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London open: Stocks drop amid Sino-US woes, growth concerns
London stocks fell in early trade on Wednesday, taking their cue from a downbeat session on Wall Street amid ongoing worries about Sino-US trade relations and renewed concerns about global growth.
At 0840 BST, the FTSE 100 was down 1% at 7,199.82, while the pound remained close to four-month lows, trading flat against the dollar and the euro at 1.2652 and 1.1341, respectively.
Neil Wilson, chief market analyst at Markets.com, said: “It’s a simple one right now – investors are getting out of equities and going into bonds amid a lack of any positive noises on trade. There’s a growing acceptance that the US and China are in this for the long-haul. Possible Chinese retaliation on rare earths has got investors really starting to notice.
“We’ve also got ongoing concerns about Italy in European equities. Markets are beginning to price in the risk of a prolonged trade war and a possible hit to US economic growth.”
In equity markets, industrial and engineering software provider Aveva was in the green after it said full year pre-tax profits rose 21.7% to £46.7m, driven by increasing demand for industrial software and good sales execution, including an increase in multi-year commitments from key customers.
Southend airport owner Stobart Group was a high riser as it said it swung to an annual loss of £58.2m from a profit of £100m the year before – partly due to legal costs – but posted a rise in revenue rose thanks to an improvement in its two core operating businesses and sounded an upbeat note on the outlook.
Experian edged lower as it announced the appointment of Mike Rogers, an independent non-executive director of the company, as its chairman with effect from the end of its annual general meeting on 24 July. He will succeed Don Robert.
Doorstep lender Provident Financial was also a little weaker after the Competition and Markets Authority said it was considering whether Non-Standard Finance’s £1.3bn hostile takeover would result in a substantial lessening of competition. The watchdog also confirmed that NSF has offered to demerge its home credit business as part of the deal.
In broker note action, Diploma was initiated at ‘overweight’ by JPMorgan Cazenove, while Electrocomponents was started at ‘neutral’.
Serco was lifted to ‘outperform’ at RBC Capital Markets and Ultra Electronics was initiated at ‘hold’ by Jefferies.
