London midday: Investors show caution ahead of ECB, ASOS leads retailers lower

5th Jun 2014 11:25

- Markets await ECB decision, Draghi with caution- BoE keeps policy unchanged- ASOS shares plummet after profit warning, retailers fall- Smith & Nephew jumps on continued M&A speculationtechMARK 2,820.75 -0.07%FTSE 100 6,796.31 -0.33%FTSE 250 15,939.53 -0.29%UK stocks were in the red on Thursday, on track for their lowest finish in nearly a month, as investors scaled back risk appetite ahead of the pivotal European Central Bank (ECB) meeting this afternoon.Although the ECB is widely expected to unleash a host of new measures to battle deflationary pressures and boost growth across the single-currency region, markets were showing nerves given the potential for policymakers to disappoint. Meanwhile, a surprise profit warning from online fashion retailer ASOS sent the stock plummeting more than 40% at one point this morning, dampening sentiment among the retail and online shopping sectors. The FTSE 100 was trading 0.3% at 6,796 by lunchtime. The index has not closed lower than this level since May 7th.As expected, the Bank of England announced at noon that it has decided to keep its Bank Rate at 0.5% and the size of the asset purchase programme unchanged at £375bn. However, the news had very little impact on markets given that no change is expected in UK monetary policy until at least the end of 2014.The focus will likely remain on the ECB for the rest of the session with expectations high ahead of a policy decision at 12:45 and press conference with President Mario Draghi shortly after. Jonathan Sudaria, a dealer from Capital Spreads, said that a cut in the main interest rate would be a "minimum" and has already largely been priced-in to markets. However, he said that due to "Draghi's history of talking the talk but not walking the walk, another impotent outing could see risks to the downside".While the ECB will undoubtedly garner the most attention today, jobless claims data from the States will also be analysed this afternoon as markets gear up for the all-important US employment report tomorrow, which has the potential to spark some volatility across global financial markets. Jobless claims are expected to rise to 310,000 in the week ended May 31st, from 300,000 the week before which was the second-lowest reading since the financial crisis ended.ASOS plummets on profit warningShares in online fashion retailer ASOS plummeted as much as 40% after the company cut its margin guidance for the full year and blamed a strong pound for a slowdown in growth in the third quarter. The company said that because of a higher mix of UK and European sales, which have lower retail margins, together with increased promotions, its operating margin for the current financial year would be 4.5%, down from its previous forecast of 6.5%.The surprise trading statement saw shares in fellow retailers Next, Sports Direct, N Brown, SuperGroup and Primark owner Associated British Foods lower, while boohoo.com, the online fashion group which floated in March, was down around 10%.Johnson Matthey, which makes catalytic converters for cars, reported higher sales and profits and hiked its dividend, but the share price fell as it warned that changes in a deal with a supplier and currency volatility would hit growth in 2014/15.Leading the upside was Smith & Nephew which jumped around 5% as M&A speculation continues to surround the medical devices manufacturer. US group Medtronic has become the latest party rumoured to be interested in the UK firm and is reportedly in the early stages of preparing an offer.The numbers of passengers flying with budget airline easyJet rose 7.9% in May compared to the same month last year, helping the stock higher in morning trade.Meanwhile, insurance stocks were putting in a decent performance with Admiral, Friends Life, Aviva and Old Mutual among the best performers.UK residential property developer Bellway rose after saying that demand for new homes remained robust, buoyed by growing consumer confidence and a strong supply of mortgages. Sector peer Persimmon, however, was a heavy faller today.FTSE 100 - RisersSmith & Nephew (SN.) 1,116.00p +4.89%Friends Life Group Limited (FLG) 319.90p +1.88%Meggitt (MGGT) 501.50p +1.50%Admiral Group (ADM) 1,491.00p +1.29%United Utilities Group (UU.) 878.50p +1.21%BG Group (BG.) 1,235.50p +1.02%Coca-Cola HBC AG (CDI) (CCH) 1,378.00p +0.80%Aviva (AV.) 530.00p +0.76%Old Mutual (OML) 200.70p +0.75%Smiths Group (SMIN) 1,324.00p +0.68%FTSE 100 - FallersPersimmon (PSN) 1,255.00p -5.78%Royal Mail (RMG) 501.00p -2.62%Petrofac Ltd. (PFC) 1,225.00p -2.08%Rexam (REX) 533.00p -1.84%Weir Group (WEIR) 2,583.00p -1.75%ITV (ITV) 177.70p -1.71%Sports Direct International (SPD) 785.50p -1.69%TUI Travel (TT.) 403.30p -1.59%Randgold Resources Ltd. (RRS) 4,328.00p -1.28%ARM Holdings (ARM) 903.50p -1.26%FTSE 250 - RisersImagination Technologies Group (IMG) 257.00p +9.18%AL Noor Hospitals Group (ANH) 1,041.00p +3.48%Rathbone Brothers (RAT) 2,108.00p +1.84%BH Global Ltd. USD Shares (BHGU) 11.89 +1.80%Petra Diamonds Ltd.(DI) (PDL) 166.60p +1.65%Bellway (BWY) 1,427.00p +1.57%UDG Healthcare Public Limited Company (UDG) 356.50p +1.28%Pace (PIC) 362.20p +1.26%Foxtons Group (FOXT) 306.90p +1.25%Berkeley Group Holdings (The) (BKG) 2,291.00p +1.24%FTSE 250 - FallersSupergroup (SGP) 1,064.00p -4.14%ITE Group (ITE) 225.40p -3.18%Xaar (XAR) 795.50p -2.69%Micro Focus International (MCRO) 816.50p -2.68%Brown (N.) Group (BWNG) 457.20p -2.56%Lonmin (LMI) 246.80p -2.53%Domino's Pizza Group (DOM) 541.50p -2.34%Cairn Energy (CNE) 200.30p -2.15%Northgate (NTG) 514.00p -2.10%Home Retail Group (HOME) 185.20p -2.01%BC