London close: Stocks slide on trade jitters ahead of Trump-Juncker meeting
London stocks erased all their gains from the day before as jitters set in ahead of US President Trump's meeting with EU Commission President Jean-Claude Juncker on Wednesday evening, with a flood of earnings news to keep investors busy.
The FTSE 100 lost 50.79 or 0.66% to close at 7,658.26, while the pound was up 0.1% against the dollar at 1.3157 and flat versus the euro at 1.1244.
The meeting between Trump and Juncker, due to take place at the White House, comes after the US administration decided to impose tariffs on all imported European cars.
Tweets from Trump ahead of the meeting were doing little to calm nerves. "Tariffs are the greatest!" was one of his gems, while he also tweeted that the US and the EU should drop all tariffs, barriers and subsidies. "That would finally be called Free Market and Fair Trade!" he said.
IG analyst Chris Beauchamp said: "Yesterday’s positive tone to equity markets has been replaced by caution as investors wait to see whether the Trump/Juncker meeting will produce any fireworks. Mr Trump’s suggestion of imposing tariffs on all Chinese imports has uncomfortable implications for the EU, since it indicates he may not shrink from imposing them on all-important car imports from Europe, ramping up the trade war on the US’s other flank."
Analyst Artjom Hatsaturjants at Accendo Markets said the real culprits for the FTSE's fall was mining companies, which were "giving up most of yesterday's gains to understandable profit taking amid a waning of the perceived benefits of China stimulus to offset trade war concerns".
Equally there was no shortage of news elsewhere for investors to get their teeth into.
Banks RBS and Lloyds were under pressure after the Financial Conduct Authority suggested a basic savings rate for cash savings accounts, as it noted concerns that savers who stick to the same bank or building society get poor returns on their money. Beauchamp said this would "doubtless hurt revenue at a time of (almost) record low interest rates".
Meanwhile, mortgage lending by the UK's main banks fell in June amid a stagnant housing market, according to figures from trade body UK Finance, though remortgage figures rose as borrowers sought out new deals ahead of a potential interest rate increase.
Upstart rival Metro Bank was lower after raising a gross £303m in a share placing, which masked first-half results where profits jumped fourfold.
Retailers were mixed after a survey on the retail industry from the Confederation of British Industry that showed growth eased in July and that the outlook was weaker.
The CBI's quarterly distributive trades survey found that 32% of respondents reported a rise in sales volumes in July compared to a year ago, while 12% said they were down, giving a balance of +20%. This was down from a nine-month high of +32% in June but above expectations for a drop to +15%. The outlook for the coming month was gloomier, however, with retailers expecting sales volumes to flatten out.
CBI principal economist Alpesh Paleja said: "While the heatwave has boosted retail sales in recent months, we may be seeing some early signs of a cooling off, with orders falling in the year to July and retailers expecting no growth in sales next month."
Elsewhere, defence firms BAE Systems, Babcock and GSK owner Melrose were down amid reports about a Ministry of Defence funding crisis. The Times reported that the Type 31e frigate may never materialise, with shipbuilders and yards in the running for the £1.25bn contract were taken by surprise when the Ministry of Defence announced the freeze, just as they prepared to finalise their respective ship designs.
Vodafone shares declined as the telco reported a slow start to the year but management said they were confident about the full year. While at first glance the results appear fine, analysts at Societe Generale said scratching the surface showed "a tangible deterioration in year-on-year growth trends with more to come".
Drugmaker Indivior tumbled after saying the launch of a generic version of its opioid addiction treatment could have a much bigger impact on its 2018 results than it originally expected.
Budget airline Wizz Air hit turbulence as it posted a 14% drop in first-quarter pre-tax profit, while Ireland's Ryanair was up as it announced plans to cut its Dublin based fleet by 20%.
Business publishing and events group Informa was weaker as it posted a drop in first-half pre-tax profit, mainly on the back of the completion of its merger with UBM. Chemicals group Croda International was on the back foot as it posted a small rise in reported half-year profit.
Fresnillo and Antofagasta were both in the red following second-quarter production reports, while Randgold erased early losses and ended up marginally higher after a late announcement that production at its Kibali mine in the Congo had risen more than expected.
Bucking the trend, GlaxoSmithKline rose as the pharmaceutical giant outlined a new research and development programme and lifted its full-year earnings per share guidance.
ITV ticked up after unveiling a plan to focus on production and expand direct-to-consumer activities as the broadcaster announced a reduction in first-half earnings caused by the cost of the World Cup.
Private equity-style investor 3i Group was higher as its quarterly net asset value rose to 760p since the end of March.
Wealth management firm Brewin Dolphin gained as it reported a 6.5% increase in total funds under management for the quarter to 30 June, while rival Rathbone Brothers rose as it posted a 64% increase in first-half profits.
Tullow Oil gushed higher after saying it swung to a first-half pre-tax profit of $55m from a loss of $348m the year before, while property developer Capital & Counties edged up on the back of in-line interim results.
Victrex rallied after saying it has performed well since the end of the first half and that it remains on track for a strong full-year 2018.
Things were just as busy on the broker note front, with Berenberg initiating coverage of a host of housebuilders. Taylor Wimpey, Redrow, Bovis and Bellway were started a 'buy', while Persimmon, McCarthy & Stone, Crest Nicholson and Berkeley were started at 'hold'.
UBS initiated coverage of Thomas Cook at 'sell', while BT and Rio Tinto were cut to 'sector perform' and 'underperform', respectively, at RBC Capital Markets. B&M European Value Retail and Kingfisher were lifted by upgrades from Citi, while budget airline Ryanair was downgraded to 'reduce' at AlphaValue.
Market Movers
FTSE 100 (UKX) 7,658.26 -0.66%
FTSE 250 (MCX) 20,753.60 -0.48%
techMARK (TASX) 3,551.65 -0.86%
FTSE 100 - Risers
3i Group (III) 946.60p 2.76%
Taylor Wimpey (TW.) 175.35p 1.80%
Barratt Developments (BDEV) 529.00p 1.34%
Smurfit Kappa Group (SKG) 3,080.00p 1.18%
ITV (ITV) 172.45p 1.17%
Ocado Group (OCDO) 1,146.00p 1.01%
Burberry Group (BRBY) 2,156.00p 0.98%
British Land Company (BLND) 649.60p 0.96%
Berkeley Group Holdings (The) (BKG) 3,735.00p 0.92%
Land Securities Group (LAND) 928.00p 0.87%
FTSE 100 - Fallers
Fresnillo (FRES) 1,025.00p -7.32%
InterContinental Hotels Group (IHG) 4,670.00p -4.83%
Informa (INF) 815.00p -4.12%
Prudential (PRU) 1,752.50p -2.48%
Direct Line Insurance Group (DLG) 330.90p -2.48%
Melrose Industries (MRO) 212.10p -2.35%
BAE Systems (BA.) 654.60p -2.30%
Evraz (EVR) 537.20p -2.15%
Standard Chartered (STAN) 683.90p -2.03%
Rio Tinto (RIO) 4,170.00p -2.03%
FTSE 250 - Risers
Brewin Dolphin Holdings (BRW) 356.40p 5.95%
Daejan Holdings (DJAN) 6,150.00p 4.06%
B&M European Value Retail S.A. (DI) (BME) 425.40p 3.50%
Euromoney Institutional Investor (ERM) 1,396.00p 3.41%
Tullow Oil (TLW) 223.70p 3.09%
PZ Cussons (PZC) 222.00p 2.78%
Close Brothers Group (CBG) 1,613.00p 2.74%
Britvic (BVIC) 834.50p 2.52%
Bovis Homes Group (BVS) 1,150.50p 2.40%
Clarkson (CKN) 2,450.00p 2.08%
FTSE 250 - Fallers
Wizz Air Holdings (WIZZ) 3,256.00p -8.49%
Indivior (INDV) 307.70p -7.74%
IP Group (IPO) 123.60p -5.21%
Just Group (JUST) 111.30p -4.30%
On The Beach Group (OTB) 431.00p -4.22%
Domino's Pizza Group (DOM) 331.20p -4.22%
Charter Court Financial Services Group (CCFS) 338.40p -3.80%
Spectris (SXS) 2,271.00p -3.73%
Contour Global (GLO) 240.00p -3.23%
Weir Group (WEIR) 1,892.00p -2.97%