London open: Stocks slide as investors digest Powell comments; Metro Bank tanks
London stocks fell in early trade on Wednesday as investors digested some mixed comments from Federal Reserve chairman Jerome Powell, with investors also giving an unenthusiastic reception to results from ITV and Metro Bank and a profit warning from Ted Baker.
At 0840 GMT, the FTSE 100 was down 0.7% at 7,102.28.
In a testimony to the US Senate overnight, Powell reiterated the need for patience as the US economy is healthy and said he sees no inflationary pressures but "some crosscurrents and conflicting signals".
London Capital Group analyst Jasper Lawler said traders "remained un-enthused" by Powell reaffirming a patient approach to rate hikes to the US Senate Banking Committee.
"Jay Powell delved into the conflicting signals from the economy that the Fed has been trying to decipher across recent months. As if on cue, disappointing US housing data and stronger than forecast consumer confidence figures provided further evidence of these mixed signals."
Meanwhile, the pound was up 0.1% against the dollar and the euro at 1.3269 and 1.1649, respectively, having surged in the previous session on hopes that a no-deal Brexit will be avoided.
"After Theresa May promised ministers two further votes in addition to the meaningful vote, the edge has been taken off today’s voting in Parliament," Lawler said.
"With Brexit coming to a head in the week commencing March 11th, with the meaningful vote, and a vote on a no deal Brexit and delaying Brexit, volatility in the pound is expected to remain elevated in the coming weeks. Developments so far suggest that we now have an increasingly solid floor at $1.30."
In corporate news, Marks & Spencer shares fell sharply after the retailer said it will slash its dividend by 40% and conduct a rights issue to raise up to £600m to fund the acquisition of a 50% share in Ocado’s UK retail business.
The joint venture will trade as Ocado.com but benefit from access to M&S's brand, products and customer database from September 2020 at the latest. Ocado was the standout gainer on the FTSE 100 as the up-front £562.5m cash will enable it to fund investment in all the currently agreed warehouse projects for its international clients.
ITV was lower as it said it was in the "concluding phase of talks" with the BBC to establish a strategic partnership to launch the Britbox video-on-demand service, but reported a drop in adjusted profit for 2018 and said it was likely to be hit by falling ad sales in the first half of 2019.
Metro Bank was under the cosh, having pushed its full-year results out quietly after the close on Tuesday and confirming a £350m cash call. The challenger bank also said overnight that it had received notification that the PRA and FCA plan to investigate the circumstances and events that led to its risk-weighted adjustment announced last month.
Shares in Ted Baker slid as the fashion retailer warned that profit for the financial year ended 26 January 2019 will be down on the previous year as it takes a hit from currency movements, additional costs following the transition to new systems and a writedown in the value of aged stock.
Wealth manager St James’s Place was in the red as it reported a rise in full-year profits but an easing of new business growth and inflows.
Going the other way, housebuilder Taylor Wimpey was in the green as it posted a jump in full-year profit as completions edged higher amid "robust" demand for new homes.
Playtech rallied as it signed a new long-term agreement with GVC Holdings to provide its services and products to all GVC brands in existing and new markets.
In broker notes, Shell was downgraded to ‘sector perform’ at RBC Capital Markets, Meggitt was cut to ‘neutral’ at JPMorgan and Metro Bank was downgraded to ‘market perform’ at KBW.
Smurfit Kappa was cut to ‘hold’ at Goodbody and Tullow was reduced to ‘hold’ at Jefferies.
Market Movers
FTSE 100 (UKX) 7,102.28 -0.68%
FTSE 250 (MCX) 19,194.13 -0.40%
techMARK (TASX) 3,477.20 -0.26%
FTSE 100 - Risers
Ocado Group (OCDO) 1,014.99p 2.52%
Rio Tinto (RIO) 4,469.50p 1.90%
Micro Focus International (MCRO) 1,899.50p 1.69%
Taylor Wimpey (TW.) 173.55p 1.52%
Persimmon (PSN) 2,426.00p 1.25%
Rightmove (RMV) 477.80p 0.44%
Halma (HLMA) 1,543.00p 0.39%
BHP Group (BHP) 1,812.40p 0.24%
Land Securities Group (LAND) 880.20p 0.02%
St James's Place (STJ) 977.00p 0.02%
FTSE 100 - Fallers
Marks & Spencer Group (MKS) 280.80p -7.39%
Unilever (ULVR) 4,008.00p -2.65%
Smurfit Kappa Group (SKG) 2,212.00p -2.47%
ITV (ITV) 128.28p -2.30%
easyJet (EZJ) 1,317.50p -2.23%
Pearson (PSON) 841.00p -2.14%
Croda International (CRDA) 4,779.00p -2.09%
Standard Chartered (STAN) 602.60p -2.02%
WPP (WPP) 826.80p -1.90%
Reckitt Benckiser Group (RB.) 5,728.00p -1.83%
FTSE 250 - Risers
Playtech (PTEC) 431.56p 3.62%
QinetiQ Group (QQ.) 314.00p 2.95%
Funding Circle Holdings (FCH) 360.00p 2.23%
888 Holdings (888) 181.10p 1.68%
Galliford Try (GFRD) 740.50p 1.58%
Stobart Group Ltd. (STOB) 154.12p 1.26%
Acacia Mining (ACA) 227.80p 1.24%
Indivior (INDV) 105.95p 1.15%
TalkTalk Telecom Group (TALK) 100.00p 1.06%
Travis Perkins (TPK) 1,443.50p 1.01%
FTSE 250 - Fallers
Metro Bank (MTRO) 1,014.00p -22.00%
Ted Baker (TED) 1,744.00p -12.80%
Capital & Counties Properties (CAPC) 248.50p -2.78%
Meggitt (MGGT) 539.00p -2.18%
TBC Bank Group (TBCG) 1,410.00p -2.08%
Millennium & Copthorne Hotels (MLC) 458.00p -2.03%
Hammerson (HMSO) 372.60p -2.00%
FDM Group (Holdings) (FDM) 817.00p -1.80%
Superdry (SDRY) 533.00p -1.75%
Riverstone Energy Limited (RSE) 1,030.00p -1.72%