Shares in London have started poorly after a bleaker outlook from Next hit retailers, while weak data from the US also knocked sentiment.
High street fashion chain Next was very clearly at the foot of the UK blue-chip leaderboard, slipping 163p (-7.41%) to 2036p at 9.30am, after it announced its six-month like-for-like sales were down by 1.5%. Next did however pledge to raise its dividend to 10% for this year, though the confirmation did not help its share price this morning.
Next issued a statement reflecting the likely effect that the UK government austerity measures are likely to have on its second-half trading, saying 'consumer spending will be more restrained...as spending cuts and tax rises begin to take effect'.
Next's pessimistic outlook predictably affected fellow blue-chip retailers, with Home Retail Group (-3.56%), Marks & Spencer (-3.24%) and Kingfisher (-3.22%) all down so far on Wednesday.
British Land was another firm citing the government's austerity drive, as well as the potential for a similar situation across Europe, as the property investment company said its net asset value per share rose 2.2% to 515p in the first three months, against a 15.1% jump over the previous quarter. British Land Company was also among the worst performers on the FTSE 100 this morning, 14.7p (-3.13%) weaker at 454.80p.
At the opposite side of the FTSE leaderboard, Lloyds Banking Group gained 0.98p (+1.36%) to 72.90p after reporting a significant, consensus-beating return to profit thanks in part to a drop in bad loans charges. Pre-tax figures for the first-half were £1.6 billion, from a £3.96 billion loss over the same period in 2009.
Standard Chartered meanwhile unveiled a 10% rise in six-month pre-tax profit of $3.12 billion, compared with $2.84 billion last year. However the Asia-focused bank has not fared so well today, sliding 94.50p (-4.97%) to 1808p after the bank issued an uncertain outlook for revenue growth.
Approaching 10.30am the FTSE 100 was down 63.26 points (-1.17%) to 5333.22, while the mid-cap FTSE 250 has fallen by 74.32 points (-0.73%) to 10061.55. In Europe, the DAX and Cac 40 were down by 0.50% and 0.65% respectively.
Markets across the Atlantic fell yesterday following some disappointing figures from a number of surveys, including consumer spending, pending home sales and factory orders. Weaker-than-expected earnings from MasterCard and Procter & Gamble also hit confidence, as the Dow Jones followed up Monday 1.99% rise with a 0.36% fall to 10636.38. The S&P 500 and Nasdaq both slid by 5%.
Looking ahead, investors will be looking closely at this afternoon's July Challenger job cuts report at 12.30pm (London time) alongside the latest batch of US earnings news, including quarterlies from Time Warner and News Corp.
