London close: FTSE rebounds as pound slides on PM's struggles

London stocks clawed back some ground on Tuesday, boosted by strong showings from the likes of WPP and Ashtead and a shred of optimism about US-China relations, as the pound seesawed on the vicissitudes of Brexit.

The FTSE 100 closed 1.3% higher at 6,806.94. Sterling, having strengthened earlier thanks to strong jobs data and faint optimism about Theresa May's decision to call off this week's parliamentary vote on Brexit, later in the session fell to its lowest level since April last year.

The Prime Minister was racing between European capitals as she attempted to gain some assurances on the Brexit backstop ahead of Thursday's EU council summit.

But, not too dissimilar to Bethlehem innkeepers, Angela Merkel and Jean-Claude Juncker said there was no room for manoeuvre on the Brexit deal.

Germany's Chancellor Merkel said "there will be no further opening of the exit deal”, while European Commission president Juncker, ahead of his meeting later in the evening, declared that there is “no room whatsoever for renegotiation” though "there is room enough to give further clarifications and further interpretations".

The pound also took a knock from further pushes by Scotland's SNP and the Green party to encourage Labour to call a vote of no-confidence in May. There were also reports that hardline Conservative MPs had sent a further bath of letters that they felt was enough to reach the requisite 48 mark to trigger a vote of no-confidence in the PM.

"On all sides Theresa May is facing intense pressure and it looks like her time is up," said market analyst Neil Wilson at Markets.com, adding that time was ticking towards the extremes of the debate: no deal, a fresh election or the second referendum.

A vote of no confidence could, he said, see May’s position look more secure if she survives it: "Whilst on the face of things unlikely, it’s hard to see just how much appetite Conservative MPs have to throw the cat among the pigeons and upend the entire Brexit process, which could perhaps trigger an election and possible defeat. A fresh election however would be the necessary excuse to pause Article 50 – as long as the EU agrees. In the meantime, the clock is very much ticking and the odds of no deal are increasing.”

There was some good news on the economic front as the latest figures from the Office for National Statistics showed that UK employment has reached a record high, with nominal wages growing at a rate not seen for a decade.

According to the ONS, there were an estimated 32.48m people in work between August and October, 79,000 more than the previous quarter and a 396,000 improvement on the same three months a year ago.

It means that the employment rate is now at 75.7%, up on last year’s 75.1% and the joint highest rate since records began in 1971. The unemployment rate was 4.1%, unchanged on the previous quarter.

Average weekly earnings in nominal terms, which are not adjusted for price inflation, rose 3.3% year-on-year, excluding bonuses. That was the biggest rise since July 2008 and ahead of forecasts of around 3%. In real terms, they increased by 1% including bonuses, a level not seen since late 2016.

Economists at Pantheon Macroeconomics said the data strengthen the case for a rate hike at the earliest opportunity after the threat of a no-deal Brexit has disappeared.

Global trade worries were also dialled down after a bullish tweet from US president Donald Trump on relations with China, saying to watch out for "important announcements" amid "very productive conversations".

Said market analyst Joshua Mahony, market analyst at IG: "It comes as no surprise to see some of the top commodity mining firms posting near 5% gains on the day."

Anglo American, Antofagasta, Glencore and Rio Tinto were leading the pack on the FTSE 100.

In more microeconomic news, WPP surged as new boss Mark Read unveiled his three-year plan to restructure the marketing and advertising giant, while still keeping operating profit margins above 15% and a dividend at 60p.

Analysts at Liberum gave it "a cautious welcome" but felt "it could have been more ambitious and wide ranging", while at Numis they said it was "nothing especially radical".

Equipment rental company Ashtead also racked up gains as it said it expects full-year results to beat expectations after interim pre-tax profit rose 45% to £461m. With investors reading across to other US-focused companies, plumbing specialist Ferguson also was lifted onto the leaderboard.

Russ Mould, investment director at AJ Bell, said: "Guidance for better than previously expected full year results from Ashtead has put a rocket underneath its share price... Drill into the numbers and you’ll see a continuation of a long-standing trend that its US business is doing exceedingly well while its UK business is finding life very hard, albeit not disastrous."

Supermarket group Morrisons main solid gains, while Tesco was slightly higher and Sainsbury's slightly lower on the back of fresh industry data from Kantar Worldpanel, which showed the past 12 weeks had seen the slowest growth rate since March 2017. Grocery sales have softened to 2.0% from 2.6%, 3.2% and 3.8% in the past three updates, as Kantar's measure of inflation has more than halved over the past year.

Anglo American was also on the rise after saying it expects production for the year to be 2% above previous guidance and costs 5% below.

Standard Life was the biggest loser on the FTSE 100 after a downgrade to 'sector perform' at RBC Capital Markets, while Superdry suffered the heaviest losses on the 250 as Berenberg cut its stance on the fashion brand to 'hold' from 'buy' a day ahead of the retailer's interim results.

Market Movers

FTSE 100 (UKX) 6,806.94 1.27%
FTSE 250 (MCX) 17,653.26 0.92%
techMARK (TASX) 3,354.89 1.01%

FTSE 100 - Risers

Anglo American (AAL) 1,661.60p 5.50%
Wood Group (John) (WG.) 645.80p 4.99%
WPP (WPP) 844.00p 4.84%
Melrose Industries (MRO) 154.25p 4.78%
Antofagasta (ANTO) 774.40p 4.71%
Scottish Mortgage Inv Trust (SMT) 491.45p 4.29%
Ashtead Group (AHT) 1,664.00p 3.58%
Glencore (GLEN) 283.70p 3.35%
Rio Tinto (RIO) 3,642.50p 3.27%
Ferguson (FERG) 4,960.00p 3.13%

FTSE 100 - Fallers

Standard Life Aberdeen (SLA) 225.25p -1.90%
Randgold Resources Ltd. (RRS) 6,906.00p -1.62%
Lloyds Banking Group (LLOY) 52.33p -1.06%
RSA Insurance Group (RSA) 500.60p -0.68%
Associated British Foods (ABF) 2,151.00p -0.46%
Rightmove (RMV) 431.90p -0.36%
Royal Bank of Scotland Group (RBS) 203.20p -0.29%
Land Securities Group (LAND) 818.00p -0.22%
SEGRO (SGRO) 604.00p -0.13%
Marks & Spencer Group (MKS) 275.50p -0.11%

FTSE 250 - Risers

Indivior (INDV) 84.82p 10.79%
NewRiver REIT (NRR) 219.00p 5.80%
Spire Healthcare Group (SPI) 113.70p 5.51%
Computacenter (CCC) 1,018.00p 5.38%
Kier Group (KIE) 394.40p 4.78%
Tullow Oil (TLW) 185.90p 4.47%
Playtech (PTEC) 400.40p 4.44%
Hikma Pharmaceuticals (HIK) 1,788.50p 4.38%
Weir Group (WEIR) 1,398.50p 4.07%
Charter Court Financial Services Group (CCFS) 238.40p 4.02%

FTSE 250 - Fallers

Bakkavor Group (BAKK) 136.80p -7.64%
Superdry (SDRY) 573.50p -7.28%
Stagecoach Group (SGC) 147.70p -6.45%
Thomas Cook Group (TCG) 25.30p -4.82%
Renishaw (RSW) 3,960.00p -4.02%
Amigo Holdings (AMGO) 255.95p -3.99%
Saga (SAGA) 98.90p -3.70%
Just Group (JUST) 94.35p -3.48%
Contour Global (GLO) 166.70p -3.35%
CLS Holdings (CLI) 204.50p -3.31%