14th Jun 2019 12:01
(Alliance News) - Stocks in London were lower at midday on Friday as underwhelming Chinese economic figures and worries of a potential military confrontation in the Middle East spooked investors.US Secretary of State, Mike Pompeo, accused Iran of orchestrating a series of attacks on tankers in the Strait of Hormuz, though Iran denied any involvement."These unprovoked attacks present a clear threat to international security, a blatant assault on the freedom of navigation, and an unacceptable campaign of escalating tension by Iran," Pompeo told reporters.The US military has released a video showing what it claimed was Iran's Revolutionary Guard removing an unexploded limpet mine from one of the oil tankers targeted near the key waterway.Furthermore, the International Energy Agency cut its outlook for oil demand growth in 2019, saying economic sentiment is weakening and the consequences for oil demand are becoming apparent. The IEA revised down its 2019 demand growth estimate by 100,000 barrels to 1.2 million barrels per day, but said it would climb to 1.4 million bpd for 2020.Brent oil was quoted at USD61.20 a barrel at midday, down from USD61.80 late Thursday. The North Sea benchmark is on track for a weekly loss, down 3.3%. "Oil can be a good proxy for the health of the global economy, and if demand is tipped to fall, it's viewed that worldwide demand will dwindle, and that is hitting equities," said CMC Markets analyst David Madden. In addition, disappointing data from the world's second largest economy weighed on sentiment.China's industrial output growth slowed to a more than 17-year low of 5% in May amid an escalating trade war with the US, a government report showed."Chinese industrial data played a part in the FTSE's decline as the UK is the second largest European exporter into the country. Industrial production in China is now at a 17-year low, reflecting weaker domestic demand but also the escalating trade tensions which became worse during May, the month of the latest data reading," said City Index analyst Fiona Cincotta. The FTSE 100 was down 50.40 points, or 0.7%, at 7,317.38. The FTSE 250 was down 68.49 points, or 0.4%, at 19,103.88 while the AIM All-Share was down 0.2% at 937.04.The Cboe UK 100 index was down 0.3% at 12,454.21. The Cboe UK 250 was down 0.2% at 17,170.20 with the Cboe UK Small Companies up 0.1% at 11,853.45.In Paris the CAC 40 was down 0.2%, while the DAX 30 in Frankfurt was down 0.6%. On the London Stock Exchange, Mexican gold miner Fresnillo was the best blue chip performer, up 2.5% tracking spot gold prices higher, as demand for safe haven assets increased. Midcap peers Centamin and Hocshchild Mining were up 3.5% and 3.0%, respectively. Gold was quoted at USD1,354.00 an ounce at midday, up from USD1,336.70 late Thursday. The precious metal hit an intraday high of USD1,357.92 in early trade - its highest level since April 2018. "Gold has blast past the level of USD1,350 and it is likely that traders are going to target the next resistance of USD1,370. The fact is that there are large number of bearish bets on the dollar index, and it is likely that the Federal Reserve would make a U-turn with respect to their monetary policy [next week]," said ThinkMarkets analyst Naeem Aslam.In the FTSE 250, Kier Group shares plunged 18% after the Times newspaper reported the construction firm is preparing to sell its housebuilding business in a deal that could be worth up to GBP150 million. The move to prop up its finances comes as two trade credit insurers withdrew cover insuring Kier's suppliers from any potential losses, the Times reported. Trade credit insurers pay a company's suppliers when it stops paying bills. The stock is down 60% so far this year and Kier will be demoted from the midcap index when the FTSE Russell index review changes come into effect later this month. "Last week, the stock was clobbered after the struggling group announced a profit warning, and today the talk of the asset sale confirms the weakened state of the firm. The company gets tarred with the same brush as Carillion and Interserve as it is in the same sector, but in reality, Kier is in stronger position that some investors fear," CMC Markets analyst Madden noted. Meanwhile, UK life insurance consolidator ReAssure Group confirmed it is looking to list on the London Stock Exchange during July. This comes a week after ReAssure announced the initial plan to float. The initial public offering will consist of insurance giant Swiss Re selling shares in ReAssure. Swiss Re first announced a possible float of ReAssure in the summer of 2018, and the move will see its stake fall below 50% from 75% currently. ReAssure has 4.3 million policies in the UK with GBP68.7 billion in assets under management. It will be targeting the FTSE indices. The pound was quoted at USD1.2650 at midday, lower than USD1.2683 at the London equities close Thursday, as frontrunner Boris Johnson gained a commanding lead into the next round of the Conservative party leadership race. Sterling is down 0.7% so far this week. "Markets are growing increasingly fearful over the direction of travel for Brexit, with the prospect of Boris Johnson leading us into the critical phase of negotiations driving sterling back into the lows of the week," said IG Group's Josh Mahony. On Thursday, the MP for Uxbridge & South Ruislip secured 114 votes from his Tory colleagues in the opening round of the leadership battle - 71 votes clear of his closest rival Foreign Secretary Jeremy Hunt. Candidates will need to obtain 33 votes in the second ballot on Tuesday in order to advance in the contest.The euro stood at USD1.1270 at midday, flat against USD1.1275 at the European equities close Thursday. In economic news, German wholesale price growth slowed in May, the Federal Statistical Office said.Separately, official statistics also showed consumer inflation in both France and Italy eased in May.In Germany, wholesale prices were up 1.6% in May on a year before, slower than 2.1% in April. In March, prices had risen 1.8%. On a monthly basis, wholesale selling prices were up 0.3%.Among components, food, beverage and tobacco prices were up 2.1% year-on-year in Germany while live animals rose 11% and flower & plants grew 2.1%.Meanwhile, in France, official data showed consumer prices rose by 0.1% on a monthly basis and 0.9% year-on-year. This compares to a monthly rise of 0.3% in April and annual growth of 1.3%.France's harmonised index of consumer prices gained 1.1% on an annual basis. On this basis, prices rose 0.1% on the previous month.Stocks in New York were set for a lower open with the DJIA called down 0.3%, the S&P 500 index down 0.4% and the Nasdaq Composite down 0.9%.London Midday is available to subscribers as an email newsletter. Contact [email protected]
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