27th Aug 2019 11:57
(Alliance News) - London stocks started an abbreviated trading week on a broadly downbeat note, traders overlooking the prospect of further US-China trade talks to instead focus on the ailing German economy.
The FTSE 100 was down 21.93 points, or 0.3%, at 7,073.05 Tuesday midday. The FTSE 250 up 23.21 points, or 0.1%, at 19,259.34, and the AIM All-Share was flat at 871.82.
The Cboe UK 100 index was down 0.5% at 11,992.23. The Cboe UK 250 was down 0.1% at 17,156.40 and the Cboe UK Small Companies was up 0.3% at 10,929.00.
"The FTSE ignored Wall Street's higher finish overnight and tumbled lower in early trade at the start of the bank holiday shortened week. Whilst Wall Street and Asia rallied on the trade war hope roller coaster, European stocks were broadly lower amid growing recession fears," said Fiona Cincotta, senior market analyst at City Index.
These economic worries were reinforced Tuesday when Destatis confirmed Germany's gross domestic product in the second quarter of 2019 shrank 0.1% on the first quarter. This is in contrast to the 0.4% quarter-on-quarter growth reported in the first quarter.
On a year prior, there was no growth at all in the German economy in the second quarter. This is in contrast to the 0.8% year-on-year growth recorded in the first quarter of 2019.
In early afternoon trade, the CAC 40 index in Paris was flat and the DAX 30 in Frankfurt up 0.2%.
The FTSE 100 was faring worse than counterparts in mainland Europe due to the resilient pound, Cincotta observed.
Sterling was quoted at USD1.2270 at midday, broadly unchanged from USD1.2274 late Friday and having risen off its near-USD1.2200 lows overnight.
"Sterling is advancing across the board as the UK opposition leaders meet today to plot to prevent a no deal Brexit," said Cincotta. "Whilst Bojo is sticking to his do or die Brexit mantra, he has also expressed a little more optimism that a new deal can still be achieved between the EU and the UK."
Jeremy Corbyn has insisted Labour will "do everything necessary" to halt a no-deal Brexit as he meets other senior members of Parliament to try to find a way to challenge UK Prime Minister Boris Johnson over EU withdrawal.
Before discussions on Tuesday with leading Commons figures opposed to breaking EU ties without an agreement in place, Corbyn insisted the country was heading for a crisis under the prime minister.
Opposition leaders attending the discussion with Corbyn on parliamentary tactics include Liberal Democrat leader Jo Swinson, SNP Westminster leader Ian Blackford, the Independent Group for Change's Anna Soubry, and Plaid Cymru Westminster head Liz Saville-Roberts.
Meanwhile, the Daily Telegraph said that Johnson is sending his chief Brexit adviser David Frost to Brussels this week to hold discussions with EU officials.
The report came after Johnson said at the G7 summit in France that he was "marginally" more optimistic about securing a deal, but insisted that other EU states needed to shift ground.
Among stocks weighing on the FTSE 100, plumbing firm Ferguson was down 2.6% after Bank of America cut the stock to Underperform from Neutral.
In addition, the firm pound was weighing on UK stocks which earn in dollars, explained Russ Mould at AJ Bell, leading to share price weakness for Ferguson and New York dual-listed cruise operator Carnival, down 1.7% at midday.
In a quiet day for company news, Bunzl shares were flat after the distribution firm reported a slight rise in interim profit, despite weakening economic conditions.
Pretax profit climbed 1.6% to GBP200.5 million, with the adjusted figure was up 2.7% to GBP264.2 million. Bunzl's revenue rose 4.3% to GBP4.53 million.
"Against the background of slowing macroeconomic and market conditions across the countries and sectors in which we operate, Bunzl has produced a resilient operating performance," said Chief Executive Frank van Zanten.
North America, which makes up over half of Bunzl's business, grew revenue by 0.7% at constant exchange rates, to GBP2.63 billion, with adjusted operating profit up 1.4%. Growth mainly came from the grocery sector, said Bunzl. UK & Ireland revenue, however, fell 3.7% to GBP602.5 million, with adjusted operating profit down 10%, mainly due to a business being sold.
Elsewhere on the Main Market, Carpetright was up 9.3% after major shareholder Meditor European Master Fund agreed to purchase the lending facilities of the carpet retailer.
Meditor - which held a 30% stake in Carpetright as of late May - agreed to buy the GBP40.7 million revolving credit facility from the current providers, NatWest and AIB, whilst also retaining the current terms of the facility.
In addition, Meditor has agreed to provide funding to NatWest and Ulster Bank for the current GBP6.5 million overdraft facilities currently provided by the two lenders.
Carpetright emphasised that the participation of Meditor in the facilities held by the firm were at an "arms-length" to the company. Consequently, Meditor did not seek any assurances from Carpetright and did not propose any board representation or structural changes at the company.
"Meditor has confirmed it now intends to engage with the company with a view to providing a more stable and longer-term funding platform," Carpetright said.
Daily Mail & General Trust shares rose 2.0% after the newspaper publisher said it will sell its energy industry data unit to US firm Verisk Analytics for USD364.0 million. The sale of Genscape will result in the Daily Mail newspaper owner reducing the size of its business portfolio to five sectors, compared with ten in 2016.
In the US, Wall Street is on course for a broadly flat open, with both the Dow Jones and S&P 500 seen unchanged and the Nasdaq set to rise 0.1%.
To come in the US economic calendar on Tuesday, the Redbook index is at 1355 BST following by the housing price index at 1400 BST and consumer confidence at 1500 BST.
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