporate news, BT was initially the standout gainer as it announced that group chief executive Gavin Patterson will step down later this year after the telecoms giant's board wielded the axe after pressure from major shareholders. But after almost an hour's trading the shares were flat.
Standard Life Aberdeen tumbled after Lloyds Bank sold its remaining 3.3% stake in for £344m, with Lloyds shares falling too. The sale comes after Lloyds cancelled its £109bn arrangement with SLA in February.
Games Workshop slumped after saying that it expects sales for the year to be around £219m, with a pre-tax profit of no less than £74m and royalties receivable of licensing at around £10m.
Chemicals maker Synthomer was in the red after saying it was included in an European Commission investigation into practices related to buying styrene monomer, a chemical used in making plastics, by companies operating in the European Economic Area.
Kaz Minerals was under the cosh after announcing that Non Ferrous China has agreed to invest $70m into its Koksay project, giving it a 19.4% stake. The stock was likely being hit by a downgrade to ‘neutral’ at JPMorgan.
In broker note action, Auto Trader was upgraded to ‘hold’ at Berenberg, while Capita was lifted to ‘outperform’ by RBC Capital Markets. Pets at Home was cut to ‘hold’ at Berenberg but upgraded to ‘equalweight’ by Morgan Stanley.
Market Movers
FTSE 100 (UKX) 7,650.88 -0.69%
FTSE 250 (MCX) 21,055.67 -0.47%
techMARK (TASX) 3,512.70 -0.29%
FTSE 100 - Risers
BT Group (BT.A) 206.70p 1.85%
Associated British Foods (ABF) 2,725.00p 0.70%
Carnival (CCL) 4,560.00p 0.40%
Randgold Resources Ltd. (RRS) 5,944.84p 0.22%
Sky (SKY) 1,351.50p 0.11%
SSE (SSE) 1,357.50p 0.07%
Bunzl (BNZL) 2,285.00p -0.04%
Relx plc (REL) 1,667.50p -0.06%
WPP (WPP) 1,218.50p -0.08%
British Land Company (BLND) 681.54p -0.10%
FTSE 100 - Fallers
NMC Health (NMC) 3,364.00p -3.61%
Standard Life Aberdeen (SLA) 351.30p -3.49%
Antofagasta (ANTO) 1,105.00p -2.64%
Mediclinic International (MDC) 542.40p -2.34%
Old Mutual (OML) 221.60p -2.33%
Anglo American (AAL) 1,850.00p -1.70%
Glencore (GLEN) 387.65p -1.62%
Evraz (EVR) 505.20p -1.60%
Royal Mail (RMG) 484.70p -1.50%
Tesco (TSCO) 244.20p -1.49%
FTSE 250 - Risers
Capita (CPI) 157.65p 5.06%
Victrex plc (VCT) 2,976.00p 2.62%
Auto Trader Group (AUTO) 392.90p 2.05%
Contour Global (GLO) 226.00p 1.80%
Serco Group (SRP) 103.40p 1.37%
Stobart Group Ltd. (STOB) 235.87p 1.23%
Daejan Holdings (DJAN) 5,705.80p 0.99%
Pennon Group (PNN) 789.80p 0.97%
Millennium & Copthorne Hotels (MLC) 537.00p 0.94%
McCarthy & Stone (MCS) 131.60p 0.84%
FTSE 250 - Fallers
Kaz Minerals (KAZ) 1,023.25p -4.90%
Petrofac Ltd. (PFC) 571.20p -2.72%
Vedanta Resources (VED) 702.60p -2.71%
John Laing Group (JLG) 282.60p -2.21%
Centamin (DI) (CEY) 124.15p -1.90%
Renishaw (RSW) 5,435.00p -1.81%
Investec (INVP) 560.00p -1.69%
Alfa Financial Software Holdings (ALFA) 207.00p -1.66%
Hochschild Mining (HOC) 213.90p -1.66%
Ashmore Group (ASHM) 382.60p -1.59%