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London open: Stocks fall amid trade, growth concerns
London stocks fell in early trade on Thursday, with escalating trade tensions and fears about a global slowdown continuing to dent sentiment as investors eyed the release of UK services data.
At 0840 BST, the FTSE 100 was down 0.3% at 7,101.72, in the red but nowhere near the levels seen in the previous session, while the pound was down 0.1% against the dollar at 1.2292 and flat versus the euro at 1.1223.
Neil Wilson, chief market analyst at Markets.com, said “ugly” was the only way to describe the situation in financial markets at the moment. “Not quite free-fall or panic, but very ugly,” he said.
“Investor confidence has crumbled off the back off a couple of weak US data prints, whilst impeachment talk and geopolitical troubles from Hong Kong to North Korea are not helping. European investors also battling the real prospect of a no-deal Brexit and worries about a new tariff war with the US after the WTO back Washington over the Airbus case.
“On the latter, the White House has approved a range of punitive tariffs of between 10% and 25% on everything from malt whisky to aircraft. The UK, France and Germany have been targeted (mutters something about the special relationship). But wait, if EU companies see their US market hit, does that make the UK export even more important…?”
Wilson said the EU may now retaliate, risking a tit-for-tat tariff war that will serve no one.
“Markets have decided that manufacturing is in recession – further escalation of tariffs won’t help,” he added.
On home shores, investors were eyeing the release of the services PMI for September at 0930 BST, which is expected to slip to 50.3 from 50.6.
In equity markets, ex-dividends were a drag, with DS Smith, WPP, Taylor Wimpey, British American Tobacco, British Land, Hays and Hastings all in the red.
3i Infrastructure was weaker as it announced a placing of up to 81m shares to pay down debt, with the price to be determined via a bookbuild.
Centamin fell after announcing the retirement of chief executive officer Andrew Pardey and Stagecoach retreated even as it backed its full-year expectations.
In small caps, Ted Baker shares slumped as the fashion retailer said it swung to an interim loss, slashed its dividend and warned over its full-year results amid “very challenging” trading conditions. In the 28 weeks to 10 August, the company swung to a pre-tax loss of £23m from a profit of £24.5m in the first-half of last year, with revenue down 0.7% at £303.8m.
On the upside, Imperial Brands nudged up as the tobacco giant announced that chief executive Alison Cooper will step down from the role after nine years in the job and 20 at the company, once a suitable successor has been found.
Assura gained as it struck an upbeat note on its full-year outlook, while London Stock Exchange shares rose as it was upgraded to ‘reduce’ at Commerzbank.
