London midday: Stocks fall further as ex-divs weigh; NMC rallies on deal speculation
London stocks had fallen a little further into the red by midday on Thursday as investors digested mixed minutes from the Federal Reserve and a downbeat assessment of the UK retail sector, but NMC Health bucked the trend on deal news.
The FTSE 100 was down 0.5% at 7,167.68, with ex-dividend stocks proving a drag as is often the case on a Thursday.
Oanda analyst Craig Erlam said: "The minutes on Wednesday highlighted just how difficult the current situation is, with the central bank deeply divided on the correct course of action, although there was a broad agreement that the July rate cut was a 'mid-cycle adjustment' rather than the start of an easing cycle. Of course, one doesn't stop the other becoming true and could develop that way.
"The two key takeaway from the minutes as far as I'm concerned is that they are very outdated already - as we already thought - and investors are in no mood to tolerate the Fed dragging its feet. Which begs the question, how will Powell respond in his speech on Friday? Investors are effectively trying to force the Fed into submission and the central bank is losing, if they're going to fight back, now is the time. But it could get messy."
Powell is due to make a speech at the Jackson Hole symposium on Friday.
In currency markets, sterling was flat against the dollar at 1.2125 and 0.1% firmer versus the euro at 1.0947 as Prime Minister Boris Johnson was set to hold talks with French President Emmanuel Macron in Paris.
David Cheetham, chief market analyst at XTB, said: "The meeting last night with German chancellor Angela Merkel failed to yield any real progress but at least the tone from both sides was fairly optimistic and constructive. However, Boris is unlikely to get as warm a welcome from Macron, who is one of the most pro-EU leaders in Europe and already set the tone for their meeting by warning that Brexit could turn the UK into a vassal state.
"Macron was also reportedly the last of the EU 27 leaders to agree on the extension to the Brexit deadline earlier this year and there’s a sense that he will take the hardest approach of all leaders from EU countries in negotiations. The pound continues to tread water near its recent lows, with traders clearly awaiting further clarity on the likely outcome of Brexit before committing to any high conviction positions."
On the data front, figures from the Confederation of British Industry showed retail sales in the UK fell at their fastest rate since the financial crisis in the year to August.
The balance of retailers reporting year-on-year growth in sales volumes tumbled to -49 this month from -16 in July, massively undershooting expectations for an improvement to -11. This was the fastest drop since December 2008 and the second weakest reading since records began in 1983.
CBI deputy chief economist Anna Leach said: "Sentiment is crumbling among retailers, and unexpectedly weak sales have led to a large overhang of stocks. With investment intentions for the year ahead and employment down, retailers expect a chilly few months ahead.
"It is unsurprising that business confidence has deteriorated sharply, with a potential no-deal Brexit on the horizon. But retailers are also buckling under the cumulative burden of costs, including an outdated business rates system and the apprenticeship levy. Businesses will be looking for government action at the Budget in the coming months to alleviate some of these pressures."
In equity markets, ex-dividends weighed, with Prudential, Schroders, Berkeley, CLS Holdings, Carnival, Croda, Hikma Pharmaceuticals, Imperial Brands, Reckitt Benckiser and Stagecoach all in the frame.
Elsewhere, Chilean copper miner Antofagasta lost ground as it posted a rise in first-half profit but warned that the outlook for the copper market remains uncertain amid the ongoing Sino-US trade spat.
Online supermarket Ocado was in the red as it said a "small fire" reported at its customer fulfilment centre in Erith, southeast London, on Wednesday evening, had been extinguished. Back in February, the company's warehouse in Andover, Hampshire, suffered a huge fire that was later found to have been sparked by an electrical fault that set a robot on fire.
John Laing was under the cosh as it posted a slump in half-year pre-tax profit and highlighted challenges in the renewable energy market.
On the upside, UAE-based healthcare provider NMC Health surged to the top of the FTSE 100 following a Reuters report that two groups, including one backed by China's Fosun, have made competing offers to buy a 40% stake in the company worth up to $1.9bn. The group also released its half-year results, which showed an increase in profit, and announced a share buyback.
Premier Oil was a high riser as it launched a formal process to sell its stake in an undeveloped project off the coast of Mexico and posted a 24% increase in first-half profit.
FTSE 100 - Risers
NMC Health (NMC) 2,340.00p 20.87%
TUI AG Reg Shs (DI) (TUI) 804.80p 2.00%
ITV (ITV) 112.15p 1.40%
BT Group (BT.A) 163.65p 1.17%
Aviva (AV.) 362.60p 1.14%
Ferguson (FERG) 6,122.00p 0.99%
Sainsbury (J) (SBRY) 197.48p 0.86%
Standard Life Aberdeen (SLA) 241.40p 0.67%
Vodafone Group (VOD) 151.92p 0.65%
Centrica (CNA) 65.24p 0.62%
FTSE 100 - Fallers
Imperial Brands (IMB) 2,055.00p -2.28%
Prudential (PRU) 1,387.50p -2.05%
Anglo American (AAL) 1,690.80p -1.87%
Hargreaves Lansdown (HL.) 1,911.50p -1.70%
Rolls-Royce Holdings (RR.) 771.00p -1.68%
London Stock Exchange Group (LSE) 6,784.00p -1.68%
Aveva Group (AVV) 3,878.00p -1.67%
Schroders (SDR) 2,685.00p -1.54%
British American Tobacco (BATS) 2,978.03p -1.54%
Scottish Mortgage Inv Trust (SMT) 531.86p -1.42%
FTSE 250 - Risers
GVC Holdings (GVC) 617.20p 4.57%
Premier Oil (PMO) 75.44p 4.40%
Royal Mail (RMG) 199.15p 4.21%
TI Fluid Systems (TIFS) 169.40p 4.05%
Bakkavor Group (BAKK) 106.60p 3.90%
Hammerson (HMSO) 215.80p 3.25%
Hastings Group Holdings (HSTG) 182.80p 2.93%
Amigo Holdings (AMGO) 170.97p 2.87%
Clarkson (CKN) 2,455.00p 2.72%
B&M European Value Retail S.A. (DI) (BME) 358.30p 2.37%
FTSE 250 - Fallers
John Laing Group (JLG) 350.20p -8.04%
PureTech Health (PRTC) 264.00p -7.04%
Ferrexpo (FXPO) 203.20p -5.84%
Intu Properties (INTU) 32.10p -5.23%
Tritax Big Box Reit (BBOX) 137.60p -5.10%
Wood Group (John) (WG.) 395.80p -3.56%
Provident Financial (PFG) 364.40p -3.09%
Ted Baker (TED) 930.50p -3.07%
Syncona Limited NPV (SYNC) 224.50p -2.81%
Assura (AGR) 68.00p -2.72%