London open: Stocks edge lower ahead of services PMI; Imperial Brands slumps
London stocks edged lower in early trade on Wednesday following strong gains in the previous session, as investors eyed the release of the latest services PMI, with tobacco giant Imperial Brands under pressure after a profit warning.
At 0830 GMT, the FTSE 100 was down 0.3% at 7,415.28.
London Capital Group analyst Jasper Lawler said: "Shares in Asia rose on the hopes of fresh Chinese stimulus, but gains were capped by data showing Chinese service sector activity hit a three-month low in January. Given the supply chain disruption caused by the coronavirus, we’d expect more Chinese data heading south to weigh on equities.
"European markets have opened lower and futures point to a weaker start on Wall Street. The World Health Organisation may not be calling it a pandemic, but doubts are creeping back in about the coronavirus derailing an economic recovery."
On the UK data front, Markit’s services purchasing managers’ index for January is at 0930 GMT.
Ipek Ozkardeskaya, senior analyst at Swissquote Bank, said: "Yesterday, the UK construction PMI bettered the already solid expectations in January. Today, the services PMI should confirm a rebound in activity posterior to the December snap election as well.
"So far, we know that the business surveys reacted well to fading political stress and waning no-deal Brexit expectations. How much of this optimism would translate into the headline data such as growth and inflation are what will really matter to the pound. In this respect, the next couple of data points may see limited market reaction if they refer to the pre-election period. Among those, the fourth quarter growth and December production data due next Tuesday."
In corporate news, Imperial Brands was the worst performer after it issued a profit warning as a worldwide crackdown on vaping products takes effect.
First-half adjusted earnings per share were forecast to be 10% lower on a constant currency basis, Imperial said ahead of its annual general meeting and a day before a US ban on some flavoured vaping products comes into effect. Full-year group net revenue at constant currency was forecast to be at a similar level to last year and adjusted earnings per share to be slightly lower.
On the upside, shares of corrugated packaging group Smurfit Kappa rose after it reported a jump in full-year core earnings and revenue as it benefited from its capital spend programme and recent acquisitions. In the year to the end of December, earnings before interest, tax, depreciation and amortisation rose 7% to €1.65bn while revenue ticked up more than 1% to €9.05bn. Smurfit hiked its final dividend by 12% to 80.9 cent per share.
Barratt Developments was also in the green as the housebuilder announced a further extension to its capital return programme and posted an increase in first-half profit and revenue amid its highest home completions in 12 years.
Domino’s Pizza rallied as it said fourth-quarter system sales rose 3.7% but warned that it expects to report an operating loss of about £20m for its directly-operated international markets, which include countries such as Norway, Sweden and Switzerland.
Antofagasta was boosted by an upgrade to ‘hold’ at Deutsche Bank, while Kaz Minerals were underpinned by an upgrade to ‘buy’.
Market Movers
FTSE 100 (UKX) 7,415.28 -0.33%
FTSE 250 (MCX) 21,425.87 -0.07%
techMARK (TASX) 4,153.70 0.01%
FTSE 100 - Risers
Smurfit Kappa Group (SKG) 2,800.00p 3.02%
Antofagasta (ANTO) 881.80p 2.77%
Barratt Developments (BDEV) 837.80p 2.05%
Vodafone Group (VOD) 154.32p 2.04%
NMC Health (NMC) 1,019.00p 1.75%
Smith (DS) (SMDS) 355.10p 0.77%
Taylor Wimpey (TW.) 224.30p 0.63%
London Stock Exchange Group (LSE) 8,070.00p 0.52%
Standard Life Aberdeen (SLA) 310.80p 0.48%
Scottish Mortgage Inv Trust (SMT) 624.50p 0.48%
FTSE 100 - Fallers
Imperial Brands (IMB) 1,871.40p -4.19%
Carnival (CCL) 3,132.00p -1.85%
Hargreaves Lansdown (HL.) 1,755.50p -1.27%
Sage Group (SGE) 755.60p -0.92%
BP (BP.) 467.60p -0.84%
Ferguson (FERG) 7,318.00p -0.81%
CRH (CRH) 2,941.00p -0.74%
Meggitt (MGGT) 669.40p -0.74%
3i Group (III) 1,139.50p -0.74%
Ashtead Group (AHT) 2,571.00p -0.73%
FTSE 250 - Risers
Domino's Pizza Group (DOM) 307.10p 3.33%
Genus (GNS) 3,188.00p 2.84%
Savills (SVS) 1,256.00p 2.45%
Hochschild Mining (HOC) 164.30p 2.18%
Vivo Energy (VVO) 113.80p 2.15%
Elementis (ELM) 133.40p 1.99%
SIG (SHI) 94.00p 1.62%
Kaz Minerals (KAZ) 480.00p 1.50%
RHI Magnesita N.V. (DI) (RHIM) 3,302.00p 1.35%
Mitchells & Butlers (MAB) 410.00p 1.23%
FTSE 250 - Fallers
Airtel Africa (AAF) 70.75p -4.39%
Frasers Group (FRAS) 482.20p -2.59%
Finablr (FIN) 77.00p -2.41%
Plus500 Ltd (DI) (PLUS) 888.60p -2.35%
Helios Towers (HTWS) 136.30p -2.08%
Quilter (QLT) 171.15p -1.86%
Micro Focus International (MCRO) 754.00p -1.67%
Cairn Energy (CNE) 167.60p -1.64%
Vesuvius (VSVS) 439.00p -1.39%
Hays (HAS) 159.00p -1.36%