ADVFN Morning London Market Report: Wednesday 17 April 2019

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London open: Stocks slip as investors mull China data; UK inflation in focus


London stocks were a little lower in early trade on Wednesday despite the release of better-than-expected Chinese growth figures, as investors looked ahead to UK inflation data.

At 0830 BST, the FTSE 100 was off 0.2% at 7,455.54, while the pound was up 0.1% against the dollar at 1.3055 and 0.2% lower versus the euro at 1.1539.

Data released overnight showed that first-quarter Chinese GDP grew at 6.4%, beating estimates of 6.3% and matching the 6.4% seen in the fourth quarter of last year, while the Lunar New Year slowdown in industrial production in February of 5.3% saw a rebound to expansion of 8.5% year-on-year. This was ahead of expectations of 5.9%.

In addition, retail sales for March rose 8.7%, up from 8.2%.

“Good news isn’t good anymore,” said Naeem Aslam, chief market analyst at TF Global Markets.

“The concern is that the People’s Bank of China may change its stance towards its monetary policy- we may not see that much support from the PBOC. The truth is that the handoff from feeble economic numbers to strong economic numbers is here and this is good news. Let’s not forget, improving economic conditions over in China means better economic health of the global economy.”

Market participants were also digesting Netflix‘s Q1 numbers, which led the stock lower after the US close as guidance disappointed.

London Capital Group analyst Jasper Lawler said that while Netflix beat expectations on both top and bottom lines, “investors were far from impressed by the EPS Netflix predicts in the second quarter, which at 55c is well below the $1 per share that analysts had pencilled in”.

On the UK data front, all eyes will be on the latest inflation figures, with the retail price index, producer price index and consumer price index all due at 0930 BST.

Meanwhile, Sino-US trade relations were in focus again as White House economic adviser Larry Kudlow said “very good progress” was being made in talks.

“We like what we see, but I’m not here to make a forecast,” he told Fox Business Network when asked about whether he could definitively say a deal would be reached between the two.

In equity markets, miners were the worst performers, with BHPRio Tinto, Anglo Americanand Antofagasta among the top fallers.

BHP was also in the red as it cut iron ore output forecasts, reflecting the impact of tropical cyclone Veronica in Western Australia, which also hit production at sector peer Rio Tinto.

Segro traded lower as the property investment and development company said it had secured £21.2m of new headline rent in the first quarter, down from £27.3m in the first quarter of 2018.

Distribution and outsourcing group Bunzl was under the cosh as it said underlying revenue growth slowed in the first quarter, mostly due to its North America operations, and announced the recent acquisition of Netherlands-based distributor Coolpack.

Telecom Plus lost ground as it warned that full-year adjusted pre-tax profit would be towards the lower end of previous guidance at around £56m due to a warm winter and the Ofgem price cap.

Hunting shares fell as its first-quarter profit rose but margins took a hit.

On the upside, Countryside Properties rallied as the housebuilder said it was on track to deliver full-year results in line with expectations, posted a 43% jump in first-half completions and announced the departure of its chief operating officer.

Mediclinic gained as it said full-year core profit is expected to drop by 3.5%, in line with market expectations.

In broker note action, Burberry was initiated at ‘underperform’ by Bernstein, while Rio Tintowas cut to ‘hold’ at Investec.

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