LONDON MARKET MIDDAY: Pound Tumbles Below USD1.30 After UK Retail Data

LONDON (Alliance News) - The FTSE 100 was outperforming European peers on Thursday at the detriment of the pound, which tumbled to sub-USD1.30 after UK retail sales unexpectedly fell in June.Weighing on the FTSE 250 was losses for Babcock International and Sports Direct International, despite gains for Moneysupermarket.com.The FTSE 100 was up 0.1%, or 8.51 points, at 7,684.79 Thursday midday. The mid-cap FTSE 250 index was down 0.5%, or 102.16 points, at 20,882.04. The AIM All-Share index was flat at 1,096.58.The Cboe UK 100 was up 0.1% at 13,019.59, the Cboe UK 250 was down 0.4% at 19,022.38, while the Cboe UK Small Companies was down 0.2% at 12,523.08.In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were both 0.4% lower at midday.Sterling was quoted at USD1.2996 Thursday midday - having dipped to its lowest price since September last year of USD1.2982 immediately after the retail sales release - down compared to USD1.3058 at the London equities close on Wednesday.The Office for National Statistics on Thursday showed retail sales dropped 0.5% month-on-month in June, with consensus forecasts expecting a 0.2% gain after May's strong 1.4% rise.On a year-on-year basis, retail sales grew 3% in June after a 4.5% rise in May, again disappointing economists who had forecast 3.5% growth. In a bright spot amid the weaker-than-expected data, sales rose 2.1% in the three months to June, marking the fastest growth since February 2015. Food stores saw 2.2% growth in the three months, the strongest since May 2001. The ONS said feedback from supermarkets suggested that good weather and the football World Cup encouraged food and drink sales. However, these food sales due to hot weather and the football came at the expense of footfall to non-food stores, feedback also showed."There may well be a strong feeling in the MPC that the central bank should have pushed ahead with a hike in May and stood by its belief that weather had a negative but temporary impact on the economy which would have given it the freedom to be patient through the rest of the year," commented Oanda senior market analyst Craig Erlam. Erlam continued: "Instead, it now finds itself in a position were the most recent data hasn't been great and Brexit talks are not progressing as hoped, meaning it would make far more sense to hold off until November, something that would likely result in another backlash against the policy of forward guidance."The analyst did note, however, that a hike on August 2 is still 68% priced in by markets.New York markets are set for a lower open on Thursday, with the Dow Jones called 0.1% down and the Nasdaq and S&P both seen shedding 0.2%.Reporting before the open on Thursday is takeaway firm Domino's Pizza, while tech company Microsoft publishes results after the close.In pre-market trade, eBay was 6.0% lower despite saying late Wednesday second quarter earnings multiplied on last year, its bottom line coming in at USD638 million from just USD29 million last year.The company's revenue for the quarter rose 9.1% to USD2.64 billion from USD2.42 billion last year. Adjusted earnings of USD533 million, or USD0.53 per share for the quarter, beat Reuters-compiled consensus of USD0.51 per share.International Business Machines, however, was up 3.0% pre-market after its second quarter results beat expectations.The IT firm's second-quarter profit rose 3.0% to USD2.40 billion, as second-quarter revenue rose 3.7% to USD20.00 billion. Excluding one-time items, earnings from continuing operations rose to USD3.08 per share from USD2.94 per share last year. Analysts had a consensus earnings estimate of USD3.04 per share for the quarter.On the London Stock Exchange at midday, Unilever was up 1.9% as it beat margin and earnings per share forecasts, though its underlying sales growth lagged.For the six months to June 30, the consumer goods company recorded pretax profit of EUR4.34 billion, down 6.3% from EUR4.63 billion in the year-ago period. Revenue fell 5.0% to EUR26.35 billion from EUR27.73 billion.First half underlying sales growth, excluding the spreads business, stood at 2.7%. A truckers' strike in Brazil - one of the biggest markets for the company - hurt adjusted sales growth by around 60 basis points.UBS said first half earnings per share of EUR1.22 was 3.4% ahead of consensus at EUR1.18. Unilever's adjusted operating margin was also strong, an 80 basis points improvement to 18.6% was above consensus of 18.3%. However, overall second quarter underlying sales growth of 1.6% was below expectations for a 2.2% rise. Royal Dutch Shell 'A' shares were up 1.3% and 'B' shares up 1.4% after Credit Suisse said it expects a strong second quarter from the oil major.At the bottom of the index was advertising firm WPP, down 3.9% after French peer Publicis Groupe said net revenue for the first half of the year fell 8.2% to EUR4.28 billion, with organic growth declining 0.4% in the period.Publicis Groupe was trading 7.1% lower in Paris on Thursday.Also in the FTSE 100, SSE was down 2.5% as it said the start of its new financial year has been marked by "lower-than-expected output of renewable energy" and "persistently high gas prices", in addition to dry, warm weather.Weather in the UK during the period - being 1.5 degrees centigrade warmer than the thirty-year average - led to average domestic gas demand being lower than planned. The company said this has hurt its adjusted operating profit in the first quarter by around GBP80 million, and could potentially hit its full-year results.Remaining the best FTSE 250 performer at midday was Moneysupermarket.com, up 8.4%. For the first half, the price comparison website recorded pretax profit of GBP51.7 million, up from GBP49.5 million last year. Revenue grew to GBP173.7 million from GBP165.3 million a year ago.Babcock International was down 11% after it said it now expects to see low single-digit underlying revenue growth for the full year, compared to a previous forecast of "low mid-single digit" growth at its annual results in May. Revenue expectations for the Aviation sector and the Nuclear sector remain unchanged, though defence revenue is now expected to be "temporarily impacted" by the restructuring of the Defence Equipment & Support organisation, which has created the new Submarine Delivery Agency.The defence outsourcer, nonetheless, retained its underlying earnings guidance for the year.Sports Direct lost 6.4% as its "strategic investment" in department store chain Debenhams wiped GBP85.4 million off its annual profit.The retailer said pretax profit for the year to April 29 fell 73% to GBP77.5 million from GBP281.6 million reported a year earlier, while revenue rose 3.5% to GBP3.36 billion. On an underlying basis, pretax profit increased by 35% to GBP152.9 million.The steep profit drop was largely due to the charge taken following a reduction in value of Debenhams. During the year, Sports Direct increased its holding in Debenhams to 29.7%. Debenhams shares were down 3.7% at midday on Thursday, having tumbled 66% since the start of 2018."The company has a string of such 'strategic investments', which also includes House of Fraser, French Connection and Goals Soccer Centres, and it's hard to fathom the precise strategy at play here. Looking beyond the impact of subsidiaries and acquisitions, things aren't great in the main UK business, but then given current trading conditions that's to be expected," said Laith Khalaf, a senior analyst at Hargreaves Lansdown.Goals Soccers Centres, meanwhile, was down 19% at midday on Thursday.The company - in which Sports Direct holds a 18.92% stake - said its results for 2018 are to be "materially below market expectations" as bad weather hit first-half sales. In addition, Chief Financial Officer Bill Gow has resigned effective immediately.Underlying sales in the first half have declined 3%, the company said, versus a 1.6% rise last year. This is expected to hit annual results."Frustratingly, the first half was impacted by the snow and its significant after-effects, which masks the performance of the business where positive trends are clear. With the improving underlying performance, we expect a better second half," said Chief Executive Andy Anson.