LONDON MARKET MIDDAY: Stocks Lower As BoE Cut UK Economic Outlook

(Alliance News) - London stocks were down at midday Thursday after Bank of England policymakers kept UK interest rates unchanged, while cutting its forecast for the country's economic growth.The large-cap index was 15.58 points, or 0.2%, lower at 7,571.20 Thursday midday. The mid-cap FTSE 250 index down 76.36 points, or 0.4%, at 19,590.18, while the AIM All-Share was down 0.2% at 929.94.The Cboe UK 100 index was down 0.1% at 12,874.50. The Cboe UK 250 was down 0.1% at 17,517.12, and the Cboe UK Small Companies was up 0.4% at 11,077.63.The Bank of England voted unanimously to keep interest rates on hold again, while lowering its growth expectations for the year ahead as it remarked Thursday that the UK economy appears to be expanding at a below-potential rate.The nine-strong Monetary Policy Committee voted to keep Bank Rate at 0.75%, while also unanimously voting to keep corporate bond purchases at up to GBP10 billion and purchased assets at GBP435 billion.A press conference will be held with BoE Governor Mark Carney at 1230 BST."The fact that the Brexit uncertainty has risen noticeably means short-term GDP forecasts have been cut. The BoE's projections do not include a no-deal Brexit possibility, and it continues to assume a smooth Brexit scenario," noted Forex Market Analyst Fawad Razaqzada. Since the last inflation report in May, the BoE said, global trade tensions have intensified while global activity has softened. In addition, an increase in the perceived likelihood of a no-deal Brexit has further lowered UK interest rate expectations.Even with the market rapidly lowering interest rate expectations, the BoE continues to assume an EU departure delivers a "smooth adjustment to the average of a range of possible outcomes". Sterling was quoted at USD1.2110 midday Thursday, following the decision, down from USD1.2222 at the London equities close on Wednesday."The GBP/USD has dropped to a new low for the year. The cable is no doubt hurt by the rallying US dollar, which rose after the Fed's expected 25 basis point rate cut -- the first trim since 2008 -- was accompanied by a less dovish than expected tone from Chair Jerome Powell, as he didn't signal the start of a series of reductions," commented Razaqzada. Wall Street is pointed to higher start with the Dow Jones and the S&P both on course to gain 0.2%, and the Nasdaq set for a 0.3% rise. The New York market closed lower on Wednesday after the US Federal Reserve decision.The Fed on Wednesday lowered its target range for US interest rates by a quarter point, bringing the benchmark rate down to 2.00% from 2.25%.The rate cut was not enough to please President Donald Trump, who criticized Powell for not going further. "As usual, Powell let us down," Trump said. Some traders had hoped the Fed would cut interest rates by a chunkier 50 basis points.In London, the FTSE 100's largest constituent, Royal Dutch Shell, was one of the worst performers at midday, with 'A' and 'B' shares down 4.4% and 4.5%, respectively, after the oil major posted a decline in interim earnings.Current cost of supply earnings attributable to shareholders excluding items was down 13% in the first half to USD8.76 billion. Cash flow from operating operating activities was up 4% to USD19.66 billion.For the second quarter alone, CCS earnings attributable to shareholders excluding items was down 26% year-on-year to USD3.46 billion, which Shell said reflected lower realised oil, gas and LNG prices, weaker realised chemicals and refining margins as well as higher provisions, though this was all partly offset by improved production.Total production available for sale in the half rose 1% on a year before to 3.67 million barrels of oil equivalent per day. In the second quarter alone, this was up 4% to 3.58 million.Chief Executive Officer Ben van Beurden commented: "We have delivered good cash flow performance, despite earnings volatility, in a quarter that has seen challenging macroeconomic conditions in refining and chemicals as well as lower gas prices.""The resilience of our Upstream and customer-facing businesses and their ability to generate cash support the delivery of our 2020 outlook, which remains unchanged," he added.Miner Rio Tinto also was in the red, slipping by 2.6% at midday, as its profit fell in the first half of 2019 on impairment charges from the Oyu Tologi mine.For the six months to the end of June, pretax profit was USD5.19 billion, down 23% from USD6.73 billion the year before, hurt by impairment charges rising to USD2.35 billion compared to USD123 million a year ago, mostly relating to the Oyu Tolgoi copper and gold underground project in Mongolia.In 2018, geotechnical data from Oyu Tolgoi revealed that "potentially significant changes" to the design of future elements for the mine would be needed.First production from the mine is expected to be delayed by between 16 to 30 months from the original start date in 2020.As a result of the delay, the development capital spend for the project may increase by between USD1.2 billion and USD1.9 billion, above the original project budget of USD5.3 billion.On the other side of the ledger was London Stock Exchange, trading as the best performer in the blue-chip index, up 6.8%. LSE Group confirmed it has agreed to buy financial markets data provider Refinitiv for an enterprise value of USD27 billion in an all-share deal, as it also revealed a slight increase in interim profit.The deal is with a consortium of investment funds affiliated with Blackstone, as well as Thomson Reuters. Refinitiv is currently 55% owned by the Blackstone funds and 45% by Thomson Reuters. The transaction will result in the current owners of Refinitiv ultimately holding around a 37% stake in the LSE Group, though less than 30% of its voting rights.Together, LSE Group and Refinitiv generated a combined annual revenue of over GBP6 billion in 2018, which would have made the combined business the largest listed global financial markets infrastructure provider by revenue last year.Separately, LSE Group released its interim results on Thursday, saying they showed a "strong" performance despite challenging market conditions.Total revenue was up 7% to GBP1.02 billion in the six months to June 30 with total income up 8% to GBP1.14 billion. FTSE Russell index revenue was up 9% to GBP315 million, while Post Trade revenue at LCH was up 12% to GBP266 million.LSE Group pretax profit rose slightly to GBP363 million from GBP360 million a year before. Adjusted operating profit was up 11% to GBP533 million.British American Tobacco was the second best large-cap performer, up 6.6%, as it delivered "strong" interim results which left the cigarette maker on track to deliver another set of "good" annual growth figures.For the six months ended June, pretax profit narrowed 2.5% to GBP3.87 billion from GBP3.97 billion the year prior. This was despite revenue rising 4.6% to GBP12.17 billion from GBP11.64 billion the year before.Reported profit performance was hurt by rising operating and finance costs during the period. Adjusted operating profit in constant currency, however, pushed 5.9% higher to GBP5.21 billion."We continue to deliver on our financial objectives with adjusted revenue and adjusted profit from operations in line with our guidance, driven by a continued strong financial performance in combustibles," BAT Chief Executive Officer Jack Bowles said.

Peer Imperial Brands was up 2.6%, another top-5 FTSE 100 riser.

Among London mid-caps, Capita shares surged by 21%, whilst ConvaTec jumped by 17%. Although both companies reported a sharp fall in interim profit, their annual targets were maintained amid ongoing transformation programmes. Outsourcing services company Capita recorded pretax profit of GBP31.2 million for the six months ended June 30, down from GBP42.3 million in the year ago period. The decrease in profit was attributed to structurally challenged contracts in local government and life insurance. A number of contract losses including Prudential and Marsh in specialist services and Home Office escorting in government services also contributed the decline in earnings.Despite that, Capita retained its annual guidance and said it remains on track to record pretax profit of between GBP265 million and GBP295 million for 2019 and cost savings of GBP175 million by end 2019. Meanwhile, wound and skin care products company ConvaTec reported a pretax profit of USD61.3 million for the six months to the end of June, down 31% on a year earlier, as revenue slipped 3.5% to USD888.9 million. On an organic basis, revenue was flat year-on-year. ConvaTec explained that its revenue was hurt by a one-off rebate provision recognised in the first quarter of USD8.9 million and by adverse foreign exchange movements of USD33.2 million in the half-year.The company is undergoing a structural transformation. This was initiated in February and is expected to result in gross benefits, arising from the total USD150 million investment, of USD130 million to USD150 million annually starting from 2021. ConvaTec said it expects to deliver margin expansion, over the medium to long term, from its adjusted earnings before interest and taxes margin in 2018 of 23.4% and the anticipated decline to between 21.0% and 22.5% in 2019. intu Properties dropped at the bottom of the mid-cap index, trading 5.9% lower, after broker Alphavalue cut the real estate investment trust to Sell from Reduce. The shopping mall operator was adding to its 26% loss on Wednesday, having axed its interim dividend, as it looked to strengthen its balance sheet amid intense pressure on its assets and income performance.Renishaw was down 4.9% in midday trade as its annual profit and revenue dropped below already lowered targets.In the year ended June 30, Renishaw - which makes high-precision products for the metrology and healthcare markets - saw pretax profit plunge 29% to GBP109.9 million from GBP155.2 million.In May, Renishaw guided for a pretax profit in the range of GBP111 million to GBP126 million. This was the second time the engineering firm had lowered its profit guidance after previously expecting pretax profit between GBP123 million and GBP141 million in March.The company's annual revenue slipped 6.1% to GBP574.0 million from GBP611.5 million.Back in May, Renishaw had guided for revenue of between GBP580 million to GBP600 million. This was also below prior guidance of between GBP595 million to GBP620 million, itself a cut from an earlier estimate.In Paris, the CAC 40 stock index was 0.1% higher while the DAX 30 in Frankfurt was 0.5% higher in midday trade.The eurozone manufacturing sector contracted at the fastest rate since the end of 2012, IHS Markit said.The final eurozone Manufacturing Purchasing Managers' Index came in at 46.5 in July, above the flash reading of 46.4 but below last month's final print of 47.6. With a reading even further below the no-change mark of 50, this indicates the sector is continuing to shrink.The downturn in the overall manufacturing economy was driven by a sharp fall in new orders, IHS Markit said.