LONDON MARKET COMMENT: Stocks Lower; Aviva Leads FTSE 100 Gainers

Mon, 13th Apr 2015 09:32

LONDON (Alliance News) - UK stocks are trading lower mid-morning Monday on a light day of company and economic news, as insurer Aviva leads FTSE 100 gainers on its first day of trading after the completion of its merger with Friends Life Group.

The FTSE 100 trades down 0.3% at 7,066.55, the FTSE 250 is down 0.3% at 17,819.98, and the AIM All-Share index is flat at 735.88.

In Europe, the CAC 40 in Paris is up 0.2%, and the DAX 30 in Frankfurt is a touch higher.

London equities opened lower after much worse-than-expected Chinese trade data. China's exports logged an unexpected double-digit decline in March and imports fell by more than expected, weighing on the outlook for economic growth in the first quarter.

Exports decreased 14.6% in March from last year, data from the General Administration of Customs showed. Shipments were expected to grow 9%. In February, the Customs Office said exports surged 48.3%, while imports plunged 20.5%. Imports dropped 12.3% in March, faster than an expected fall of 10%, suggesting weak domestic demand.

The trade surplus fell sharply to USD3.1 billion, below February's surplus of USD60.6 billion and a USD40.1 billion forecast by economists. Foreign trade slid 13.5% on a yearly basis.

Furthermore, the World Bank forecasts that economic growth in developing countries in East Asia and Pacific will slow this year despite the benefits of weak oil prices and the continued recovery in developed economies.

China's growth is expected to moderate to 7.1% in 2015 and to 7% in 2016, according to official lender. This reflects continued efforts to address financial vulnerabilities and a gradual shift to a more sustainable path of growth. Earlier the bank had estimated 7.2% growth for 2015 and 7.1% next year.

Investors will be looking closely at Wednesday's Chinese GDP reading, which is expected to show that the economy grew 7% year-on-year in the first quarter of 2015. In the fourth quarter of 2014, growth was 7.3%, the weakest since early 2009.

The Chinese government targets 7% growth for 2015 after seeing a 7.4% expansion in 2014, which was the slowest since 1990.

On the corporate front, insurer Aviva is up 2.1% in its first trading session after the merger with Friends Life Group. The company also received a boost after Barclays, Morgan Stanley and JP Morgan resumed their coverage with Overweight ratings.

Pearson, down 2.5% is one of the worst blue-chip performers after Jefferies downgraded the publisher to Underperform from Buy. Similarly, miners BHP Billiton, down 2.4%, and Anglo American, down 1.6%, have been hit by downgrades from Citigroup. Meanwhile, HSBC Holdings is up 1.6% after Morgan Stanley raised the bank to Equal-Weight from Underweight.

Oil companies including BG Group, up 0.4%, Royal Dutch Shall 'B', up 0.7%, and SOCO International, up 2.5%, are trading higher as the price of oil rose. Brent oil is quoted at USD58.92 a barrel, while West Texas Intermediate is at USD52.51 a barrel.

However, easyJet is down 1.9% and International Consolidated Airlines Group is down 0.7%.

EasyJet poached Halfords Group Chief Financial Officer Andrew Findlay to the same position at the low-cost airline, with the car-parts and bicycles retailer starting a search for a replacement.

Findlay will remain at Halfords until the end of October, having been CFO of the company since February 1, 2011. Prior to that he held finance roles at Marks & Spencer Group, the London Stock Exchange Group and Cable & Wireless Communications. Halfords trades down 1.4%, one of the biggest fallers in the FTSE 250.

Still ahead in the economic calendar is the US monthly budget statement after the close of London equity markets, at 1900 BST.

Futures indicate Wall Street for a lower opening, with the DJIA and Nasdaq Composite both pointed down 0.2%, and the S&P 500 down 0.3%.

By Neil Thakrar; neilthakrar@alliancenews.com; @NeilThakrar1