London open: Stocks fall after Trump signs Hong Kong bill; ex-divs weigh

London stocks fell early on Thursday amid renewed concerns about trade relations between the US and China, while ex-dividends were a drag.

At 0830 GMT, the FTSE 100 was down 0.6% at 7,388.77, while the pound was up 0.1% against the dollar at 1.2930 and flat versus the euro at 1.1745, having rallied overnight after the MRP YouGov poll - the same poll that predicted the outcome of the 2017 election - suggested that the Conservatives were on track for a 68-seat majority.

Neil Wilson, chief market analyst at Markets.com, said: "It’s easy to overstate the importance of this poll but as it backs up every other poll, the picture looks quite clear now.

"However, the margins in many seats is very narrow and complacent Tory voters could stay home. The majority may be much smaller than this poll predicts, we may still get a hung parliament. Betting markets will be mis-pricing the result for sure. As politicians are wont to say, there’s only one poll that matters."

More broadly, sentiment took a hit after US President Donald Trump signed into law legislation that backs pro-democracy protesters in Hong Kong - a move that will likely strain US relations with China further as the two nations work towards an agreement on trade. Trump signed the Hong Kong Human Rights and Democracy Act of 2019 into law on Wednesday, along with another bill banning the sale of munitions to Hong Kong police.

China was quick to condemn the signing of the legislation and US interference in its internal matters. The country’s Ministry of Foreign Affairs said that the bill reveals "sinister intentions" on the part of the US towards the people of China and Hong Kong.

Neil Wilson said: "At such a delicate moment for trade talks this could tip the balance against agreement. To rob a phrase, Trump seems apt to bring discord where there was harmony. China has promised countermeasures. It’s interesting how economic disagreements are being politicised. We’ve seen how Trump has used tariffs as a diplomatic tool - this move, albeit in reverse, is in this vein."

Investors were also mulling the latest survey from Nationwide, which showed that house prices grew more than expected in November, hitting a seven-month high but remaining "subdued".

House prices were up 0.5% on the month, which was an improvement on 0.2% growth in October and better than expectations of a 0.1% increase. On the year, house prices rose 0.8% in November, up from 0.4% the month before and ahead of expectations of 0.2% growth. This also marked the strongest jump since April.

Nationwide's chief economist, Robert Gardner, said: "Indicators of UK economic activity have been fairly volatile in recent quarters, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensification of Brexit uncertainty. To date, the slowdown has largely centred on business investment, while household spending has been more resilient."

In equity markets, Johnson Matthey was the biggest loser on the FTSE 100 after a downgrade to ‘underweight’ at JPMorgan, while Melrose Industries was knocked lower by a downgrade to ‘outperform’ from ‘top pick’ at RBC Capital Markets. Playtech suffered heavy losses after a downgrade by Morgan Stanley.

Ex-dividends weighed, with Vodafone, IAG, National Grid, Severn Trent, Bellway, TalkTalk and Micro Focus all in the frame.

On the upside, British Land, Land Securities and Great Portland Estates all rose after upgrades to ‘overweight’ at Morgan Stanley, while Phoenix Group was higher as it said in a trading update that 2019 cash generation was ahead of target.

Virgin Money racked up strong gains even as it said full-year losses widened and scrapped plans to introduce a dividend.

Market Movers

FTSE 100 (UKX) 7,388.77 -0.55%
FTSE 250 (MCX) 20,897.06 -0.27%
techMARK (TASX) 4,105.93 -0.42%

FTSE 100 - Risers

British Land Company (BLND) 583.40p 1.57%
Land Securities Group (LAND) 956.60p 0.86%
Hiscox Limited (DI) (HSX) 1,371.00p 0.66%
Phoenix Group Holdings (PHNX) 738.20p 0.65%
Ocado Group (OCDO) 1,173.50p 0.64%
United Utilities Group (UU.) 876.40p 0.64%
Barclays (BARC) 175.54p 0.64%
Taylor Wimpey (TW.) 178.75p 0.62%
Royal Bank of Scotland Group (RBS) 232.50p 0.56%
Barratt Developments (BDEV) 688.20p 0.56%

FTSE 100 - Fallers

Johnson Matthey (JMAT) 2,826.00p -4.53%
Vodafone Group (VOD) 155.54p -3.05%
Ashtead Group (AHT) 2,382.00p -2.54%
International Consolidated Airlines Group SA (CDI) (IAG) 560.40p -2.03%
Melrose Industries (MRO) 229.20p -1.97%
National Grid (NG.) 906.80p -1.70%
Antofagasta (ANTO) 891.60p -1.50%
Halma (HLMA) 2,123.00p -1.30%
Mondi (MNDI) 1,680.50p -1.29%
Severn Trent (SVT) 2,306.00p -1.28%

FTSE 250 - Risers

Virgin Money UK (VMUK) 154.00p 7.69%
Vesuvius (VSVS) 455.60p 2.06%
Great Portland Estates (GPOR) 838.00p 1.87%
Derwent London (DLN) 3,734.00p 1.36%
Provident Financial (PFG) 433.90p 1.14%
Sophos Group (SOPH) 573.80p 0.81%
Greencore Group (GNC) 240.90p 0.75%
Babcock International Group (BAB) 595.00p 0.75%
Workspace Group (WKP) 1,101.00p 0.73%
Dechra Pharmaceuticals (DPH) 2,836.00p 0.71%

FTSE 250 - Fallers

Playtech (PTEC) 380.50p -4.73%
Vivo Energy (VVO) 115.00p -4.64%
Stagecoach Group (SGC) 130.80p -2.90%
Bellway (BWY) 3,376.00p -2.85%
TalkTalk Telecom Group (TALK) 103.10p -2.37%
Sirius Minerals (SXX) 3.49p -1.80%
Mediclinic International (MDC) 385.20p -1.73%
Quilter (QLT) 143.60p -1.68%
Ferrexpo (FXPO) 148.40p -1.66%
Micro Focus International (MCRO) 1,130.00p -1.60%