London open: Stocks drop as investors eye UK GDP reading
London stocks fell in early trade on Friday, taking their cue from uninspiring sessions in the US and Asia ahead of the latest UK GDP reading.
At 0825 BST, the FTSE 100 was down 0.6% to 7,692.47, while the pound was off 0.3% against the dollar at 1.2786, trading below 1.28 for the first time in almost a year, and up 0.3% versus the euro at 1.1156 as investors awaited the release of second-quarter gross domestic product at 0930 BST, along with industrial and manufacturing production and trade balance.
GDP is expected to rebound to 0.4% from 0.2% growth in the first quarter, after the 'Beast from the East' snowstorm shut down much of the country for a few days in February and March.
Laith Khalaf, senior analyst at Hargreaves Lansdown, said: "The second quarter was altogether brighter, with good weather, a Royal Wedding and the World Cup all driving consumer behaviour."
Khalaf said that if the growth number disappoints, the Bank of England could find some pretty instant egg on its face after its decision to raise interest rates last week.
"However the main indicators suggest a rebound from the weak first quarter is on the cards. One quarter’s reading is of course a fairly brief snapshot. Looking at the bigger picture, UK economic growth is still way below the gains we were used to before the financial crisis (see charts below- data available on request)."
Meanwhile, as the Turkish lira tanked against the dollar after a meeting on Friday between a Turkish delegation and US officials yielded no solution to a diplomatic rift over the detention of a US pastor in Turkey, the euro was also under the cosh, dropping to a new yearly low below $1.15 on worries that Turkey's problems may be spreading to Europe.
The single currency took a dive after a report in the Financial Times suggested that the ECB sees BBVA, UniCredit and BNP Paribas as particularly exposed to the Turkish lira's plunge.
Konstantinos Anthis, head of research at ADSS, noted that the lira has declined more than 15% versus the dollar since the start of the month and said that even though Turkey was not part of Europe - or the eurozone for that matter - it was the European banks' exposure on the Turkish lira that lit the fuse this morning.
The lira has been under pressure on the back of worries about (Turkey President Recep) Erdogan’s influence over monetary policy, Anthis added.
Corporate news was thin on the ground.
Ryanair flew a little lower as the budget airline cancelled one in six flights due to a pilot walkout.
IP Group was little changed after saying it has committed to investing £5m in portfolio company Artios Pharma as it raises £65m in a Series B financing.
SSP fell after saying it has found investors for a $175m issue of US bonds to replace existing debt and for general corporate purposes.
Diageo ticked up as it told its broker to kick off the first swathe of its £2bn share buyback. Citigroup will begin purchasing the drinks giant's shares up to a value of up to £1.4bn, with further tranche to be announced by the FTSE 100 company later in the financial year to June 2019.
On the broker note front, Paddy Power Betfair was upgraded to ‘neutral’ at Credit Suisse, while Spire Healthcare was downgraded to ‘hold’ at Jefferies and Hill & Smith was cut to ‘hold’ at Berenberg.
Rolls-Royce was reduced to ‘underweight’ at JPMorgan and Evraz was downgraded to ‘sell’ at VTB Capital.
FTSE 100 - Risers
Carnival (CCL) 4,571.00p 0.88%
easyJet (EZJ) 1,575.50p 0.38%
International Consolidated Airlines Group SA (CDI) (IAG) 688.40p 0.35%
Pearson (PSON) 919.40p 0.26%
Royal Mail (RMG) 460.60p 0.24%
National Grid (NG.) 811.90p 0.19%
British American Tobacco (BATS) 4,200.50p 0.15%
Severn Trent (SVT) 1,983.00p 0.15%
BAE Systems (BA.) 624.60p 0.13%
Imperial Brands (IMB) 2,973.50p -0.03%
FTSE 100 - Fallers
Evraz (EVR) 515.60p -7.99%
Rolls-Royce Holdings (RR.) 1,051.00p -3.04%
Randgold Resources Ltd. (RRS) 5,476.00p -2.18%
Glencore (GLEN) 323.50p -2.03%
BHP Billiton (BLT) 1,686.40p -1.95%
Antofagasta (ANTO) 960.00p -1.94%
Anglo American (AAL) 1,679.60p -1.87%
Rio Tinto (RIO) 3,819.50p -1.60%
Paddy Power Betfair (PPB) 7,445.00p -1.39%
Mondi (MNDI) 2,195.00p -1.35%
FTSE 250 - Risers
Fisher (James) & Sons (FSJ) 1,842.40p 2.93%
Dunelm Group (DNLM) 534.00p 1.91%
Charter Court Financial Services Group (CCFS) 343.00p 1.84%
Mitchells & Butlers (MAB) 256.00p 1.67%
Spire Healthcare Group (SPI) 162.56p 1.60%
McCarthy & Stone (MCS) 110.90p 1.09%
PZ Cussons (PZC) 236.71p 0.73%
TalkTalk Telecom Group (TALK) 119.05p 0.72%
Fidelity China Special Situations (FCSS) 235.53p 0.66%
Spectris (SXS) 2,475.00p 0.65%
FTSE 250 - Fallers
Polymetal International (POLY) 645.47p -3.63%
Hill & Smith Holdings (HILS) 1,086.95p -3.38%
Investec (INVP) 525.00p -2.38%
Hochschild Mining (HOC) 172.58p -2.08%
On The Beach Group (OTB) 425.50p -1.96%
Premier Oil (PMO) 120.74p -1.68%
G4S (GFS) 255.80p -1.65%
Ferrexpo (FXPO) 174.34p -1.64%
Capital & Counties Properties (CAPC) 265.00p -1.63%
Kaz Minerals (KAZ) 611.60p -1.55%