London open: Stocks drop as pound holds above $1.30
London stocks fell in early trade on Thursday despite a positive session on Wall Street, as the pound traded back above $1.30.
At 0830 BST, the FTSE 100 was down 0.5% to 7,526.36, while the pound was up 0.1% against the dollar and the euro at 1.3041 and 1.1133, respectively, having shot higher on Wednesday after the EU’s chief Brexit negotiator, Michel Barnier, said he was prepared to offer an unprecedented partnership to the UK.
Neil Wilson, chief market analyst at Markets.com, said: "Sterling is steady above $1.30, holding those gains inspired by Michel Barnier’s positive noises on Brexit yesterday. With that level holding overnight we could see a push up north towards 1.31 but the pair is encountering resistance at the 50-day moving average - a break to the upside would be a pretty bullish signal. Lots of pound shorts could get squeezed here.
"The pound now looks susceptible to upside surprises on the Brexit front here on out, having had a lot of the bad news already priced in. Barnier’s softer language will be a positive but a) there is yet scepticism about what it all means with few details on any of this and b) we have heard this kind of language in the past - it’s just that the context to these comments lends it a more upbeat tone."
Meanwhile, trade relations were still in focus after the US and Mexico agreed a preliminary deal and as Canadian Prime Minister Justin Trudeau and foreign minister Chrystia Freeland expressed optimism that a deal with the US would be reached in the near-term.
On the data front, net lending, consumer credit and mortgage approvals are all due at 0930 BST.
In corporate news, Hays was in the red despite reporting a 17% jump in full-year profit as the recruiter boosted its dividend after a "landmark" year that saw solid growth in its international businesses.
Vodafone fell after agreeing to merge its loss-making Australian mobile joint venture with broadband provider TPG Telecom in a deal valuing the combined company at about A$15bn (£8.4bn).
AstraZeneca slipped even as it said that the European Commission has approved a new formulation of its type-2 diabetes treatment.
WH Smith rose after saying it expects results for the year to the end of August to be in line with expectations thanks to a strong performance from its travel business.
SSE nudged higher as the Competition and Markets Authority provisionally cleared the proposed merger between its retail arm and Npower.
Oilfield services provider Hunting surged after saying it swung to a profit in the six months to the end of June and reinstating its dividend.
In broker note action, IWG was cut to ‘underperform’ at RBC Capital Markets, while Intu was downgraded to ‘underweight’ at Morgan Stanley. Vodafone was reduced to ‘neutral’ at Bank of America Merrill Lynch and Glaxo was downgraded to ‘hold’ at Liberum.
Unite Group was lifted to ‘overweight’ by Morgan Stanley, while Petrofac was upgraded to ‘equalweight’ at Morgan Stanley. Bellway was lifted to ‘buy’ by Deutsche Bank and Big Yellow was raised to ‘neutral’ at Kempen & Co.
Meanwhile, ex-dividend stocks took 0.5 points off the FTSE 100 and 17 off the FTSE 250, with John Wood Group, LondonMetric, Ascential, Auto Trader, Capital & Counties, Centamin, Elementis, Greencore, Hammerson, Hochschild, InterContinental Hotels, Polypipe, Ultra Electronics, National Express and St James’s Place all in the frame.
Market Movers
FTSE 100 (UKX) 7,526.36 -0.49%
FTSE 250 (MCX) 20,680.15 -0.27%
techMARK (TASX) 3,544.32 -0.46%
FTSE 100 - Risers
Prudential (PRU) 1,753.50p 0.49%
Admiral Group (ADM) 2,084.00p 0.24%
Halma (HLMA) 1,446.00p 0.21%
easyJet (EZJ) 1,555.00p 0.16%
SSE (SSE) 1,252.50p 0.16%
Randgold Resources Ltd. (RRS) 5,092.00p 0.12%
NMC Health (NMC) 3,978.00p 0.05%
Sky (SKY) 1,544.62p 0.04%
Royal Dutch Shell 'A' (RDSA) 2,539.00p 0.04%
Aviva (AV.) 491.80p 0.02%
FTSE 100 - Fallers
Pearson (PSON) 916.20p -2.28%
Anglo American (AAL) 1,570.00p -1.67%
St James's Place (STJ) 1,135.00p -1.65%
Standard Chartered (STAN) 632.20p -1.59%
ITV (ITV) 161.45p -1.52%
BT Group (BT.A) 219.55p -1.35%
Glencore (GLEN) 320.70p -1.28%
BHP Billiton (BLT) 1,676.40p -1.17%
British Land Company (BLND) 634.40p -1.15%
Reckitt Benckiser Group (RB.) 6,620.00p -1.15%
FTSE 250 - Risers
Petrofac Ltd. (PFC) 672.60p 3.19%
IP Group (IPO) 131.60p 2.33%
Bellway (BWY) 2,938.00p 1.66%
OneSavings Bank (OSB) 421.20p 1.06%
Jardine Lloyd Thompson Group (JLT) 1,444.00p 0.98%
WH Smith (SMWH) 2,072.00p 0.97%
Dairy Crest Group (DCG) 478.60p 0.93%
Unite Group (UTG) 878.00p 0.86%
Premier Oil (PMO) 117.80p 0.86%
SSP Group (SSPG) 699.90p 0.84%
FTSE 250 - Fallers
IWG (IWG) 228.80p -4.15%
Intu Properties (INTU) 156.05p -3.52%
Hammerson (HMSO) 476.40p -3.25%
Keller Group (KLR) 1,018.00p -2.68%
Capital & Counties Properties (CAPC) 257.70p -2.39%
Centamin (DI) (CEY) 103.55p -1.99%
Energean Oil & Gas (ENOG) 511.00p -1.73%
Fisher (James) & Sons (FSJ) 1,752.00p -1.68%
National Express Group (NEX) 395.60p -1.59%
RDI Reit (RDI) 34.05p -1.59%