London midday: FTSE slumps as trade fears rattle markets

(Sharecast News) - London stocks had fallen further into the red by midday on Wednesday as concerns about trade relations between the US and China dented the mood, while results from the likes of Kingfisher and Sage also weighed.

The FTSE 100 was down 1.4% at 7,222.55 as sentiment took a knock after US President Donald Trump said at a cabinet meeting on Tuesday that he would raise tariffs on China "even higher" if a trade deal between the two is not agreed.

The US Senate's passing of a bill aimed at protecting human rights in Hong Kong added to tensions. The Hong Kong Human Rights and Democracy Act will now go to the House of Representatives for approval. If signed into law, the bill will demand sanctions on Chinese and Hong Kong officials identified by the US as carrying out alleged human rights abuses.

China has condemned the bill and called on the White House to block it.

Foreign Ministry spokesman Geng Shuang said: "This bill neglects facts and the truth. It applies double standards and it is overt meddling in Hong Kong's affairs and China's internal affairs. This is a serious violation of the international law and fundamental norms regulating international relations. China condemns this and speaks out against this decisively."

He added that China "will be forced to take resolute countermeasure for protectings its national sovereignty".

David Cheetham, chief market analyst at XTB, said that while the passing of the Senate bill was "a victory for human rights, it will likely infuriate Beijing and once more stoke tensions between the world's two largest economies at a time when US-Sino trade developments are the main driving force for the markets".

"It feels like a phase one agreement on a trade deal has been already discounted several times over by investors and sentiment may be starting to sour," he added.

In equity markets, DIY group Kingfisher tumbled after it reported a "disappointing" 3.2% fall in third-quarter sales in softer markets as the company's chief executive said it was suffering from "organisational complexity" that ignored customers.

Total sales fell 3.2% to £2.95bn on a constant currency basis. On a like-for-like basis, the decrease was 3.7% reflecting continuing disruption from new range implementations, lower promotional activity and ongoing operational challenges in France.

Russ Mould, investment director at AJ Bell, said "the company seems to be running very hard to get nowhere in particular".

"Recently appointed chief executive Thierry Garnier has diagnosed what he sees as some of the problems. It is trying to do too much at once and there is too much complexity in the business with the result that the company hasn't been good enough at giving customers what they want.

"Garnier is right to bring the focus to this part of the equation as ultimately all retailers should be trying to get the right products in front of the right people, in the right place and at the right time.

"However, ultimately the company could just be swimming against the tide. Fewer people seem to have the time, skills or inclination to do DIY and would rather get a professional in instead."

Elsewhere, Aviva fell after saying it was simplifying its business into five operating divisions and selling its stake in its Hong Kong unit to joint-venture partner Hillhouse Capital, while software company Sage retreated as it posted a 9% decline in full-year pre-tax profit.

On the upside, All Bar One and Harvester owner Mitchells & Butlers rallied after it posted a 36.2% rise in full-year pre-tax profit as its transformation programme bears fruit.

Micro Focus and Bodycote were also up after well-received trading updates.

Market Movers

FTSE 100 (UKX) 7,222.55 -1.38%
FTSE 250 (MCX) 20,380.54 -0.72%
techMARK (TASX) 3,987.69 -0.72%

FTSE 100 - Risers

Croda International (CRDA) 4,846.00p 0.96%
Scottish Mortgage Inv Trust (SMT) 513.00p 0.49%
Diageo (DGE) 3,127.00p 0.27%
Glencore (GLEN) 241.25p 0.12%
Just Eat (JE.) 754.00p 0.00%
Flutter Entertainment (FLTR) 8,494.00p -0.07%
Experian (EXPN) 2,474.00p -0.24%
Hikma Pharmaceuticals (HIK) 1,899.00p -0.31%
Fresnillo (FRES) 624.60p -0.38%
Rightmove (RMV) 603.80p -0.43%

FTSE 100 - Fallers

Kingfisher (KGF) 194.50p -6.85%
Aviva (AV.) 401.20p -4.09%
Pearson (PSON) 642.20p -3.75%
Hargreaves Lansdown (HL.) 1,754.50p -3.47%
Sage Group (SGE) 717.40p -3.32%
Melrose Industries (MRO) 217.30p -2.99%
3i Group (III) 1,024.00p -2.94%
NMC Health (NMC) 2,522.00p -2.78%
TUI AG Reg Shs (DI) (TUI) 1,033.50p -2.73%
Prudential (PRU) 1,285.00p -2.54%

FTSE 250 - Risers

Mitchells & Butlers (MAB) 469.50p 5.27%
Micro Focus International (MCRO) 1,094.40p 5.07%
Bodycote (BOY) 856.50p 2.64%
Bakkavor Group (BAKK) 128.00p 2.40%
Oxford Instruments (OXIG) 1,590.00p 1.66%
Vesuvius (VSVS) 422.00p 1.30%
Hilton Food Group (HFG) 1,018.00p 0.99%
Sirius Minerals (SXX) 3.45p 0.94%
Watches of Switzerland Group (WOSG) 300.00p 0.84%
Future (FUTR) 1,456.00p 0.83%

FTSE 250 - Fallers

Domino's Pizza Group (DOM) 294.40p -3.73%
Aston Martin Lagonda Global Holdings (AML) 427.30p -3.44%
Ferrexpo (FXPO) 137.65p -3.23%
Elementis (ELM) 171.00p -3.17%
Babcock International Group (BAB) 528.40p -3.05%
SSP Group (SSPG) 636.00p -2.90%
Wood Group (John) (WG.) 341.20p -2.88%
Plus500 Ltd (DI) (PLUS) 740.00p -2.84%
PureTech Health (PRTC) 282.00p -2.76%
PPHE Hotel Group Ltd (PPH) 1,830.00p -2.66%