- MPC members grilled by MPs, sound dovish tone
- Iraq tensions, German data weigh on sentiment
- Domino Printing plummets on cautious outlook
techMARK 2,807.14 -0.75%
FTSE 100 6,788.81 -0.17%
FTSE 250 15,563.07 -0.72%
UK stocks erased early gains and were trading in the red by Tuesday lunchtime as investors digested comments from Bank of England policymakers and disappointing economic data from Germany.
Markets were also keeping a close eye on developments in Iraq after US Secretary of State John Kerry called on Kurdish leaders not to abandon the country in the face of ongoing battles with the Islamic State of Iraq and the Levant (known as ISIS).
The FTSE 100 was trading 0.2% lower at 6,789 by around noon, after having hit an intraday high of 6,824.45 early on.
Monetary Policy Committee members including Governor Mark Carney sounded a dovish tone in front of the Treasury Select Committee today, as MPs grilled policymakers on the economic outlook and the first potential rise in interest rates. Carney in particular said that rate hikes would be "limited and gradual", but softer-than-expected wage increases meant that there was more spare capacity in the labour market than initially thought.
"We must make sure that the economy absorbs wasteful spare capacity before we start normalising interest rates [...] Average weekly earnings were softer than our expectation and add to a run of hard data that has been softer than expected," he said.
Also weighing on stocks was the IFO Institute's headline German business climate index fell from 110.4 to 109.7 in June, worse than the 110.3 consensus estimate. The current assessment and expectations indices also came in lower than expected which "adds to signs that the recovery in the Eurozone's largest economy might already be nearing a peak", according to Jennifer McKeown, Senior European Economist at Capital Economics.
Consumer confidence figures, home prices and new-home sales data are also due out this afternoon in the States.
Domino Printing and Croda provide a drag
Domino Printing, which develops inkjet, laser and thermal printing products, reported double-digit underlying growth in the first half, but warned that progress may be limited next year, causing shares
to drop sharply this morning. Chairman Peter Byrom said he is "cautious about prospects for the business in 2015" and that results next year would be broadly flat.
Specialist chemicals company Croda International also fell after saying that second-quarter pre-tax profits would be around 8% below its first quarter and full-year profit to be lower than the previous year as a strong pound continues to weigh on earnings.
Heading the other way was chip designer Imagination Technologies after the drop in annual profits wasn't as bad as feared. The company also said the demand for its Ensigma communications technology is "accelerating [...] driven by the emerging trends in the Internet of Things and home connectivity", as it continues to face a slowdown in the core smartphone market.
Broker downgrades were weighing on a number of heavyweight stocks this morning; supermarket giant Tesco was cut to 'neutral' by Exane BNP Paribas; while utilities providers United Utilities and Severn Trent were both hit by a Goldman Sachs ratings cut to 'neutral'.
Bid target Shire, which last week rejected a £27bn approach from US pharmaceutical outfit AbbVie was making gains this morning after yesterday setting out its defence to shareholders with its 10-year strategic plan. Credit Suisse was providing a lift this morning, saying: "We believe ABBV will need to step in at a higher price in order to get the deal done."
Meanwhile, IAG's stock rebounded slightly after some selling pressure yesterday as cabin crew at its UK carrier British Airways threatened to strike over salary conditions.
FTSE 100 - Risers
Aggreko (AGK) 1,644.00p +2.37%
BG Group (BG.) 1,293.00p +1.77%
Pearson (PSON) 1,134.00p +1.34%
Fresnillo (FRES) 872.00p +1.28%
BP (BP.) 525.50p +1.06%
Shire Plc (SHP) 4,346.00p +1.00%
Carnival (CCL) 2,336.00p +0.99%
easyJet (EZJ) 1,436.00p +0.91%
Randgold Resources Ltd. (RRS) 4,942.00p +0.86%
Morrison (Wm) Supermarkets (MRW) 188.00p +0.75%
FTSE 100 - Fallers
Sports Direct International (SPD) 713.50p -3.91%
Schroders (SDR) 2,463.00p -3.18%
Ashtead Group (AHT) 829.00p -2.93%
Weir Group (WEIR) 2,624.00p -2.71%
Smith & Nephew (SN.) 1,040.00p -1.79%
Friends Life Group Limited (FLG) 304.70p -1.77%
Petrofac Ltd. (PFC) 1,224.00p -1.69%
Aviva (AV.) 501.50p -1.67%
Barratt Developments (BDEV) 345.10p -1.62%
London Stock Exchange Group (LSE) 1,884.00p -1.52%
FTSE 250 - Risers
Imagination Technologies Group (IMG) 249.20p +6.72%
Evraz (EVR) 93.00p +3.33%
Howden Joinery Group (HWDN) 303.10p +2.16%
AL Noor Hospitals Group (ANH) 1,000.00p +2.04%
Supergroup (SGP) 948.00p +1.39%
Informa (INF) 489.60p +1.35%
Debenhams (DEB) 69.40p +1.17%
Mitchells & Butlers (MAB) 395.10p +1.15%
Kazakhmys (KAZ) 310.20p +1.14%
Ladbrokes (LAD) 143.90p +1.05%
FTSE 250 - Fallers
Domino Printing Sciences (DNO) 625.00p -15.31%
Croda International (CRDA) 2,206.00p -8.31%
NMC Health (NMC) 441.00p -4.13%
Cranswick (CWK) 1,248.00p -2.80%
Tullett Prebon (TLPR) 251.50p -2.71%
Senior (SNR) 263.10p -2.48%
Victrex plc (VCT) 1,660.00p -2.47%
RPC Group (RPC) 612.00p -2.47%
Fidessa Group (FDSA) 2,231.00p -2.45%
Northgate (NTG) 501.50p -2.34%