London close: Stocks dip amid US-China trade jitters
London stocks dipped on Tuesday, but finished well off their worst levels of the session, with investor sentiment dented by weak UK economic growth figures and a degree of uncertainty over a potential US-China trade deal.
Against that backdrop, the FTSE 100 was down 0.28% at 7,213.76, after recouping nearly a full percentage point of losses when compared to its intra-day lows, as the pound added 0.24% against the US dollar to 1.3178 and 0.03% firmer versus the euro at 1.1886, even as traders waited on the release of YouGov's closely-followed MRP poll ahead of the general election.
Data released by the Office for National Statistics showed that Britain’s economy flatlined in October as growth in services was offset by declines in construction and manufacturing output.
GDP grew by 0.0% in October and was flat for the three months to the end of October. The result for the month of October pushed the annual growth rate down to 0.7%, the weakest in almost eight years.
Services, which make up about three quarters of the UK economy, expanded by 0.2% but manufacturing, construction and agriculture all shrank. The biggest decline was the 2.3% drop in construction output, caused by what the ONS said was a "notable drop in housebuilding and infrastructure".
Paul Dale, chief UK economist at Capital Economics, said: "The stagnation in GDP in October is unlikely to influence many people’s vote in Thursday’s election, but it could prompt some more MPC members to consider voting for lower interest rates in the coming months."
And in the background, the US was still due to implement tariffs on more than $150bn of Chinese imports on 15 December.
Earlier, the South China Morning Post had reported that it was increasingly unlikely that a trade deal between the US and China will be reached this week. Nonetheless, the SCMP also cited sources according to whom the tariffs planned for later in the week were unlikely to come into force.
However, in the afternoon, the Wall Street Journal reported that trade negotiators from the US and China were laying the groundwork for a delay in the US trade tariffs that were set to kick in on 15 December.
IG market analyst Joshua Mahony said: "While many believe that we will see that deadline delayed, the default option remains another ramp-up in tariffs, and thus markets had to take it into account soon enough."
Investors were also wary ahead of interest rate decisions by the European Central Bank and the US Federal Reserve scheduled for later in the same week.
In equity markets, equipment rental firm Ashtead lost ground as it posted a slump in first-half profit at its UK business, A-Plant, and warned of "challenging" trading conditions.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "As the UK is currently demonstrating all too well, renting out construction equipment is a cyclical business. When times are bad construction activity grinds to a halt and unsurprisingly rental demand disappears too. This affects both rental volumes and rental rates at the same time, exacerbating the pain.
"That’s part and parcel of the business, but it becomes more concerning when borrowing climbs, since debt holders must be paid regardless of the economic conditions. So far strong results in the US are more than offsetting weakness in the UK, and Ashtead is keen to point to the not insignificant proportion of activity that falls into the ‘vital maintenance’ category.
"Nonetheless, with conditions in the UK looking set to remain tough for some time and debt still climbing, we’ll be keeping a close eye on performance going forwards."
Rolls-Royce was under pressure as the aerospace and defence company announced the departure of non-executive director Bradley Singer, a representative of its largest shareholder, ValueAct Capital.
Morrisons was in the red as data from research firm Kantar showed that sales at the supermarket retailer fell 2.9% in the 12 weeks to 1 December.
Hunting was knocked lower by a downgrade to ‘neutral’ at Credit Suisse, while Shaftesbury was hit by a downgrade to ‘underweight’ at Barclays.
In small caps, shares of fashion retailer Ted Baker tumbled after it announced the departure of its chief executive officer and chairman, scrapped its dividend payments and warned on profits.
Going the other way, stock in Tullow Oil bounced back, having suffered heavy losses during the previous session on the back of a disappointing update.
Computacenter shares jumped after saying that results for 2019 would be "well ahead" of current market expectations in terms of profitability and earnings per share.
FTSE 100 - Risers
Hikma Pharmaceuticals (HIK) 1,943.00p 1.78%
GlaxoSmithKline (GSK) 1,750.20p 1.26%
Reckitt Benckiser Group (RB.) 6,009.00p 0.96%
Standard Chartered (STAN) 682.80p 0.65%
St James's Place (STJ) 1,100.00p 0.64%
Smith & Nephew (SN.) 1,684.50p 0.54%
Burberry Group (BRBY) 2,109.00p 0.52%
AstraZeneca (AZN) 7,246.00p 0.33%
Ferguson (FERG) 6,734.00p 0.33%
Rentokil Initial (RTO) 431.10p 0.30%
FTSE 100 - Fallers
Ashtead Group (AHT) 2,220.00p -6.17%
Rolls-Royce Holdings (RR.) 701.00p -3.31%
Morrison (Wm) Supermarkets (MRW) 198.00p -3.26%
Bunzl (BNZL) 2,062.00p -2.14%
Mondi (MNDI) 1,615.00p -2.00%
BT Group (BT.A) 189.24p -1.93%
TUI AG Reg Shs (DI) (TUI) 942.60p -1.59%
Standard Life Aberdeen (SLA) 305.50p -1.55%
Coca-Cola HBC AG (CDI) (CCH) 2,473.00p -1.51%
Centrica (CNA) 80.34p -1.40%
FTSE 250 - Risers
Tullow Oil (TLW) 45.64p 14.27%
Computacenter (CCC) 1,605.00p 4.70%
Virgin Money UK (VMUK) 182.85p 4.28%
Bodycote (BOY) 890.00p 3.19%
Airtel Africa (AAF) 79.25p 2.92%
Royal Mail (RMG) 227.40p 2.57%
Pets at Home Group (PETS) 266.20p 2.37%
Future (FUTR) 1,400.00p 2.34%
Equiniti Group (EQN) 202.80p 2.21%
Greencore Group (GNC) 259.30p 2.17%
FTSE 250 - Fallers
Stagecoach Group (SGC) 125.60p -5.85%
Card Factory (CARD) 150.80p -5.18%
Micro Focus International (MCRO) 1,055.40p -4.30%
Paragon Banking Group (PAG) 499.40p -3.87%
Quilter (QLT) 146.70p -3.42%
Grafton Group Units (GFTU) 836.00p -3.36%
Hunting (HTG) 377.00p -3.23%
RHI Magnesita N.V. (DI) (RHIM) 3,732.00p -3.22%
Capita (CPI) 159.35p -2.86%
SIG (SHI) 119.10p -2.85%