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London midday: Market flat amid slowest retail sales growth ever

Tue, 9th Jul 2019 12:07

(Sharecast News) - London stocks remained just a touch in the red at midday Tuesday, as investors digested the worst retail sales data on record and eyed a speech by Federal Reserve chairman Jerome Powell.

At 1200 BST, the FTSE 100 was down 0.014% at 7,548.24, while sterling was 0.41% weaker against the dollar at $1.2464 and 0.29% lower on the euro at €1.1128.

"Ahead of an appearance from Jerome Powell later this afternoon, the rate cut doubts that appeared last Friday, and came to dominate Monday's trading, continued to be felt on Tuesday," said Spreadex analyst Connor Campbell earlier.

"To be fair to the FTSE, it has kept its losses on the lighter end of the scale, even if its early dip puts it under 7,550 and at a one-week low.

"The avoidance of a more significant decline, despite the red hues of its mining sector, came as sterling fell 0.2% against both [the] dollar and euro."

Campbell noted that the sterling-dollar rate was now sitting "the wrong side" of $1.285, and was nearing levels last seen more than two years ago, as the greenback benefited from emerging concerns that the Fed won't cut interest rates this month.

Against the euro, he said the pound remained in the vicinity of its recent six-month lows, without quite striking a "fresh nadir".

"The tension between the US and UK following Trump's attack on the latter's ambassador may be playing its part; ditto the ongoing Brexit uncertainty as the Tory leadership race continues."

Conservative Party leadership candidates Jeremy Hunt and Boris Johnson are set to face each other in a televised debate on Tuesday evening.

In economic news, British retail sales advanced at the slowest average pace on record in the last twelve months as Brexit-related concerns continued to weigh on consumer spending.

Average sales growth slowed to just 0.6% over the year ending 30 June, according to the British Retail Consortium, which was the slowest increase since the industry group began recording figures back in 1995.

Retailers also saw the largest annual fall for the month of June - down 1.3% - as Brexit concerns mounted even as the UK waited for a new Prime Minister to be named, with the boost to spending last year from the heatwave and the World Cup making for tough comparatives.

"Overall, the picture is bleak: rising real wages have failed to translate into higher spending as ongoing Brexit uncertainty led consumers to put off non-essential purchases," said BRC chief executive Helen Dickinson.

"The continued risk of a no-deal Brexit is harming consumer confidence and forcing retailers to spend hundreds of millions of pounds putting in place mitigations."

Samuel Tombs at Pantheon Macroeconomics was more upbeat, however, pointing out how wage growth hit an 11-year high in April, the increase - the biggest in five years - in the personal allowance at the start of the tax year and above average consumer confidence.

"None of these developments suggest that a downturn in consumers' spending is imminent," Tombs noted.

On the corporate front, Ocado shares continued to soar after an in-line set of interim results, rising almost 9% by midday.

The company said its interim pre-tax loss widened from £13.6m to £142.8m for the six months ended 2 June as the online retailer dealt with the impact of a fire that damaged property and goods at its Andover distribution centre in February.

Housebuilder Bovis reversed earlier gains and was just below the waterline, even after saying it expected to make "significant" progress in the second half to deliver an improved full year operational and financial performance despite Brexit worries.

Bovis reported a 4% rise in completions for the half year to 1,647, adding that market fundamentals remained stable with good demand for new homes across all regions.

Software company Micro Focus fell more than 1% after posting a 5.3% drop in its revenue on a constant currency basis for the six months ended 30 April, to $1.66bn - in line with its guidance - while its adjusted EBITDA was ahead 1.8% to $662.3m.

In broker note action, Just Eat slumped after a downgrade to 'hold' at Berenberg, while Antofagasta was hit by a downgrade to 'neutral' at Macquarie.

Intertek was weaker after a downgrade to 'sell' at Goldman Sachs, while Babcock was lifted to 'neutral' at Citi and Diageo was cut to 'hold' at Kepler Cheuvreux.

FTSE 100 - Risers

Ocado Group (OCDO) 1,283.50p 9.65%

Barratt Developments (BDEV) 578.34p 1.29%

Smith & Nephew (SN.) 1,750.50p 1.21%

Compass Group (CPG) 1,946.00p 1.01%

JD Sports Fashion (JD.) 609.40p 0.99%

Taylor Wimpey (TW.) 159.25p 0.98%

Royal Bank of Scotland Group (RBS) 227.95p 0.95%

Reckitt Benckiser Group (RB.) 6,425.00p 0.88%

Persimmon (PSN) 1,906.50p 0.87%

Next (NXT) 5,446.00p 0.78%

FTSE 100 - Fallers

Melrose Industries (MRO) 173.50p -7.14%

TUI AG Reg Shs (DI) (TUI) 764.80p -3.07%

Just Eat (JE.) 618.20p -2.83%

Antofagasta (ANTO) 857.80p -2.72%

Johnson Matthey (JMAT) 3,250.00p -2.55%

NMC Health (NMC) 2,373.00p -2.55%

Croda International (CRDA) 4,760.00p -2.54%

Glencore (GLEN) 268.75p -1.95%

Mondi (MNDI) 1,743.00p -1.94%

Coca-Cola HBC AG (CDI) (CCH) 2,776.00p -1.87%

FTSE 250 - Risers

Cineworld Group (CINE) 260.30p 1.88%

Unite Group (UTG) 1,014.00p 1.40%

Funding Circle Holdings (FCH) 140.70p 1.37%

Pets at Home Group (PETS) 195.10p 1.35%

Workspace Group (WKP) 884.00p 1.32%

Dechra Pharmaceuticals (DPH) 2,791.31p 1.13%

Ted Baker (TED) 815.50p 1.12%

Apax Global Alpha Limited (APAX) 152.50p 0.99%

Intu Properties (INTU) 79.02p 0.92%

Daejan Holdings (DJAN) 5,609.70p 0.89%

FTSE 250 - Fallers

Elementis (ELM) 129.70p -4.56%

RHI Magnesita N.V. (DI) (RHIM) 4,698.00p -4.51%

Bodycote (BOY) 789.00p -4.31%

Vesuvius (VSVS) 521.94p -4.06%

Future (FUTR) 879.00p -3.93%

GVC Holdings (GVC) 604.80p -3.85%

Amigo Holdings (AMGO) 174.00p -3.65%

TI Fluid Systems (TIFS) 190.38p -3.65%

Renishaw (RSW) 3,858.00p -3.55%

CYBG (CYBG) 196.35p -3.51%

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