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London open: Stocks drop as Tui, ex-divs weigh; trade woes still in focus
London stocks fell in early trade on Thursday, dragged lower by ex-dividends and a sharp drop for travel group Tui as trade war woes continued to weigh on investors’ minds.
At 0850 BST, the FTSE 100 was down 0.6% to 7,730.20, while the pound was off 0.2% against the dollar at 1.2855 and flat versus the euro at 1.1096.
“Trade concerns remain to the fore, and not just between the US and China, with Washington set to slap more sanctions on Russia,” said analyst Mike van Dulken at Accendo Markets. “Ahead of mid-term elections, this may help Trump look tougher vis-a-vis the Kremlin, distancing himself from Putin and, he will hope, allegations of collusion.”
Data released earlier in China showed that consumer prices rose by 2.1% in July versus expectations for 1.9% and June’s 1.9%, while the PPI for last month was 4.6% versus expectations of 4.4% and 4.7% in June.
CMC Markets‘ David Madden said the reports suggest that demand in China is still firm, with no major impact yet from US tariffs, coming the day after Chinese exports and imports comfortably analysts’ forecasts to suggest the Chinese economy “is still holding up well”.
In corporate news, Anglo-German travel group Tui was under the cosh as it posted a drop in third-quarter underlying earnings but stuck to its guidance of at least 10% growth in underlying EBITA for the year. Peer Thomas Cook also lost ground.
Randgold Resources retreated after reporting a drop in second-quarter profit, while Coca-Cola HBC lost some fizz despite saying that first-half pre-tax profit was up 14%.
Card Factory tumbled as the greeting cards retailer warned that full-year underlying earnings to be between £89m and £91m, down from last year’s £94m on the back of uncertainty about Brexit and “extreme” weather conditions.
Security firm G4S was in the red as it reported a 3.2% decline in first-half profit before interest, tax and amortisation, while BTG was under pressure after the US Food and Drug Administration confirmed its Elevair treatment would not be approved.
Savills was on the back foot as the estate agency’s first-half profit fell amid challenging market conditions.
On the upside, Legal & General pushed higher as it produced a first-half operating profit that was ahead of City forecasts.
Cineworld racked up blockbuster gains after posting a surge in first-half profit, while Evraz rose as net profits increased in the first half of the year for the Russian steelmaker.
Brick maker Ibstock advanced after its interim results, while AA gained ground after saying it was on track to deliver its targets for 2019 despite extreme weather conditions.
On the broker note front, BBA Aviation was lifted to ‘buy’ at Liberum, while Capita and UDG Healthcare were upgraded to ‘buy’ at Jefferies. Virgin Money was cut to ‘hold’ at Investec.
AstraZeneca, BT Group, Barclays, Diageo, Direct Line, Fresnillo, GlaxoSmithKline, Hiscox, IMI, Informa, Man Group, Jupiter Fund Management, Royal Dutch Shell and Virgin Money were among the companies whose stock went ex-dividend, taking 39 points off the FTSE 100 in total and 17.5 off the FTSE 250.
