London open: Stocks start lower on geopolitical jitters, gold futures flat

Selling from the US and Asian trading sessions has carried over into the London open, despite possible indications that China might not back-up its errant neighbour if it carries out a missile strike that could threaten US territory.

According to the Global Times, which is considered by some as a mouthpiece for Beijing, China should "make clear that if North Korea launches missiles that threaten US soil first and the US retaliates, China will stay neutral."

Against that backdrop, as of 0822 BST the FTSE 100 was trading lower by 0.81% or 59.86 points to 7,330.37. For their part, overnight the Shanghai Stock Exchange's Composite index closed 1.63% lower overnight at 3,208.54 with the Kospi down by 1.69% to 2,319.71 alongside it.

In parallel, COMEX-traded gold futures were little changed, edging higher by 0.16% to $1,292.20/oz..

Wall Street saw significant selling on Thursday, albeit amid depleted summer trading volumes, and a spike in levels of stockmarket volatility, as traders opted to take out some insurance against the risk of unforeseen events in the North Pacific.

The downwards pressure on the US stockmarket increased after US president Donald Trump told journalists he stood by his warning made to the North Korean regime the day before. Indeed, Trump added that his warning may not have been "tough enough" and declined to take the option of a pre-emptive strike off the table.

On that note, the Global Times also pointed out that: "if the US and South Korea carry out strikes and try to overthrow the North Korean regime and change the political pattern on the peninsula, China will prevent them from doing so."

Commenting on the situation in markets, LCG Head of Research Jasper Lawler said: "Love or loathe him, Trump isn’t one to back down from a confrontation so its perhaps not a surprise that things have escalated. North Korea responding with a threat to US territory after Trump warned them not to threaten the US was never going to go down well. We assume markets will move on if it remains purely a war of words but the sell-off looks durable. With earnings season almost over, worry over North Korea may have ignited a well-overdue period of greater market volatility."

For his part, Mike van Dulken, head of research at Accendo Markets chipped-in: "Calls for another negative open (third on the trot) comes after a US equity selloff, inspired by fresh Trump aggression towards North Korea, made for a weak session in Asia overnight.

"It also saw the VIX post its 8th biggest spike in history, regaining levels last seen around the US presidential election, and resulted in fresh preference for bonds and gold over equities and metals, and added to an already weak oil price."

No major data releases are scheduled for release in the UK on Friday.

For later in the day, US consumer price data for July are expected at 1330 BST, followed soon afterwards by speeches from the presidents of the Federal Reserve banks of New York and Minneapolis at 1440 BST and 1630 BST, respcetively.

Old Mutual hikes dividend

Financial services group Old Mutual posted a sharp 37% rise in adjusted pre-tax profits to £969m, helped in part by £108m of proceeds from the sale of its OMAM unit although it did incur in a goodwill impairment charge of £71m linked to UAP-Old Mutualin East Africa. On an IFRS basis profits before tax surged from £534m in the year-ago period to £940m, for earnings per share of 10.6p, with the latter up by 33%. Despite that, its net asset value per share decreased from 228.6p to 220.1p. In line with its stated policy on payouts, the interim dividend was increased by 32% to 3.53p.

Domino's Pizza Group announced the creation of a partnership with its largest franchisee in London on Friday. The FTSE 250 company said that, as part of the transaction, it agreed to pay £24m for a 75% stake in a newly-formed company, whose assets will consist of all the franchisee's operations being 25 existing Domino's stores in London.

The Restaurant Group announced the appointment of Kirk Davis as Chief Financial Officer on Friday before the market open. Davis arrives having spent the previous three years in the same position for fellow FTSE 250-listed firm Greene King.

Pub operator and brewing company Greene King announced on Friday that Richard Smothers would be joining the firm in December 2017, and joining the board as chief financial officer in February 2018. The FTSE 250 firm said Smothers was joining from retailer Mothercare, where he was chief financial officer since March 2015.

Market Movers

FTSE 100 (UKX) 7,328.42 -0.83%
FTSE 250 (MCX) 19,529.21 -0.86%
techMARK (TASX) 3,355.98 -0.64%

FTSE 100 - Risers

Coca-Cola HBC AG (CDI) (CCH) 2,639.00p 1.81%
Smurfit Kappa Group (SKG) 2,203.00p 0.78%
Babcock International Group (BAB) 843.00p 0.60%
Reckitt Benckiser Group (RB.) 7,353.00p 0.57%
WPP (WPP) 1,589.00p 0.51%
Mondi (MNDI) 1,996.00p 0.40%
Centrica (CNA) 199.50p 0.15%
DCC (DCC) 6,825.00p 0.15%
Mediclinic International (MDC) 739.50p 0.14%
G4S (GFS) 303.20p 0.13%

FTSE 100 - Fallers

Antofagasta (ANTO) 910.00p -3.04%
Rio Tinto (RIO) 3,375.00p -3.00%
Glencore (GLEN) 322.10p -2.82%
BHP Billiton (BLT) 1,339.00p -2.65%
Anglo American (AAL) 1,246.50p -2.43%
Convatec Group (CTEC) 286.10p -2.39%
Prudential (PRU) 1,791.50p -1.89%
Old Mutual (OML) 197.70p -1.89%
Legal & General Group (LGEN) 267.40p -1.76%
TUI AG Reg Shs (DI) (TUI) 1,224.00p -1.69%

FTSE 250 - Risers

CLS Holdings (CLI) 205.70p 2.24%
Millennium & Copthorne Hotels (MLC) 460.90p 1.92%
Fisher (James) & Sons (FSJ) 1,511.00p 1.89%
Hastings Group Holdings (HSTG) 321.70p 1.80%
IP Group (IPO) 139.10p 1.53%
Sanne Group (SNN) 728.50p 1.46%
PayPoint (PAY) 885.50p 1.08%
Caledonia Investments (CLDN) 2,826.00p 1.00%
Syncona Limited NPV (SYNC) 171.50p 0.88%
LondonMetric Property (LMP) 166.40p 0.60%

FTSE 250 - Fallers

Dixons Carphone (DC.) 243.70p -8.28%
Kaz Minerals (KAZ) 686.00p -4.72%
Domino's Pizza Group (DOM) 267.60p -4.53%
Ferrexpo (FXPO) 253.60p -4.37%
Vedanta Resources (VED) 711.50p -4.24%
FDM Group (Holdings) (FDM) 882.00p -4.03%
Tullow Oil (TLW) 168.00p -3.67%
Evraz (EVR) 261.30p -3.51%
Sophos Group (SOPH) 472.40p -2.50%
JD Sports Fashion (JD.) 346.60p -2.28%