London midday: Stocks maintain losses as ex-divs weigh; Melrose bucks trend
A large number of stocks going ex-dividend took its toll on London equity markets on Thursday, with disappointing earnings from the likes of NMC Health, Aviva and Admiral adding to the downside as investors eyed the latest policy announcement from the European Central Bank.
The FTSE 100 was down 0.4% to 7,165.67, while the pound was off 0.3% against the dollar and the euro at 1.3130 and 1.1609, respectively, after the EU reportedly gave the UK 48 hours to offer a Brexit solution.
The ECB interest rate decision is scheduled for 1245 GMT and the press conference at 1330 GMT will be watched closely amid expectations that the central bank may prolong or extends its current Targeted Long Term Refinancing Operations programme to provide extra liquidity to banks.
Neil Wilson, chief market analyst at Markets.com, said key things to watch for are the forward guidance on rates, growth and inflation forecasts, and anything on a new round of TLTROs.
"Whilst there will be no overt change in policy, it does seem likely that the central bank will have to acknowledge greater downside risks," he said.
UK housing data out earlier from lender Halifax showed annual house prices rose 2.8% in the three months to February, up from the 0.8% increase seen in January and beating expectations for a 1% jump.
On the month, house prices were up 5.9%, which was well above the 0.1% increase analysts had pencilled in. In the latest quarter, meanwhile, prices were 1.8% higher.
Halifax managing director Russell Galley said the shortage of houses for sale will certainly be playing a role in supporting prices. "People are still facing challenges in raising a deposit which means we continue to expect subdued price growth for the time being. However, the number of sales in January was right on the five year average and, at over 100,000 for the fifth consecutive month, the overall resilience of the market is still evident."
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said that right now, he has little confidence in Halifax’s index as a reliable indicator of the housing market. "Its extreme volatility - February’s gigantic increase follows a 3.0% month-to-month decline in January - undermines its validity. Like others, the index is seasonally adjusted, but it uses an outdated methodology which potentially is contributing to its excessive volatility."
In equity markets, ex-dividends clipped 22 points off the FTSE 100 and nine off the 250.
Companies whose stock went ex-dividend accounted for most of the fallers on the top-flight index, with Rio, Evraz, Persimmon, BHP Group, RSA and Standard Chartered all in the frame. In mid-caps, Redrow and Renishaw took a hit.
Miners were also dragged lower after Societe Generale cut BHP to 'hold' and Rio Tinto to 'sell' as it took a more cautious stance on most of the metals and mining stocks it covers following the gains posted in the year to date.
UAE-based private healthcare operator NMC Health was the worst performer even as it hailed another year of record revenue on profits thanks in part to the successful integration of acquisitions. Analysts said adjusted earnings per share came in 6% below consensus, while financial charges were higher than expected.
Admiral fell as the home and motor insurer reported record profits for 2018, as the results were flattered by the government's decision to unwind partially the change in the Ogden discount rate.
Aviva retreated as its full-year results came in in line with expectations but the life insurer warned that growth this year would be more muted amid Brexit uncertainty.
On the upside, tobacco stocks made gains for the second day in a row as investors welcomed the resignation of America's chief drug and tobacco regulator, Scott Gottlieb, who had been spearheading a ban on menthol cigarettes and curbs on e-cigarettes.
Analysts at RBC Capital Markets said: "While this event serves as a near-term catalyst, the real impact depends on who ultimately replaces him, in our view. We are monitoring the situation closely with our contacts on the Hill but understand that the process to permanently fill the position is likely to be lengthy.
"Commissioner Gottlieb’s departure could be viewed as an opportunity for aggressive actions against the tobacco industry to be reversed and tobacco regulation to be moved to the backburner, as his proposals had run into fierce opposition by anti-regulation groups."
Turnaround specialist Melrose Industries was a high riser as profits for 2018 were ahead of expectations eight months after the acquisition of engineer GKN.
Informa gained as its full-year earnings per share beat expectations, while Premier Oil gushed higher after saying it swung to a net profit of $133.4m in 2018 from a net loss of more than $250m the year before.
Satellite telecommunications group Inmarsat shot up as it reported a 14.6% rise in full-year earnings before interest, tax, depreciation and amortisation.
Ultra Electronics surged as JPMorgan upgraded the stock to 'overweight' from 'neutral' saying that the company's full year results on Wednesday and "confident" meeting draw a line under a challenging two years.
In other broker note action, Just Eat was reduced to 'equalweight' by Barclays and Morgan Stanley, while Centamin was cut to 'equalweight' at MS.
Market Movers
FTSE 100 (UKX) 7,165.67 -0.42%
FTSE 250 (MCX) 19,199.62 -0.82%
techMARK (TASX) 3,489.07 -0.29%
FTSE 100 - Risers
Melrose Industries (MRO) 186.25p 3.44%
Informa (INF) 729.80p 2.56%
British American Tobacco (BATS) 3,105.00p 1.80%
Reckitt Benckiser Group (RB.) 6,145.00p 1.32%
National Grid (NG.) 857.00p 1.26%
Diageo (DGE) 3,029.50p 1.25%
Pearson (PSON) 833.40p 1.14%
Tesco (TSCO) 234.34p 0.88%
Unilever (ULVR) 4,080.50p 0.85%
Severn Trent (SVT) 2,055.00p 0.78%
FTSE 100 - Fallers
NMC Health (NMC) 2,739.88p -8.67%
Rio Tinto (RIO) 4,149.00p -7.35%
Persimmon (PSN) 2,285.89p -6.05%
Evraz (EVR) 580.20p -4.89%
Schroders (SDR) 2,630.00p -4.64%
Admiral Group (ADM) 2,089.99p -4.61%
Aviva (AV.) 416.90p -3.78%
Smith (DS) (SMDS) 350.30p -3.26%
GVC Holdings (GVC) 694.50p -3.14%
Fresnillo (FRES) 778.20p -3.06%
FTSE 250 - Risers
Ultra Electronics Holdings (ULE) 1,589.71p 10.32%
Funding Circle Holdings (FCH) 372.22p 6.05%
Inmarsat (ISAT) 419.36p 5.02%
Indivior (INDV) 117.50p 4.96%
Premier Oil (PMO) 77.45p 4.80%
Spirent Communications (SPT) 157.20p 3.97%
Ascential (ASCL) 350.00p 2.76%
FDM Group (Holdings) (FDM) 888.00p 2.07%
Greencore Group (GNC) 200.70p 1.62%
Stobart Group Ltd. (STOB) 158.20p 1.54%
FTSE 250 - Fallers
Vietnam Enterprise Investments (DI) (VEIL) 433.37p -6.40%
Superdry (SDRY) 527.00p -4.70%
Redrow (RDW) 619.50p -3.58%
Sophos Group (SOPH) 328.20p -3.30%
Ashmore Group (ASHM) 402.40p -3.22%
Hochschild Mining (HOC) 189.75p -3.11%
TP ICAP (TCAP) 307.50p -3.09%
William Hill (WMH) 168.65p -3.07%
BCA Marketplace (BCA) 198.80p -2.79%
Morgan Advanced Materials (MGAM) 266.60p -2.77%