LONDON MARKET MIDDAY: Stocks Slide As US-China Trade Concerns Remain

(Alliance News) - Stocks in London were lower at midday on Thursday as stalled trade talks between the US and China and ongoing concerns about the state of the global economy spooked investors. The FTSE 100 was 30.77 points lower, or 0.4%, at 7,504.69 at midday. The mid-cap FTSE 250 index was down 70.84 points, or 0.4%, at 19,544.37, while the AIM All-Share was 0.4% lower at 915.05.The Cboe UK 100 index down 0.5% at 12,710.96. The Cboe UK 250 was 0.2% lower at 17,450.05. The Cboe UK Small Companies was up 0.1% at 11,154.40.In mainland Europe, the CAC 40 index in Paris and DAX 30 in Frankfurt were down 0.5% and 0.9% respectively. "The selling on Wall Street has continued in Europe this morning, as the Netflix miss generates an understandable amount of caution among investors. Combined with the CSX warning yesterday afternoon, the news has been enough to sour earnings season thus far, with markets already looking vulnerable to a pullback regardless of whether trade wars return to the agenda or not," IG Group's Chris Beauchamp said. On Wednesday, railroad operator CSX Corp's second-quarter earnings missed expectations, as it said the ongoing US-China trade spat could hurt earnings going forward. CSX closed down 10% in New York on Wednesday. In the FTSE 100, tobacco producers British American Tobacco and Imperial Brands were the best performers, up 3.7% and 1.5% respectively, as demand for defensive stocks increased. Vodafone was up 1.3% after the telecommunications firm secured European Commission approval for the acquisition of Liberty Global's operations in Germany, Czech Republic, Hungary and Romania.The acquisition is conditional on the implementation of an agreed remedy package, with the deal now expected to be completed by the end of July.The remedy package comprises of a cable wholesale agreement signed between Vodafone and Telefonica Deutschland in May, allowing the latter to offer broadband services on Vodafone's network in Germany.SSE was up 1.1% after the 'Big Six' energy supplier reiterated its outlook for the 2020 financial year, despite lower-than-expected renewable energy output in the first three months of the financial period.The Scottish energy company reconfirmed its intention to recommend a dividend of 80 pence per share for the year ending March 31, 2020, in line with the company's five-year dividend plan set out in May 2018.In the FTSE 250, Ei Group was the standout performer, up 39% at 285.20 pence, after the company formerly known as Enterprise Inns agreed to a GBP1.3 billion takeover by Stonegate Pub Co.Stonegate, which owns the Slug & Lettuce chain and Walkabout pubs, will pay 285 pence per Ei share, a 39% premium to Ei's closing price in London on Wednesday of 205.8p. The deal values Ei at GBP1.27 billion, implying an enterprise value of GBP2.97 billion when including debt. Stonegate was set up in 2010, when it purchased 333 pubs from Mitchells & Butlers. It now owns over 765 outlets, compared to Ei's 4,000 properties.easyJet was up 3.3% after the budget airline said third quarter revenue rose year-on-year, partly due to the Easter period being in the second half of the current financial year.The carrier reported total revenue for the third quarter ended June 30 of GBP1.76 billion, an 11% year-on-year rise on 2018's GBP1.51 billion. easyJet said the later Easter in 2019, which generated almost GBP40.0 million extra, and an accounting change, which had a revenue benefit of GBP10.0 million, helped drive the third quarter growth. On AIM, ASOS was down 16% after the online fashion retailer reduced its profit expectations for the financial year after warehouses issues affected sales in Europe and the US, despite "robust growth" elsewhere. Europe saw a sales rise of 5% to GBP269.0 million from GBP257.4 million, while the US - though like Europe was affected by operational issues - had a 12% rise to GBP121.4 million from GBP108.1 million. The company said the overhaul of its warehouse operations in Berlin and Atlanta which is due to be completed by the end of September, hindered sales in the two regions.As a result, ASOS reduced its expectations for the financial year. It now expects group sales growth in line with the year to date, which in the first ten months of its financial year ending August 31 grew 13%. The pound was quoted at USD1.2479 at midday, higher than USD1.2435 at the London equities close Wednesday. "The [pound's] move higher has more to do with some weakness in the dollar than any reasons for the pound to firm. The dollar is weaker against most majors, dragged down partially by lower yields on Treasuries and renewed concerns over the China-US trade tensions. At home, UK economic data is not providing any reason for the pound the firm but on the upside, most of the negative comments about a no-deal Brexit and potential autumn election now seem to be priced into the market," said City Index analyst Fiona Cincotta.Crashing out of the EU without a deal could push the UK's economy into recession and increase borrowing by GBP30 billion a year, the Office for Budget Responsibility warned. The OBR quantified the impact on public finances of a no-deal, no-transition Brexit scenario and concluded that debt would rise relative to GDP over the next three years. But it said the stress test used in the fiscal risks report was "not the most disruptive one we could have chosen". The OBR warned that a no-deal Brexit could lead to a 2% fall in real GDP by the end of 2020 and a sharp fall in the pound. Analysts at FXPro commented: "The Office for Budget Responsibility published a report on the 'full-blown' recession in Britain in case of withdrawal from the EU without a deal, reducing the country's GDP by 2%. But in the meantime, the national economy is showing extremely positive signals. "Earlier this week, there was a record wage rate growth over the past 11 years, but data on producer prices came out slightly weaker than expected. Consequently, the UK economy maintains impressive consumer activity, while business is wary of the future."On the economic front, UK retail sales growth accelerated in June, despite a decline in department stores, a report from the Office for National Statistics showed. June's retail sales rose 3.8% year-on-year, and increased 1.0% when compared to May. Excluding fuel, June's sales rose 3.6% year-on-year and 0.9% month-on-month. By comparison, May's year-on-year growth was 2.2%. On the year prior, all sectors posted growth save for department stores, and on May non-food stores provided the biggest contribution to growth. For the three months to June, retail sales rose 0.7%, but this was a slowdown from 1.6% growth recorded for the three months to May. "Strong retail sales supported British currency purchases, returning GBPUSD to 1.2480 after touching 1.2380 a day earlier. The British pound looks extremely oversold, and strong data can bring it back to growth as investor interest recoversThe euro stood at USD1.1229 at midday, flat against USD1.1224 at the European equities close Wednesday. Stocks in New York were set to open in the red following a lower close on Wednesday.The DJIA and the S&P 500 index were called down 0.1% and the Nasdaq Composite pointed down 0.2%.Ahead in the US earnings calendar on Thursday, investment bank Morgan Stanley and tobacco firm Philip Morris International are set to report earnings before the market open in New York. Software maker Microsoft will report after the market close in New York. London Close is available to subscribers as an email newsletter. Contact info@alliancenews.com