London midday: Stocks stay down as WPP tumbles

(Sharecast News) - London stocks were still in the red by midday on Thursday, dragged lower by WPP, as a more hawkish tone from US Federal Reserve chair Jerome Powell outweighed any potential cheer over a breakthrough in Sino-US trade relations.

The FTSE 100 was down 0.6% at 9,696.60.

On Wednesday, the Fed cut interest rates by 25 basis points as widely expected, and announced the end of quantitative tightening. However, Powell dented the mood after he said a further reduction of the policy rate at the December meeting was "not a foregone conclusion".

Russ Mould, investment director at AJ Bell, said: "No one likes a party pooper, especially when they're standing in front of the punch bowl. That's the role taken on by Jay Powell, who poured cold water on the prospect of a December rate cut. That's put markets on the back foot when it looked like the music was just about to ramp up.

"The Fed did announce an interest rate cut, but short-term Treasury yields jumped up on the back of the hawkish tone, and Jay Powell's comments might well have elicited a hoot of derision from somewhere in the White House. The Fed chair likened the central bank's current situation to driving in the fog, because the US government shutdown has prevented the release of key economic data."

On the trade front, the US and China agreed a one-year truce that pauses some of the most contentious measures in their economic stand-off.

Trump said the two sides had reached an "amazing" understanding that would see the US scale back some tariffs on Chinese imports and China suspend planned export controls on rare earth minerals. He described the talks as a "great success" and said a formal deal would be signed "pretty soon".

Xi struck a more cautious tone, with Chinese state media saying only that both sides had reached a "consensus" on resolving major trade issues and should avoid a "vicious cycle of retaliation".

In equity markets, WPP tumbled after the advertising agency said it has launched a strategic review as it warned on profits again due to a slump in revenue.

Haleon reversed earlier gains to trade down despite posting better-than-expected third-quarter revenue growth.

Rathbones was also under the cosh after Jefferies initiated coverage of the stock at 'underperform'.

JD Sports and Whitbread both fell as they traded without entitlement to the dividend.

On the upside, Standard Chartered rose after saying it expects income for the year to be towards the upper end of its 5% to 7% growth range after reporting a rise in third-quarter earnings driven by its wealth division.

Pre-tax profit grew 3% to $1.77bn. Chief executive Bill Withers said the Asia-focused lender now expected to hit its 13% target for underlying return on tangible equity in 2025 - a year earlier than planned.

Computacenter also gained as it said it was "comfortably ahead" ahead of the prior year's trading following a strong performance in the third quarter.