London close: Drop in Sterling limits weakness in shares

London equity markets finished on a mixed note on Tuesday, with domestic stocks under the cosh amid worries about a no-deal Brexit but losses on the top-flight index kept in check as the pound gave up its post-election gains.

The FTSE 100 was up 0.1% at 7,525.28, while the pound was off 1.61% against the US dollar at 1.3118 and 1.7% weaker versus the euro at 1.1762 following news that Prime Minister Boris Johnson plans to add a clause to the Brexit Bill making it illegal to extend the transition period beyond the end of next year, reviving the threat of a no-deal Brexit.

The FTSE 250, which includes more UK-focused stocks, was 1.05% weaker at 21,690.20.

The pound had hit a one-and-a-half-year high of $1.3516 at the end of the previous week after the Tories' landslide election win. Against the euro, sterling recorded a three-year high in the aftermath of the election result last week.

"For the pound, we had been looking at a potential 2020 recovery, with the prospect of a jump in business activity also providing sharp gains for UK-focused firms," said IG analyst Josh Mahony.

"However, with Johnson introducing yet another needless cliff-edge, he has dented hopes of a sentiment driven boost in economic activity which has in turn put an end to the recent recovery in UK markets."

Although it was Brexit news hogging the limelight, investors were also mulling over the latest UK jobs data from the Office for National Statistics, which showed that employment rose as employers unexpectedly hired more workers in the run-up to October's second deadline for Brexit.

The number of people in work rose by 24,000 to 32.8m in the three months to the end of October versus expectations of a 10,000 fall.

The increase pushed the employment rate to a record high of 76.2% even as the economy flatlined during the period. The unemployment rate was 3.8% - 0.3 percentage point lower than a year earlier.

Total earnings growth, including bonuses, slowed to 3.2% from 3.7% in the three months to the end of October but the ONS said this was partly due to high bonus payments in October 2018.

David Freeman, the ONS's head of labour market and households, said: "While the estimate of the employment rate nudged up in the most recent quarter, the longer-term picture has seen it broadly flat … Pay is still increasing in real terms, but its growth rate has slowed in the last few months."

In equity markets, shares of Abu Dhabi-based healthcare centre operator NMC Health tumbled after research firm Muddy Waters said it was short the stock as it has "serious doubts" about the company’s financial statements and reckons it has manipulated its balance sheet to understate debt.

Consumer goods giant Unilever was under the cosh after it cautioned that full-year underlying sales growth would be "slightly below" guidance of the lower half of its 3-5% multi-year range amid challenges in some of its markets.

Shares of Boeing suppliers Senior and Melrose fell after the US aircraft maker said it was suspending production of its controversial 737 MAX passenger jet. British Airways owner International Airlines Group, which signed a letter of intent to buy 200 Max jets, and Ryanair, which has ordered 135 Max planes, were also both in the red.

Oilfield services firm Petrofac retreated as it said full-year group revenue was expected to be approximately $5.5bn and that it continues to expect a decrease in group revenue in 2020, reflecting low new order intake in recent years.

RBS and Virgin Money were hit by a downgrade to ‘neutral’ at Citi. More generally, banks and housebuilders were on the back foot amid renewed concerns about a no-deal Brexit. Lloyds, Barclays, Berkeley Group, Taylor Wimpey and Persimmon all fell.

Premier Inn owner Whitbread was dented by a UBS downgrade to ‘neutral’ from ‘buy’, as it said the shares were "up with events".

Hunting gushed lower as the oilfield services group said expectations for annual profit were under threat from a sharpening slowdown in the US onshore oil and gas market as the company approaches its year end.

On the upside, Intertek rose after it announced the acquisition of global health, safety, quality and security risk management business Check Safety First for an undisclosed sum.

Market Movers

FTSE 100 (UKX) 7,525.28 0.08%
FTSE 250 (MCX) 21,690.20 -1.05%
techMARK (TASX) 4,139.65 -0.29%

FTSE 100 - Risers

Ferguson (FERG) 6,970.00p 4.19%
Royal Dutch Shell 'B' (RDSB) 2,229.00p 3.19%
Royal Dutch Shell 'A' (RDSA) 2,233.00p 2.64%
BP (BP.) 478.85p 2.32%
Scottish Mortgage Inv Trust (SMT) 543.00p 2.07%
Smith & Nephew (SN.) 1,805.00p 1.92%
National Grid (NG.) 949.20p 1.74%
Evraz (EVR) 397.30p 1.69%
InterContinental Hotels Group (IHG) 5,077.00p 1.68%
Smiths Group (SMIN) 1,704.50p 1.55%

FTSE 100 - Fallers

NMC Health (NMC) 1,747.50p -32.40%
Unilever (ULVR) 4,299.00p -7.16%
Lloyds Banking Group (LLOY) 63.30p -5.87%
British Land Company (BLND) 603.80p -4.31%
Whitbread (WTB) 4,933.00p -4.25%
Persimmon (PSN) 2,721.00p -3.72%
Land Securities Group (LAND) 965.80p -3.52%
Royal Bank of Scotland Group (RBS) 253.30p -2.95%
ITV (ITV) 152.05p -2.84%
Barclays (BARC) 187.36p -2.65%

FTSE 250 - Risers

Future (FUTR) 1,418.00p 5.82%
Cineworld Group (CINE) 223.20p 5.68%
Wetherspoon (J.D.) (JDW) 1,734.00p 4.90%
Tullow Oil (TLW) 63.30p 4.47%
IntegraFin Holding (IHP) 451.00p 3.52%
Homeserve (HSV) 1,291.00p 2.46%
Fidelity China Special Situations (FCSS) 227.00p 2.02%
Templeton Emerging Markets Inv Trust (TEM) 826.00p 1.98%
Trainline (TRN) 520.00p 1.96%
TalkTalk Telecom Group (TALK) 114.10p 1.88%

FTSE 250 - Fallers

Senior (SNR) 165.70p -11.06%
Finablr (FIN) 189.20p -10.81%
PZ Cussons (PZC) 178.80p -7.93%
Petrofac Ltd. (PFC) 374.40p -6.63%
Savills (SVS) 1,100.00p -6.38%
Hunting (HTG) 384.00p -6.16%
Restaurant Group (RTN) 151.90p -6.12%
Virgin Money UK (VMUK) 193.80p -5.51%
CLS Holdings (CLI) 293.00p -5.44%
Crest Nicholson Holdings (CRST) 421.00p -5.39%