London midday: Stocks maintain losses amid trade concerns; ex-divs a drag
London stocks were still weaker by midday on Thursday amid concerns about trade relations between the US and China, while ex-dividends were a drag.
The FTSE 100 was down 0.4% at 7,399.76, while the pound was flat against the dollar and the euro at 1.2923 and 1.1746, respectively, having rallied overnight after the MRP YouGov poll - the same poll that predicted the outcome of the 2017 election - suggested that the Conservatives were on track for a 68-seat majority.
Neil Wilson, chief market analyst at Markets.com, said: "It’s easy to overstate the importance of this poll but as it backs up every other poll, the picture looks quite clear now.
"However, the margins in many seats is very narrow and complacent Tory voters could stay home. The majority may be much smaller than this poll predicts, we may still get a hung parliament. Betting markets will be mis-pricing the result for sure. As politicians are wont to say, there’s only one poll that matters."
More broadly, sentiment took a hit after US President Donald Trump signed into law legislation that backs pro-democracy protesters in Hong Kong - a move that will likely strain US relations with China further as the two nations work towards an agreement on trade. Trump signed the Hong Kong Human Rights and Democracy Act of 2019 into law on Wednesday, along with another bill banning the sale of munitions to Hong Kong police.
China was quick to condemn the move. The country’s Ministry of Foreign Affairs said that the bill reveals "sinister intentions" on the part of the US towards the people of China and Hong Kong.
IG analyst Joshua Mahony said: "Donald Trump’s decision to sign into law the pro-activist Hong Kong bill signals a further toughening in the US stance towards Chinese interests. The possibility of sanctions in the event of human rights abuses in Hong Kong signals a willingness to stand against the Chinese at a time when markets are hoping for the two sides to find common ground to agree a phase one trade deal.
"The notion that such a deal is imminent appears to be dubious given this latest step, yet the weakness we are currently seeing for stocks will likely fade as the topic moves out of the headlines."
The mood was dented further after the editor of Chinese state-run media outlet Global Times tweeted that China was considering putting those who drafted the US law supporting pro-democracy protesters in HK on a no-entry list that would bar them from China, Hong Kong and Macau.
On home shores, investors mulled the latest survey from Nationwide, which showed that house prices grew more than expected in November, hitting a seven-month high but remaining "subdued".
House prices were up 0.5% on the month, which was an improvement on 0.2% growth in October and better than expectations of a 0.1% increase. On the year, house prices rose 0.8% in November, up from 0.4% the month before and ahead of expectations of 0.2% growth. This also marked the strongest jump since April.
Nationwide's chief economist, Robert Gardner, said: "Indicators of UK economic activity have been fairly volatile in recent quarters, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensification of Brexit uncertainty. To date, the slowdown has largely centred on business investment, while household spending has been more resilient."
In equity markets, broker notes were having a big impact, with equipment rental firm Ashtead under the cosh after a downgrade to ‘hold’ at HSBC. Johnson Matthey fell after a downgrade to ‘underweight’ at JPMorgan and as its stock went ex-dividend, while Melrose Industries was hit by a downgrade to ‘outperform’ from ‘top pick’ at RBC Capital Markets.
Online gaming and sports betting software company Playtech suffered heavy losses after a downgrade by Morgan Stanley.
Ex-dividends weighed, with Vodafone, IAG, National Grid, Severn Trent, Bellway, TalkTalk and Micro Focus all in the frame.
On the upside, British Land, Land Securities and Great Portland Estates all rose after upgrades to ‘overweight’ at Morgan Stanley, while Phoenix Group was higher as it said in a trading update that 2019 cash generation was ahead of target.
Virgin Money racked up strong gains even as it said full-year losses widened and scrapped its dividend. Analysts were said to be focusing on improvements to the net interest margin and capital position.
Market Movers
FTSE 100 (UKX) 7,399.76 -0.40%
FTSE 250 (MCX) 20,971.07 0.08%
techMARK (TASX) 4,104.19 -0.46%
FTSE 100 - Risers
Ocado Group (OCDO) 1,184.50p 1.59%
St James's Place (STJ) 1,113.50p 1.46%
Land Securities Group (LAND) 960.60p 1.29%
Hargreaves Lansdown (HL.) 1,908.50p 1.25%
Reckitt Benckiser Group (RB.) 6,115.00p 1.12%
British Land Company (BLND) 579.80p 0.94%
Whitbread (WTB) 4,669.00p 0.80%
Kingfisher (KGF) 215.70p 0.79%
Berkeley Group Holdings (The) (BKG) 4,716.00p 0.79%
BHP Group (BHP) 1,740.00p 0.76%
FTSE 100 - Fallers
Vodafone Group (VOD) 154.04p -3.99%
Ashtead Group (AHT) 2,378.00p -2.70%
National Grid (NG.) 900.70p -2.36%
Evraz (EVR) 366.00p -2.35%
Severn Trent (SVT) 2,283.00p -2.27%
Johnson Matthey (JMAT) 2,903.00p -1.93%
London Stock Exchange Group (LSE) 6,892.00p -1.91%
NMC Health (NMC) 2,555.00p -1.81%
Ferguson (FERG) 6,880.00p -1.77%
Melrose Industries (MRO) 230.10p -1.58%
FTSE 250 - Risers
Virgin Money UK (VMUK) 174.25p 21.85%
Pets at Home Group (PETS) 259.80p 4.76%
TI Fluid Systems (TIFS) 233.00p 4.25%
CLS Holdings (CLI) 284.00p 3.09%
Vesuvius (VSVS) 460.00p 3.05%
UDG Healthcare Public Limited Company (UDG) 834.00p 2.96%
Grainger (GRI) 290.00p 2.91%
Bank of Georgia Group (BGEO) 1,473.00p 2.72%
Finablr (FIN) 189.90p 2.65%
FDM Group (Holdings) (FDM) 936.00p 2.41%
FTSE 250 - Fallers
Playtech (PTEC) 376.50p -5.73%
Go-Ahead Group (GOG) 2,206.00p -3.16%
Kainos Group (KNOS) 606.00p -2.88%
Fisher (James) & Sons (FSJ) 1,884.00p -2.38%
Micro Focus International (MCRO) 1,123.40p -2.18%
Beazley (BEZ) 536.00p -2.10%
Ultra Electronics Holdings (ULE) 2,088.00p -2.06%
Ferrexpo (FXPO) 147.95p -1.95%
Electrocomponents (ECM) 662.00p -1.93%
Senior (SNR) 180.00p -1.91%