London midday: Stocks extend losses as miners slump, pound gains
By Michele Maatouk
Date: Monday 11 Nov 2019
(Sharecast News) - London stocks had extended losses by midday on Monday amid worries about Sino-US trade relations and escalating protests in Hong Kong, while the latest GDP reading showed the UK economy avoided a recession despite the slowest annual growth in nearly a decade.
The FTSE 100 was down 1.3% at 7,263.01, falling further than its European counterparts as the pound rose 0.4% against the dollar to 1.2824 and 0.3% versus the euro at 1.1631. A stronger pound tends to tend the top-flight index as around 70% of its constituents derive most of their earnings from overseas.
Data released earlier by the Office for National Statistics showed the UK economy avoided falling into a recession in the third quarter.
Gross domestic product grew 0.3%, returning to growth following a 0.2% contraction in the second quarter but coming in a little below expectations of 0.4% growth. Two quarters of contraction in a row would have indicated a recession.
On an annual basis, GDP was up 1% in the three months from July to September, down from 1.3% growth in the previous quarter and missing expectations for 1.1% growth. It marked the weakest rate of quarter-on-year growth since the first quarter of 2010.
An ONS spokesperson said: "GDP grew steadily in the third quarter, mainly thanks to a strong July. Services again led the way with construction also performing well. Manufacturing failed to grow as falls in most industries were offset by car production bouncing back following April shutdowns.
"Looking at the picture over the last year, growth slowed to its lowest rate in almost a decade.
"The underlying trade deficit narrowed, mainly due to growing exports of both goods and services."
Manufacturing production and industrial production both contracted month-on-month. Manufacturing output was down 0.4%, missing expectations for a 0.3% decline, while industrial production fell 0.3% versus forecasts for a 0.2% drop.
David Cheetham, chief market analyst at XTB, said: "While the positive GDP reading means that the UK has managed to stave off a recession for another year there is little doubt that the economy is spluttering, with political uncertainty and a slowdown in global activity clearly taking their toll."
More broadly, escalating violence in Hong Kong and worries about a potential trade deal between the US and China undermined sentiment.
Neil Wilson, chief market analyst at Markets.com, said: "We are starting the week in risk-off mode: Fiery protests in Hong Kong and the US-China trade war are conspiring to dampen the mood in markets on Monday. As usual expect the risk switch to be flicked to 'on' pretty quickly with the standard trade war pump in due course. And in terms of Hong Kong, we wonder how long term this de-risking kneejerk will last."
Investors were keeping an eye on any developments on the China-US trade front after US President Donald Trump said over the weekend that talks between the two were moving more slowly than he had hoped and that China was keener to do a deal than the US.
"It comes after last week's pushback over claims the US is prepared to roll back existing tariffs as part of any deal. Despite this, it's clear the economic reality is not lost on the White House," said Wilson.
In equity markets, miners were the biggest drag, with Antofagasta, Glencore, Anglo American and BHP all lower, while steel maker Evraz suffered the heaviest losses on the FTSE 100.
BHP was in the red even as it outlined a confident outlook for its petroleum business to deliver earnings margins of more than 60% and annual increased production by up to 3% through the 2020s.
Virgin Money was knocked lower by a downgrade at Investec and Rolls-Royce was hit by a downgrade at Societe Generale.
On the upside, shares of Greggs surged after the bakery chain lifted its profit expectations for 2019 as it reported a 12.4% increase in total sales for the six weeks to 9 November.
Sirius Minerals rallied after it outlined a two-stage development plan for its flagship project in Yorkshire.
Kainos Group gained after reporting a rise in first-half profit and revenue thanks to strong momentum in its digital services business and announcing two new acquisitions, while luxury car maker Aston Martin Lagonda was boosted by an upgrade at HSBC.
Market Movers
FTSE 100 (UKX) 7,263.01 -1.31%
FTSE 250 (MCX) 20,226.88 -0.64%
techMARK (TASX) 3,954.23 -0.73%
FTSE 100 - Risers
BT Group (BT.A) 188.06p 0.49%
JD Sports Fashion (JD.) 738.80p 0.49%
Informa (INF) 803.40p 0.43%
Berkeley Group Holdings (The) (BKG) 4,464.00p 0.31%
ITV (ITV) 134.35p 0.07%
Persimmon (PSN) 2,359.40p 0.06%
Diageo (DGE) 3,088.00p -0.06%
AstraZeneca (AZN) 7,265.00p -0.16%
Aveva Group (AVV) 4,240.00p -0.19%
Ashtead Group (AHT) 2,354.00p -0.21%
FTSE 100 - Fallers
Evraz (EVR) 354.10p -4.50%
NMC Health (NMC) 2,232.00p -3.71%
Glencore (GLEN) 245.05p -3.68%
Antofagasta (ANTO) 900.40p -3.47%
Burberry Group (BRBY) 1,982.50p -3.01%
St James's Place (STJ) 1,033.50p -3.00%
Rolls-Royce Holdings (RR.) 753.60p -2.99%
Mondi (MNDI) 1,658.00p -2.98%
Prudential (PRU) 1,327.25p -2.98%
Smith (DS) (SMDS) 372.10p -2.95%
FTSE 250 - Risers
Greggs (GRG) 2,036.00p 14.96%
Sirius Minerals (SXX) 3.60p 12.64%
Aston Martin Lagonda Global Holdings (AML) 486.50p 4.18%
Kainos Group (KNOS) 532.00p 3.91%
Mitchells & Butlers (MAB) 441.00p 3.52%
Dunelm Group (DNLM) 804.00p 2.10%
Games Workshop Group (GAW) 5,480.00p 1.95%
Future (FUTR) 1,420.00p 1.87%
Trainline (TRN) 440.50p 1.73%
PureTech Health (PRTC) 249.00p 1.63%
FTSE 250 - Fallers
Beazley (BEZ) 539.50p -6.50%
Virgin Money UK (VMUK) 138.55p -4.65%
Clarkson (CKN) 2,675.00p -3.95%
Schroder Oriental Income Fund Ltd. (SOI) 255.00p -3.04%
Wood Group (John) (WG.) 367.10p -2.88%
Lancashire Holdings Limited (LRE) 696.00p -2.86%
Marks & Spencer Group (MKS) 181.00p -2.69%
BBA Aviation (BBA) 298.40p -2.48%
G4S (GFS) 200.90p -2.48%
Renishaw (RSW) 4,084.00p -2.39%
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