London midday: Stocks slump as Sino-US relations sour; retail sales beat expectations
By Michele Maatouk
Date: Thursday 15 Aug 2019
(Sharecast News) - London stocks had extended losses by midday on Thursday after Sino-US trade relations took another turn for the worse and as sterling was boosted by better-than-expected retail sales data.
The FTSE 100 was down 1.6% at 7,032.14, while the pound was up 0.4% against the dollar at 1.2103 and 0.1% firmer versus the euro at 1.0837, after figures from the Office for National Statistics showed that retail sales unexpectedly ticked higher in July.
Retail sales edged up 0.2% last month, down from a 0.9% increase in June but ahead of expectations for a 0.2% decline.
On the year, retail sales rose 3.3%, down from 3.8% growth in June but beating expectations for a 2.6% jump.
Non-store sales, such as online sales, rose 6.9% in July and were up 12.7% on the year. Meanwhile, department store sales were up 1.6%, having fallen in the previous six months.
ONS head of retail sales Rhian Murphy said: \"Retail sales saw only modest growth in the latest three months.
\"Although still declining across the quarter, there was an increase in sales for department stores in July for the first time this year. Strong online sales growth on the month was driven by promotions.\"
David Cheetham, chief market analyst at XTB, said: \"The UK consumer continues to show impressive resilience to the slowing economy and political uncertainty with retail sales figures for July topping estimates. This is the sixth time this year that monthly figures have been better than expected, with strong growth of 6.9% seen in non-store retailing.
\"Another bright spot was department stores where growth increased for the first time in 2019 after six consecutive monthly declines. There\'s been a little uptick seen in the pound after the release, but as was the case for yesterday\'s inflation figures and Tuesday\'s wage numbers, at present economic data remains of secondary importance for sterling.\"
Escalating tensions between the US and China weighed on the mood after China said the US had violated past agreements with its 10% tariffs and that Beijing will have to take countermeasures.
Neil Wilson, chief market analyst at Markets.com, said: \"This does not bode well and may encourage Trump to react - there is a chance he could bring forward all the tariffs to September 1st. Countermeasures suggests China is not interested in the delay to tariffs - and may have sniffed a weakness in the US position and is keen to exploit it. Retaliation by China means escalation in tensions, and diminishes the chances of a positive outcome in the near term. Risks are still to the downside. As ever, though, only a tweet away.
\"Fresh worries about trade compound the risk aversion we are seeing due to the macro-economic slowdown and yield curve inversion. The delay to tariffs was about the only bright spot bulls could cling to - the comments from China undermine this positivity and threaten to spook investors again. Hong Kong lowering its growth target does not help.\"
In equity markets, Kaz Minerals tumbled as it said continued copper sales growth partially offset lower commodity prices in the first half of 2019 as revenues and core earnings both fell.
Ex-dividends weighed, with RBS, Anglo American, Ashtead, Aviva, Evraz, Ferrexpo, HSBC, Ibstock, Legal & General, Mondi, Pearson, Phoenix Group, Provident Financial, Royal Dutch Shell, Segro and TI Fluids all in the frame.
On the upside, GVC Holdings was a high riser as it lifted its guidance for the full year and reported an increase in first-half revenues
Shares of online trading platform Plus500 surged after the company\'s chief executive officer and other directors picked up some stock.
Broker Liberum said: \"That directors should buy stock has been a key piece of investor feedback and is therefore notably responsive, especially taken with the recent buyback and new distribution policy. This also tells you that the company is not sitting on inside information.\"
FTSE 250 transport operator FirstGroup was on the rise as it appointed the former chief executive of Arriva, David Martin, as it new chairman with immediate effect.
In broker note action, RBS was cut to \'hold\' at HSBC, while Glencore and Hunting were downgraded to \'underweight\' \'neutral\', respectively, at JPMorgan. Capital & Regional was cut to \'hold\' at Berenberg.
Market Movers
FTSE 100 (UKX) 7,032.14 -1.62%
FTSE 250 (MCX) 18,584.32 -0.78%
techMARK (TASX) 3,757.08 -1.17%
FTSE 100 - Risers
United Utilities Group (UU.) 781.80p 0.98%
British American Tobacco (BATS) 3,038.00p 0.98%
Imperial Brands (IMB) 2,106.51p 0.84%
National Grid (NG.) 848.50p 0.68%
Centrica (CNA) 65.67p 0.26%
Associated British Foods (ABF) 2,254.00p -0.09%
NMC Health (NMC) 1,799.50p -0.11%
Relx plc (REL) 1,910.00p -0.13%
Direct Line Insurance Group (DLG) 295.80p -0.14%
Ferguson (FERG) 5,988.00p -0.20%
FTSE 100 - Fallers
Royal Bank of Scotland Group (RBS) 179.15p -9.73%
Evraz (EVR) 486.50p -7.76%
Anglo American (AAL) 1,674.40p -6.41%
Phoenix Group Holdings (PHNX) 641.50p -5.48%
Glencore (GLEN) 218.85p -5.05%
Antofagasta (ANTO) 786.00p -4.12%
Smith (DS) (SMDS) 307.80p -4.05%
Royal Dutch Shell \'B\' (RDSB) 2,243.00p -3.84%
Standard Life Aberdeen (SLA) 240.40p -3.76%
Melrose Industries (MRO) 156.87p -3.73%
FTSE 250 - Risers
Plus500 Ltd (DI) (PLUS) 716.00p 8.39%
FirstGroup (FGP) 120.30p 4.97%
GVC Holdings (GVC) 560.58p 2.52%
Avast (AVST) 364.80p 2.47%
Capital & Counties Properties (CAPC) 190.80p 2.03%
Safestore Holdings (SAFE) 598.50p 1.96%
Sophos Group (SOPH) 389.90p 1.83%
Hochschild Mining (HOC) 216.80p 1.69%
Sanne Group (SNN) 548.00p 1.67%
Riverstone Energy Limited (RSE) 724.90p 1.67%
FTSE 250 - Fallers
Kaz Minerals (KAZ) 438.52p -11.36%
Aston Martin Lagonda Global Holdings (AML) 431.40p -7.84%
Ferrexpo (FXPO) 213.30p -7.34%
Funding Circle Holdings (FCH) 112.00p -6.35%
TI Fluid Systems (TIFS) 153.00p -4.85%
Ibstock (IBST) 208.20p -4.84%
Renishaw (RSW) 3,502.00p -4.84%
Oxford Instruments (OXIG) 1,248.59p -4.83%
Mediclinic International (MDC) 295.00p -4.68%
CYBG (CYBG) 131.65p -4.12%
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