London close: Brexit concerns and weakness in miners takes its toll

London stocks finished in the red on Tuesday following the release of disappointing UK construction data and amid weakness in the mining sector.

IG's chief market analyst, Chris Beauchamp, said: "Following on from yesterday’s weaker manufacturing reading, this morning’s construction PMI was also worse than expected; tomorrow's services figure will be the decider but at present it looks like the bounce in cable over the second half of August was merely a temporary respite.

"Certainly dollar strength appears to be back in fashion too, with investors evidently expecting this week's clutch of US data to confirm their optimism regarding the US economy."

Having started higher, the FTSE 100 lost 0.62% or 46.74 points to end at 7,457.86, while the pound was 0.3% lower against the dollar at 1.2832 and 0.1% higher versus the euro at 1.1092.

IHS Markit's construction purchasing managers' index for August fell to 52.9 from the prior month's 14-month high of 55.8, when the market had pencilled in a small drop to 55.0. Construction companies across the sector reported a loss of momentum towards the end of summer, though there were some signs of resilience such as in the solid upturn seen in levels of new business.

Commenting on those figures, Duncan Brock, Group Director at the Chartered Institute of Procurement & Supply, said: "The sector is hovering too close for comfort to the no change mark which makes it a contender for more disappointment next month. Though the path to Brexit is paved with good intentions, without significant progress the sector will soon be building castles in the air rather than on solid ground."

Meanwhile, the UK's divorce from the EU remained firmly in focus following an ITV News report that the EU's chief Brexit negotiator, Michel Barnier, will only agree to a Free Trade Agreement dubbed 'Canada Plus', rather than any version of PM Theresa May's Chequers plan.

On the global trade front, the main focus was on the US and Canada after they failed to reach an agreement last week, with talks set to restart on Wednesday.

Miners were in the red as copper prices fell in response to the stronger US dollar, with Anglo American, Glencore and BHP Billiton all lower.

Stoking gains in the Greenback was data showing a jump in the ISM's widely-followed US factory sector PMI to a 14-month high in August.

London-listed South African companies were in the red, including Old Mutual, Mondi and Investec, as a sharp fall in the rand followed GDP data confirming that the country had entered into recession.

WPP fell even further after saying it returned to underlying growth in the second quarter of the year but posting a drop in profits for the first half. Triggering the sell-off was perhaps the fall in revenues for the key North American business and that group EBITDA of £948m was shy of the average analyst forecast of £973m.

Alfa Financial Software tumbled as it posted a decline in first-half profit due in part to contract delays and the weaker dollar.

DS Smith ticked a touch lower despite an upbeat first-quarter trading statement, while Redrow retreated after early gains as the housebuilder posted record full-year profit and revenue thanks to higher completions and "robust" demand, but called for clarity over Brexit and the Help to Buy scheme. Peers Persimmon, Taylor Wimpey and Berkeley were sent lower.

On the upside, Smiths Group rallied following a report late on Monday that the engineer rejected a £2.8bn takeover proposal from Nasdaq-listed ICU Medical last month. According to Sky News, the deal would have been largely composed of cash with the addition of ICU stock.

Halfords surged as it said group like-for-like sales were up 2.8% in the 20 weeks to 17 August despite a challenging retail environment and maintained its guidance for the current year.

Wizz Air flew a little lower even as it reported a 20.4% jump in passenger numbers for August and a slightly uptick in the load factor, but Ryanair declined as it said traffic grew 9% in August.

On the broker note front, BBA Aviation was higher after an initiation at 'buy' by Berenberg, while Lloyds was boosted by an upgrade to 'hold' by the same outfit and Hunting gained on an upgrade to 'buy' at Kepler Cheuvreux.

Equiniti racked up strong gains as Liberum reiterated its 'buy' rating on the stock and said the company's ongoing roadshow and capital markets day later this month should act as a catalyst for a reversal of much of the recent share price decline.

Inmarsat dropped after a downgrade to 'sector perform' by RBC Capital Markets, Shire slipped as it was cut to 'market perform' at Bernstein and Auto Trader was down after UBS cut the stock to 'neutral' from 'buy'.

Market Movers

FTSE 100 (UKX) 7,457.86 -0.62%
FTSE 250 (MCX) 20,548.61 -0.71%
techMARK (TASX) 3,497.10 -0.88%

FTSE 100 - Risers

Whitbread (WTB) 4,700.00p 2.60%
Barclays (BARC) 181.02p 1.97%
Royal Bank of Scotland Group (RBS) 246.50p 1.52%
Lloyds Banking Group (LLOY) 60.35p 1.22%
TUI AG Reg Shs (DI) (TUI) 1,410.00p 0.57%
Melrose Industries (MRO) 224.90p 0.49%
Bunzl (BNZL) 2,415.00p 0.46%
British American Tobacco (BATS) 3,743.00p 0.38%
HSBC Holdings (HSBA) 677.30p 0.37%
SSE (SSE) 1,268.50p 0.36%

FTSE 100 - Fallers

WPP (WPP) 1,196.50p -6.27%
Berkeley Group Holdings (The) (BKG) 3,510.00p -4.36%
Persimmon (PSN) 2,357.00p -3.28%
Just Eat (JE.) 753.40p -2.94%
Taylor Wimpey (TW.) 164.25p -2.78%
Burberry Group (BRBY) 2,200.00p -2.48%
Evraz (EVR) 496.60p -2.36%
Fresnillo (FRES) 870.40p -2.18%
Croda International (CRDA) 5,052.00p -2.13%
Sage Group (SGE) 590.80p -2.09%

FTSE 250 - Risers

Halfords Group (HFD) 351.40p 6.87%
Equiniti Group (EQN) 241.00p 5.93%
TalkTalk Telecom Group (TALK) 133.50p 4.05%
Dechra Pharmaceuticals (DPH) 2,524.00p 2.94%
Dairy Crest Group (DCG) 465.40p 2.20%
Hunting (HTG) 843.50p 2.00%
Jardine Lloyd Thompson Group (JLT) 1,480.00p 1.93%
BBA Aviation (BBA) 309.60p 1.84%
CYBG (CYBG) 337.40p 1.63%
Bank of Georgia Group (BGEO) 1,730.00p 1.50%

FTSE 250 - Fallers

Alfa Financial Software Holdings (ALFA) 148.00p -6.57%
Go-Ahead Group (GOG) 1,613.00p -4.78%
Auto Trader Group (AUTO) 431.90p -4.38%
Inmarsat (ISAT) 523.00p -4.35%
Centamin (DI) (CEY) 97.32p -4.26%
UDG Healthcare Public Limited Company (UDG) 710.00p -4.12%
Charter Court Financial Services Group (CCFS) 346.80p -3.88%
TI Fluid Systems (TIFS) 279.20p -3.72%
Kaz Minerals (KAZ) 461.20p -3.70%
Investec (INVP) 498.20p -3.41%