London midday: Stocks turn higher as China moves to stabilise currency
London stocks had erased earlier losses to trade a touch higher by midday on Tuesday as investors breathed a sigh of relief after China moved to stabilise its currency.
The FTSE 100 was 0.1% firmer at 7,187.68, having opened in the red and suffered heavy losses on Monday on worries about escalating Sino-US trade relations.
Meanwhile, the pound was up 0.5% against the dollar and the euro at 1.2201 and 1.0892, respectively.
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.
BRC chief executive Helen Dickinson said: "While retailers will welcome the return to growth, it has nonetheless been a punishing few months for retailers. The combination of slow real wage growth and Brexit uncertainty has left consumer spending languishing with the 12-month average total sales falling to a new low of just 0.5%.
"Whereas last year’s glorious sunshine and World Cup Finals led to strong consumer demand over the summer, this year has been weak in comparison, with both June and July showing the lowest sales on record for their respective months. And it is not just high streets that are suffering, with non-food online growth also 1 percentage point below the 12-month average."
Dickinson said the challenging retail environment is taking its toll on many high street brands that are having to deal with rising import costs, public policy costs, and ever higher business rates.
In equity markets, Rotork was 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.
On the downside, Rolls-Royce was in the red after it posted a narrowed first-half pre-tax loss and backed its full-year outlook but said group free cash outflow deteriorated to £429m from £72m, due in part to higher Trent 1000 in-service cash costs.
InterContinental Hotels saw its shares drop after it posted a rise in half-year profit and hiked its dividend, but said revenue per available room in the US and China softened.
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.
Market Movers
FTSE 100 (UKX) 7,229.34 0.08%
FTSE 250 (MCX) 19,012.42 0.75%
techMARK (TASX) 3,780.41 0.38%
FTSE 100 - Risers
ITV (ITV) 107.95p 2.52%
JD Sports Fashion (JD.) 595.00p 2.23%
Prudential (PRU) 1,545.50p 2.22%
International Consolidated Airlines Group SA (CDI) (IAG) 453.74p 2.08%
TUI AG Reg Shs (DI) (TUI) 814.04p 2.06%
Persimmon (PSN) 1,936.50p 1.60%
Halma (HLMA) 1,908.50p 1.60%
Spirax-Sarco Engineering (SPX) 8,635.00p 1.59%
Smith (DS) (SMDS) 325.45p 1.42%
Lloyds Banking Group (LLOY) 50.88p 1.39%
FTSE 100 - Fallers
Rolls-Royce Holdings (RR.) 797.60p -2.13%
Smith & Nephew (SN.) 1,814.50p -1.87%
Centrica (CNA) 69.98p -1.74%
Royal Dutch Shell 'B' (RDSB) 2,329.50p -1.38%
Royal Dutch Shell 'A' (RDSA) 2,330.50p -1.33%
NMC Health (NMC) 2,373.00p -1.21%
Smurfit Kappa Group (SKG) 2,412.00p -1.07%
InterContinental Hotels Group (IHG) 5,239.00p -0.95%
BP (BP.) 511.40p -0.81%
Intertek Group (ITRK) 5,390.00p -0.81%
FTSE 250 - Risers
Rotork (ROR) 308.80p 8.01%
Meggitt (MGGT) 601.60p 5.32%
Plus500 Ltd (DI) (PLUS) 596.20p 4.85%
Capita (CPI) 141.95p 4.15%
Spirent Communications (SPT) 164.60p 3.39%
Polypipe Group (PLP) 396.00p 2.96%
Wood Group (John) (WG.) 486.90p 2.85%
Metro Bank (MTRO) 324.36p 2.84%
Premier Oil (PMO) 72.77p 2.84%
Homeserve (HSV) 1,137.00p 2.62%
FTSE 250 - Fallers
Sirius Minerals (SXX) 10.97p -24.90%
Computacenter (CCC) 1,411.00p -2.69%
Amigo Holdings (AMGO) 146.00p -2.67%
Intu Properties (INTU) 39.11p -2.25%
Vivo Energy (VVO) 116.60p -1.85%
Acacia Mining (ACA) 228.80p -1.80%
Ferrexpo (FXPO) 229.95p -1.73%
Fisher (James) & Sons (FSJ) 1,998.00p -1.58%
Serco Group (SRP) 140.80p -1.54%
Restaurant Group (RTN) 144.12p -1.42%