London open: Stocks drop amid trade war worries; retail sales in focus
London stocks fell in early trade on Tuesday following weakness in Asia and the US, amid escalating trade tensions between the US and China.
At 0850 BST, the FTSE 100 was down 0.5% at 7,187.68, while the pound was up 0.3% against the dollar at 1.2173 and 0.2% firmer versus the euro at 1.0864.
Stocks on Wall Street slumped overnight after US President Trump accused China of currency manipulation.
Neil Wilson, chief market analyst at Markets.com, said: "In labelling China a currency manipulator, the US has simply made it clear that there is no goodwill in discussions and no desire for a swift resolution to trade talks. Given the US has already imposed tariffs, the move has little real meaning anyway, but it provides the ammo to press harder on tariffs. As I've argued for some months, there is no chance of a deal until 2020 and the US presidential election.
"But the PBOC has eased concerns a touch by setting the reference rate a little stronger than expected. China doesn’t want the yuan to depreciate too quickly and too deep as it risks creating fresh problems like capital outflows."
On home turf, investors were mulling over the latest figures from the British Retail Consortium and KPMG, which showed that retail sales suffered their worst July on record, with total sales growth of 0.3%, down from 1.6% growth last year. This was the lowest level recorded for July since records began in 1995.
Meanwhile, like-for-like sales were up 0.1%, down from 0.5% the previous year.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The meagre recovery in the BRC’s measure of year-over-year growth in like-for-like sales, to below its 12-month average of 0.6%, signals that July was a relatively poor month for retailers. Admittedly, sales in July 2018 were boosted both by a prolonged spell of hot weather and the men’s football World Cup; the official measure of retail sales volumes rose by 0.8% month-to-month.
"Nonetheless, the BRC's data still are consistent with a small month-to-month drop in retail sales volumes last month, especially given that growth in the official data exceeded the rate implied by the BRC’s data in June, pointing to scope for a correction."
In equity markets, Rolls-Royce was in the red even as it posted a narrowed first-half pre-tax loss and backed its full-year outlook.
InterContinental Hotels also saw its shares drop after the hotel operator posted a rise in first-half revenues and pre-tax profit but cautioned that protests in Hong Kong had dented demand from Greater China.
Shares of Sirius Minerals tumbled after the company said it had decided to suspend the proposed offer by its subsidiary of $500m of senior secures notes due 2027 due to "current market conditions". The bond sale needs to be completed in order for Sirius to secure a credit line from JPMorgan and finish the construction of its Woodsmith mine in North Yorkshire.
On the upside, Domino's Pizza gained ground as it announced the departure of its chief executive and chairman, and reported a drop in interim profit but a jump in revenue.
Rotork was also on the front foot after saying it had made good progress, despite order intake and revenue dropping in the first half.
Meggitt pushed higher as it delivered better-than-expected half-year top-line growth on the back of "robust" growth in both civil original equipment and defence.
Market Movers
FTSE 100 (UKX) 7,187.68 -0.50%
FTSE 250 (MCX) 18,879.23 0.04%
techMARK (TASX) 3,760.97 -0.14%
FTSE 100 - Risers
TUI AG Reg Shs (DI) (TUI) 803.20p 0.70%
Anglo American (AAL) 1,831.60p 0.64%
Evraz (EVR) 610.80p 0.59%
Spirax-Sarco Engineering (SPX) 8,550.00p 0.59%
Antofagasta (ANTO) 824.00p 0.59%
Johnson Matthey (JMAT) 2,947.00p 0.58%
Prudential (PRU) 1,520.50p 0.56%
HSBC Holdings (HSBA) 630.30p 0.56%
Fresnillo (FRES) 642.20p 0.34%
Smith (DS) (SMDS) 321.90p 0.31%
FTSE 100 - Fallers
Centrica (CNA) 69.80p -1.99%
NMC Health (NMC) 2,357.00p -1.87%
Rolls-Royce Holdings (RR.) 803.00p -1.47%
Associated British Foods (ABF) 2,360.00p -1.38%
Smith & Nephew (SN.) 1,824.00p -1.35%
National Grid (NG.) 831.10p -1.29%
InterContinental Hotels Group (IHG) 5,223.00p -1.25%
Smurfit Kappa Group (SKG) 2,408.00p -1.23%
Reckitt Benckiser Group (RB.) 5,900.00p -1.21%
Imperial Brands (IMB) 2,046.00p -1.11%
FTSE 250 - Risers
Domino's Pizza Group (DOM) 253.38p 8.38%
Rotork (ROR) 303.80p 6.26%
Spirent Communications (SPT) 166.00p 4.27%
Meggitt (MGGT) 595.00p 4.17%
Synthomer (SYNT) 288.60p 3.15%
Kainos Group (KNOS) 524.00p 1.95%
Future (FUTR) 1,075.43p 1.84%
Hammerson (HMSO) 210.10p 1.60%
Marshalls (MSLH) 617.55p 1.57%
Capita (CPI) 138.35p 1.50%
FTSE 250 - Fallers
Sirius Minerals (SXX) 9.50p -34.93%
Amigo Holdings (AMGO) 145.80p -2.80%
Computacenter (CCC) 1,422.00p -1.93%
IP Group (IPO) 60.54p -1.88%
Cineworld Group (CINE) 234.80p -1.55%
Intu Properties (INTU) 39.40p -1.52%
Bank of Georgia Group (BGEO) 1,310.00p -1.50%
Syncona Limited NPV (SYNC) 233.00p -1.48%
Spectris (SXS) 2,325.00p -1.36%
Funding Circle Holdings (FCH) 103.40p -1.34%