London midday: Stocks turn lower as caution sets in ahead of Powell; Sky surges
London stocks had reversed earlier gains by midday on Tuesday despite strong earnings from the likes of Persimmon and a counter bid for Sky from Comcast, as traders erred on the side of caution ahead of the first congressional testimony from new Federal Reserve Chair Jerome Powell.
The FTSE 100 was 0.2% lower at 7,274.06, while the pound was down 0.1% against the dollar and the euro at 1.3961 and 1.1332, respectively.
Craig Erlam, senior market analyst at Oanda said: "The feeling so far is that Powell is unlikely to diverge from the current path which would imply three rate hikes this year but with the economy strengthening and tax reform potentially providing additional stimulus, a fourth hike may be warranted this year and along with additional increases further down the road. The market seems quite well positioned on this at the moment which may reduce the likelihood of significant shocks, although we’ve seen how vulnerable markets have shown themselves to be in recent weeks.
"With the event being largely unscripted and markets remaining a little on edge, there is the potential for plenty of volatility throughout today’s and Thursday’s sessions, all the more reason why Powell may well refrain from saying anything that could have adverse consequences on his debut appearance."
Powell's prepared remarks will be released at 1330 GMT and his testimony will be at 1500 GMT.
Investors were digesting the latest data from the European Commission, which showed UK economic sentiment dipped in February. The EC's Economic Sentiment Indicator fell to 109.5 from 111.1 in January, dragged down by a decline in confidence in the industrial sector to its lowest level since April.
In corporate news, Sky surged as US cable TV company Comcast made a £22.1bn takeover bid for the broadcaster, outbidding 21st Century Fox.
Standard Chartered edged up after saying it will resume its dividend as it swung to a net profit of $774m for 2017 from a loss of $478m the year before.
Doorstep lender Provident Financial rocketed as investors welcomed the announcement of a smaller-than-expected rights issue, although the company also said it swung to a pre-tax loss in 2017 from a profit the year before.
Housebuilder Persimmon rose sharply as it pledged to pay out double its previously promised surplus cash via bumper dividends over this and the next two years and reported profits growth and encouraging recent sales. Peers Barratt Developments, Berkeley and Taylor Wimpey all gained.
FTSE 250 challenger bank Virgin Money rallied after it reported a 28% increase in underlying full-year profit amid robust customer demand and growth across its core products while Derwent London was up as it proposed a special dividend and said net asset value rose in 2017.
Greggs gained after well-received full-year numbers, while Drax powered ahead as its full-year core earnings beat expectations.
Thread maker Coats Group racked up stellar gains after saying its full-year adjusted operating profit increased 11% to $174m and RBS was just in the black even as the Treasury Select Committee criticised the bank over the rebranding of its Global Restructuring Group.
Insurer Direct Line turned lower despite announcing bumper dividend payments and posting a more than 50% increase in annual operating profit.
Speciality chemical company Croda International declined even as it posted a record full-year profit as sales grew thanks to a strong performance across sectors and regions, while Fresnillo slid as the precious metals miner reported a small jump in full-year profit amid record silver production.
Engineer GKN, which is currently fending off a hostile bid from turnaround specialist Melrose Industries, reversed earlier gains even as it posted a 125% jump in full-year reported pre-tax profit.
Investors were also wading through results from Inchcape, James Fisher, Morgan Advanced Materials, Elementis and Jupiter Fund Management in the blizzard of corporate news.
Market Movers
FTSE 100 (UKX) 7,274.06 -0.21%
FTSE 250 (MCX) 19,886.91 0.29%
techMARK (TASX) 3,312.14 -0.56%
FTSE 100 - Risers
Sky (SKY) 1,333.50p 20.68%
Persimmon (PSN) 2,729.00p 9.69%
Evraz (EVR) 433.10p 1.69%
Barratt Developments (BDEV) 560.20p 1.63%
Berkeley Group Holdings (The) (BKG) 3,924.00p 1.61%
Taylor Wimpey (TW.) 195.24p 1.58%
ITV (ITV) 173.80p 1.37%
Smurfit Kappa Group (SKG) 2,536.00p 1.20%
Standard Life Aberdeen (SLA) 375.40p 1.19%
Old Mutual (OML) 256.90p 0.82%
FTSE 100 - Fallers
Fresnillo (FRES) 1,295.00p -2.78%
Centrica (CNA) 141.30p -1.81%
Hammerson (HMSO) 457.80p -1.72%
Halma (HLMA) 1,207.31p -1.68%
Reckitt Benckiser Group (RB.) 5,881.00p -1.66%
Johnson Matthey (JMAT) 3,107.00p -1.43%
Randgold Resources Ltd. (RRS) 6,004.00p -1.41%
Severn Trent (SVT) 1,755.00p -1.40%
United Utilities Group (UU.) 678.60p -1.37%
Ferguson (FERG) 5,148.00p -1.34%
FTSE 250 - Risers
Provident Financial (PFG) 988.00p 68.03%
Coats Group (COA) 83.20p 11.38%
Virgin Money Holdings (UK) (VM.) 279.70p 5.75%
Spirax-Sarco Engineering (SPX) 5,970.00p 5.66%
Stagecoach Group (SGC) 146.00p 4.96%
Sirius Minerals (SXX) 28.13p 4.79%
Derwent London (DLN) 3,048.00p 4.78%
Fisher (James) & Sons (FSJ) 1,445.96p 3.43%
Ascential (ASCL) 414.20p 3.39%
Drax Group (DRX) 245.60p 3.11%
FTSE 250 - Fallers
TBC Bank Group (TBCG) 1,550.00p -4.91%
Meggitt (MGGT) 445.00p -4.63%
Inchcape (INCH) 679.50p -2.93%
Cobham (COB) 114.70p -2.30%
Moneysupermarket.com Group (MONY) 269.70p -2.28%
Capital & Counties Properties (CAPC) 269.70p -2.21%
Wood Group (John) (WG.) 624.40p -2.07%
Pennon Group (PNN) 627.00p -1.79%
Alfa Financial Software Holdings (ALFA) 459.00p -1.71%
Workspace Group (WKP) 965.50p -1.63%