London close: Stocks dip as IMF trims growth forecasts
London stocks edged lower on Monday as investors geared up for the start of the World Economic Forum in Davos, Swizterland, and digested downwardly revised growth forecasts from the International Monetary Fund.
The FTSE 100 ended the session down 0.3% at 7,651.44, amid what analysts described as lacklustre trading conditions on account of US markets being closed for Martin Luther King Jr day.
Sterling meanwhile was 0.11% lower against the US dollar at 1.3001.
Commenting on the session, Josh Mahony at IG said: "European markets have lost ground over the course of the day, with gains seen in Asia failing to take hold closer to home. The IMF decision to write down growth forecasts flies in the face of the notion that Trumps deal with China will help remedy the recent global slowdown.
"Today has seen a significant decline in market volumes amid a quiet economic calendar and MLK bank holiday. However, with a week full of central bank decisions and earnings releases, volatility looks certain to pick up as we move forward."
In its latest World Economic Outlook, the IMF continued to forecast a pick-up in global growth over 2020 and 2021, to 3.3% and 3.4%, respectively, although that was 0.1 and 0.2 percentage points less than envisaged at the time of the last WEO, in October.
The world's economic watchdog said that sentiment had been boosted by "tentative signs" of a bottom in global manufacturing and trade, together with lower interest rates, some better news on US-China trade and less concern of a no-deal Brexit.
Yet it cautioned that here were few signs of "turning points" in the global data.
On home turf, investors were mulling the latest survey from Rightmove, which showed that asking prices for UK houses rose at their fastest pace on record for the month in January, with sentiment boosted by the outcome of the general election.
House prices were up 2.3% on the month, marking the largest price rise recorded at this time of the year since the Rightmove house price survey began in 2002. Prices had fallen 0.9% in December. This pushed the annual rate of increase to 2.7%, which is the highest level since July 2017. Prices had risen 0.8% the month before.
In equity markets, UAE healthcare operator NMC Health was the worst performer on the top-flight index, having rallied late last week after it announced that it had appointed a former FBI director to carry out an investigation into allegations of wrongdoing by US short-seller Muddy Waters.
Outsourcer Capita was under the cosh after a downgrade to ‘sell’ at UBS. In addition, over the weekend, the Telegraph reported that it was planning the £200m sale of a clutch of businesses including translation services and events management.
On the upside, housebuilders Berkeley, Barratt Developments, Persimmon and Taylor Wimpey were all higher after the Rightmove data.
BAE Systems rallied to the top of the FTSE 100 after announcing the acquisition of Collins Aerospace's Military Global Positioning System business for $1.925bn (£1.48bn) and Raytheon's Airborne Tactical Radios business for $275m.
Auto Trader was boosted by an upgrade to ‘buy’ at Goldman Sachs and to ‘add’ at Peel Hunt.
Sirius Minerals was on the rise after it agreed to be bought by Anglo American for 5.5p a share in cash, in a deal that values the fertiliser maker at £404.9m. Anglo shares were a touch lower.
Medical products maker Convatec was knocked lower by a downgrade to ‘underweight’ at JPMorgan, while WPP was hit by a downgrade to ‘neutral’ at Goldman Sachs.
Outside the FTSE 350, shares of posh tonics maker Fevertree tumbled after it said full-year revenue was set to miss the company’s expectations after "subdued" Christmas trading, with earnings expected to fall 5% from 2018.
Shopping centre owner Intu Properties was weaker after confirming that it is looking to raise extra cash to bolster its balance sheet. Responding to press speculation over the weekend, the company said it is planning an equity raise alongside its full year results at the end of February. The statement followed an article in the Sunday Times suggesting that Intu was looking to raise £1bn in emergency funding.
FTSE 100 - Risers
BAE Systems (BA.) 647.60p 3.68%
Barratt Developments (BDEV) 816.40p 2.13%
Berkeley Group Holdings (The) (BKG) 5,136.00p 2.02%
Persimmon (PSN) 2,943.00p 1.97%
Auto Trader Group (AUTO) 583.60p 1.78%
Evraz (EVR) 426.20p 1.77%
Mondi (MNDI) 1,622.50p 1.15%
National Grid (NG.) 987.40p 1.10%
Smiths Group (SMIN) 1,751.00p 1.04%
Legal & General Group (LGEN) 302.20p 1.00%
FTSE 100 - Fallers
NMC Health (NMC) 1,500.00p -3.69%
Burberry Group (BRBY) 2,277.00p -2.23%
International Consolidated Airlines Group SA (CDI) (IAG) 657.20p -2.06%
easyJet (EZJ) 1,450.00p -1.86%
BT Group (BT.A) 180.84p -1.78%
Carnival (CCL) 3,650.00p -1.70%
Rolls-Royce Holdings (RR.) 664.40p -1.69%
Schroders (SDR) 3,246.00p -1.55%
Johnson Matthey (JMAT) 2,800.00p -1.44%
Hargreaves Lansdown (HL.) 1,777.00p -1.31%
FTSE 250 - Risers
Vesuvius (VSVS) 469.80p 3.25%
Britvic (BVIC) 900.00p 2.92%
Contour Global (GLO) 203.50p 2.75%
Wood Group (John) (WG.) 404.00p 2.75%
Sirius Minerals (SXX) 5.54p 2.59%
Redrow (RDW) 792.00p 2.33%
Spirent Communications (SPT) 232.00p 2.20%
Dechra Pharmaceuticals (DPH) 2,890.00p 1.98%
Hastings Group Holdings (HSTG) 180.10p 1.97%
QinetiQ Group (QQ.) 370.00p 1.93%
FTSE 250 - Fallers
Capita (CPI) 164.65p -4.47%
Cranswick (CWK) 3,564.00p -3.77%
Hammerson (HMSO) 255.20p -3.73%
Barr (A.G.) (BAG) 551.00p -3.50%
Convatec Group (CTEC) 205.50p -3.43%
Elementis (ELM) 137.20p -3.31%
SSP Group (SSPG) 664.00p -2.78%
Watches of Switzerland Group (WOSG) 378.00p -2.48%
Galliford Try (GFRD) 139.44p -2.41%
Playtech (PTEC) 377.10p -2.41%