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London open: Stocks in the red as Trump tax plan disappoints
London stocks edged lower in early trade on Thursday as US President Donald Trump’s tax announcement failed to get investors’ pulses racing.
At 0840 BST, the FTSE 100 was down 0.6% to 7,247.11.
As widely expected, the announcement included plans to cut corporate tax to 15% from 35% and reduce the top individual tax rate to 35% from 39.6%.
Spreadex analyst Connor Campbell said: “Somewhat inevitably Donald Trump’s tax plan didn’t contain all that investors were looking for last night, leading the markets to pull back from their recent highs after the bell.
“Alongside cutting corporate tax rates to 15%, Treasury Secretary Steven Mnuchin and National Economic Council director Gary Cohn revealed that the USA’s 7 tax brackets would be reduced to 3, while the alternative minimum tax would be slashed and nearly all of the current tax deductions eliminated.
“Yet when pressed for more information, specifically if these reforms would be revenue neutral, the pair came up short, producing some Trumped up rhetoric about how it would pay for itself through ‘growth, reduction of deductions and closing loopholes’ and that the administration had a ‘once in-a-generation opportunity to do something really big’.”
In corporate news, AstraZeneca was on the back foot after it posted a drop in first-quarter sales, while WPP also declined after it said sales slowed in the first quarter due to major account losses.
Weir Group fell despite saying full-year profits are likely to be in line with current market expectations, as its stock went ex-dividend.
Engineer Meggitt was weaker as it said lower US demand for defence products had contributed to a small drop in first-quarter organic revenue growth.
Aerospace and defence group Cobham slipped despite saying that first-quarter trading was in line with the board’s expectations, following a string of profit warnings.
Schroders lost ground even as the fund manager reported a 5% jump in assets under management and administration for the first quarter.
Howden Joinery was in the red after the company said first half profits would be hit by currency movements and extra operating costs as it reported a 3.9% rise in UK revenues for the 16 weeks to April 15.
Lloyds Banking Group bucked the trend, rallying after it reported that profits doubled in the first three months of the year.
Healthcare provider Mediclinic International was a high riser on news that Adu Dhabi has waived 20% of the co-payment for health insurance card holders.
Housebuilder Persimmon was in the black after it said current forward sales revenue, including legal completions taken to date, was up 11% to £2. 56 bn, adding that it was confident on future prospects.
Meanwhile, Taylor Wimpey nudged a touch higher as it set aside £130m for a leasehold scandal.
FTSE 250 commercial laundry group Berendsen rose as it said first-quarter trading was in line with management expectations, and announced the retirement of its chief financial officer.
Prudential, St James’s Place and Aviva were initiated at ‘outperform’ at Credit Suisse, while Legal & General was rated a new ‘underperform’.
ITV, Rolls-Royce, Antofagasta, Relx, Fresnillo, Informa, Elementis, William Hill, National Express, Senior and UBM all retreated as their stock went ex-dividend.
