London midday: Stocks go red but weak pound keeps lid on losses

(Sharecast News) - London stocks had moved into the red by midday on Tuesday as optimism over upcoming Sino-US trade talks faded, but a weaker pound kept a lid on losses as hopes of a Brexit deal dimmed.
The FTSE 100 was down 0.1% at 7,189.81, while sterling fell 0.6% against the dollar and the euro to 1.2218 and 1.1133.

Neil Wilson, chief market analyst at Markets.com, said: "The news across the wires is that Merkel said a deal will only work if Northern Ireland stays in the customs union. No 10 said this demand is impossible and that the EU is not engaging seriously.

"It's become clear a deal cannot be done, with the wording from Number 10 that a deal is 'essentially impossible not just now, but ever'. Stalemate. We are now heading towards the Revoke versus No Deal showdown."

Weakness in the pound meant the FTSE was able to keep losses to a minimum while its European peers fell more heavily as relations between the US and China soured just days before top negotiators from both countries were due to meet for trade talks in Washington.

According to reports, China has suggested that it would retaliate after the Trump administration put eight Chinese technology companies on a blacklist overnight over alleged human rights violations against Muslim minorities.

Chris Beauchamp, chief market analyst at IG, said: "This comes hard on the heels of a comment that indicates the Chinese will not allow any discussion of intellectual property issues, thus rendering a key plank of the Trump trade talks irrelevant."

A report from the South China Morning Post also weighed on the mood as it said that Vice Premier Liu He, who is leading the delegation to Washington, will not carry the title of "special envoy" for President Xi Jinping, suggesting that he has not been given any particular instructions from China's leader. It also cited a source as saying that the Chinese delegation could cut the trip short by one night.

In equity markets, shares of London Stock Exchange slumped after Hong Kong Exchanges and Clearing said it was ditching its £32bn offer for the company, having been unable to engage with management.

EasyJet shares flew lower as the budget airline said it expects annual profits to be at the upper half of its guided range but that total revenue per seat for the year will drop around 2.7% and total costs will rise 12%.

PageGroup was under pressure after the recruiter warned over its annual profits, citing slow German growth, Brexit, the Sino-US trade spat and protests in Hong Kong. Small-cap recruiter Robert Walters added to the sector gloom as it posted a drop in third-quarter UK profit and warned that full-year pre-tax profit would be flat, pointing to many of the same woes as Pagegroup. Hays also lost ground.

TalkTalk was knocked lower by a downgrade at Societe Generale.

On the upside, Polymetal and Rio Tinto were boosted by upgrades to 'buy' at Renaissance Capital, while Electrocomponents rose as it said like-for-like sales pushed up 5% in both the second quarter and the first half.



Market Movers

FTSE 100 (UKX) 7,189.81 -0.11%
FTSE 250 (MCX) 19,271.91 -0.76%
techMARK (TASX) 3,845.28 -0.07%

FTSE 100 - Risers

Polymetal International (POLY) 1,173.50p 2.62%
Relx plc (REL) 1,895.50p 1.66%
St James's Place (STJ) 943.40p 1.64%
Imperial Brands (IMB) 1,855.80p 1.39%
Smith & Nephew (SN.) 1,934.00p 1.28%
Unilever (ULVR) 4,896.50p 1.10%
Coca-Cola HBC AG (CDI) (CCH) 2,574.00p 1.10%
Croda International (CRDA) 4,808.00p 1.09%
Experian (EXPN) 2,570.00p 0.86%
Fresnillo (FRES) 680.31p 0.82%

FTSE 100 - Fallers

London Stock Exchange Group (LSE) 7,076.00p -5.05%
ITV (ITV) 116.85p -4.61%
Taylor Wimpey (TW.) 144.60p -3.44%
Persimmon (PSN) 2,010.00p -2.85%
International Consolidated Airlines Group SA (CDI) (IAG) 456.80p -2.52%
British Land Company (BLND) 543.80p -2.30%
Sainsbury (J) (SBRY) 206.30p -2.13%
Centrica (CNA) 69.96p -2.10%
BT Group (BT.A) 174.98p -2.05%
Legal & General Group (LGEN) 234.20p -1.97%

FTSE 250 - Risers

Vivo Energy (VVO) 115.20p 2.86%
Electrocomponents (ECM) 616.00p 2.74%
Sirius Minerals (SXX) 3.90p 2.15%
Trainline (TRN) 420.00p 2.07%
Sanne Group (SNN) 517.00p 1.97%
BMO Global Smaller Companies (BGSC) 1,358.00p 1.49%
SSP Group (SSPG) 616.00p 1.32%
Syncona Limited NPV (SYNC) 220.73p 1.25%
Schroder Asia Pacific Fund (SDP) 435.10p 1.19%
PPHE Hotel Group Ltd (PPH) 1,810.00p 1.12%

FTSE 250 - Fallers

Pagegroup (PAGE) 369.60p -11.49%
Vesuvius (VSVS) 401.60p -7.08%
Hays (HAS) 134.10p -5.56%
Galliford Try (GFRD) 605.60p -4.33%
Cairn Energy (CNE) 180.60p -4.09%
CYBG (CYBG) 102.95p -4.01%
Morgan Advanced Materials (MGAM) 241.65p -3.80%
TI Fluid Systems (TIFS) 177.00p -3.59%
Aston Martin Lagonda Global Holdings (AML) 463.10p -3.52%
Wood Group (John) (WG.) 338.50p -3.34%