London open: Stocks muted as investors eye US mid-term elections

London stocks were pretty muted in early trade on Tuesday, with investors opting to keep their powder dry ahead of the US mid-term elections.

At 0830 GMT, the FTSE 100 was down 0.1% to 7,099.84, while the pound was up 0.3% against the dollar at 1.3077 and 0.2% firmer versus the euro at 1.1457.

The pound was near a three-week peak against the dollar and trading at its best level against the euro since mid-June.

"That’s not necessarily down to sterling strength, however," said Spreadex analyst Connor Campbell. "The greenback is edgy ahead of the elections, especially since it is quite tricky to work out what exactly is the best result is in the eyes of investors," he said. "As for the single currency, there is little sign of a resolution to the Italy-EU budget brouhaha, with several eurozone finance ministers supporting Brussels’ attempts to block the plans."

Analysts at Rabobank noted that the latest opinion polls have indicated that the gap between the Democrats and the Republicans has narrowed, although the former are still favourites to take the House with the latter regaining control of the Senate.

"While such an outcome is the consensus view, the unusually high turnout driven by highly motivated both sides of the political spectrum could produce an unpredictable result which would have significant implications for the markets."

Closer to home, the latest survey from the British Retail Consortium and KPMG released overnight showed that retail sales rose 0.1% on the month in October on a like-for-like basis, with total sales up 1.3% on the year.

Chief executive Helen Dickinson said: "Overall, retail sales growth remains low by historical standards. Sales in October saw only a slight uplift on the previous year, as cautious consumer spending continues into the final quarter of the year.

"Brighter weather and the anticipation of better deals in the Black Friday November sales have dampened demand for discretionary purchases. Moreover, low real wage growth over an extended period has left consumers with less money in their pocket, squeezing retailers’ margins in the face of higher costs.

"Furthermore, the very real possibility of a no-deal Brexit presents a huge challenge for retailers who must contend with the prospect of higher import prices, and further drops to consumer demand

In UK corporate news, Morrisons was the standout loser as it said further strong expansion of its wholesale arm lifted sales in the third quarter, but growth slowed from the rapid rate in the preceding quarter. Group like-for-like sales were up 5.6% in the 13 weeks to 4 November, excluding fuel, as the supermarkets business grew 1.3% and the wholesale business 4.3%.

Meanwhile, William Hill was the worst performer on the 250 as the bookmaker warned that full-year profit for 2018 would be lower than the previous year due to weaker-than-expected football and racing margins and challenging conditions on the high street.

Direct Line was a little weaker after the insurer posted a 5.8% drop in third-quarter gross written premiums but said it was on track to meet its goals for 2018.

Pub group Greene King was also on the back foot as it announced that its chief executive, Rooney Anand, will step down after nearly 14 years in the role.

On the upside, packaging company DS Smith gained after saying it expects return on sales and adjusted operating profit in the half year to the end of October to be "materially" ahead of the same period a year ago.

Imperial Brands rallied as the tobacco company said full-year operating profits rose 5.7% to £2.4bn, although it took a hit from a write-off relating to its bankrupt Palmer & Harvey (P&H) distribution operation.

Associated British Foods was on the front foot as it reported stronger earnings per share for the year to September but said it expects growth to be flat in the coming year. Strong growth from its Primark retail arm, along with its Grocery, Agriculture and Ingredients divisions, offsetting a decline in the sugar business, resulted in adjusted profits before tax of £1.37bn and adjusted earnings per share of 134.9p, up 5% and 6% respectively.

On the broker note front, Hikma Pharmaceuticals was given a shot in the arm as it was upped to 'equalweight' at Barclays while Flybe was lifted to 'buy' at HSBC.

Market Movers

FTSE 100 (UKX) 7,099.84 -0.06%
FTSE 250 (MCX) 19,077.13 0.07%
techMARK (TASX) 3,309.73 -0.01%

FTSE 100 - Risers

Smith (DS) (SMDS) 390.70p 2.71%
Imperial Brands (IMB) 2,711.50p 2.57%
Associated British Foods (ABF) 2,443.00p 2.30%
Hargreaves Lansdown (HL.) 1,890.00p 2.11%
Scottish Mortgage Inv Trust (SMT) 481.87p 0.98%
Informa (INF) 711.00p 0.97%
Evraz (EVR) 575.15p 0.94%
easyJet (EZJ) 1,235.50p 0.90%
Whitbread (WTB) 4,673.00p 0.84%
Coca-Cola HBC AG (CDI) (CCH) 2,306.00p 0.79%

FTSE 100 - Fallers

Morrison (Wm) Supermarkets (MRW) 244.70p -3.87%
Kingfisher (KGF) 250.30p -1.65%
Paddy Power Betfair (PPB) 6,860.00p -1.15%
Standard Chartered (STAN) 566.90p -1.03%
Persimmon (PSN) 2,351.00p -0.93%
InterContinental Hotels Group (IHG) 4,061.00p -0.90%
Wood Group (John) (WG.) 684.40p -0.78%
Lloyds Banking Group (LLOY) 58.16p -0.70%
Royal Bank of Scotland Group (RBS) 241.20p -0.66%
Vodafone Group (VOD) 149.41p -0.66%

FTSE 250 - Risers

IntegraFin Holding (IHP) 292.00p 3.18%
Capital & Counties Properties (CAPC) 275.90p 2.57%
Sophos Group (SOPH) 482.00p 2.34%
Wizz Air Holdings (WIZZ) 2,665.00p 1.83%
Spire Healthcare Group (SPI) 129.15p 1.37%
Marshalls (MSLH) 447.60p 1.36%
OneSavings Bank (OSB) 379.60p 1.28%
Indivior (INDV) 204.50p 1.24%
Fisher (James) & Sons (FSJ) 1,818.00p 1.22%
Jupiter Fund Management (JUP) 338.90p 1.13%

FTSE 250 - Fallers

William Hill (WMH) 199.00p -6.84%
Greene King (GNK) 485.86p -2.20%
Hiscox Limited (DI) (HSX) 1,527.60p -1.57%
Go-Ahead Group (GOG) 1,573.89p -1.39%
Stagecoach Group (SGC) 150.34p -1.22%
Countryside Properties (CSP) 313.00p -1.20%
Entertainment One Limited (ETO) 415.43p -1.13%
Amigo Holdings (AMGO) 242.25p -1.12%
Greencore Group (GNC) 190.85p -1.11%
Superdry (SDRY) 861.62p -1.02%