London close: Stocks in holding pattern amid geopolitical worries

London stocks finished Tuesday's session much as they had started it and with investors cautious amid the ongoing geopolitical tensions in the Middle East, even as they monitored the day's proceedings at the UK Supreme Court and prepared for a key policy decision by the Federal Reserve.

The FTSE 100 dipped 0.01% to 7,320.40, while the pound was down 0.54% higher against the US dollar at 1.24967 as the Greenback gave back the prior session's ill-gotten gains.

But versus the euro it was nearly flat at 1.1293, as the Supreme Court kicked off a three-day hearing to decide whether Prime Minister Boris Johnson abused his powers by proroguing Parliament for an unusually long five weeks.

Markets appeared content to think that some progress had been made in talks with the European Union, according to IG's Chris Beauchamp, either that or traders were paring their substantial 'short' positions.

Having staged a surge of as much as 20% the day before, following the attacks on two Saudi oil facilities over the weekend, for their largest one-day advance on record, Brent crude oil futures fell a bit on Tuesday, following reports that Saudi output was recovering as quickly as had been hoped for after all.

Front month Brent futures were dropping 3.9% to $66.43 a barrel on the ICE.

Nonetheless, Oanda analyst Craig Erlam said a significant risk premium was being priced into the oil markets, not only because of the outages caused but also the prospect of further attacks and an escalation in the region.

To take note of, according to a source cited by CNN, Saudi and US investigators believed there was a "very high probability" that the attacks on two key Saudi oil installations at the weekend were launched from a base in Iran.

Elsewhere, Sino-US trade relations remained in focus, with deputy-level talks set to kick off this week between the US and China ahead of the next round of high-level talks in October.

Investors were also beginning to shift their focus to Wednesday's Federal Reserve policy announcement. Erlam said expectations have changed quite dramatically in recent sessions, to the point that a 50 basis point was no longer priced in at all and no change was now priced at more than 30%.

"A 25 basis point cut is still almost 70% priced in but the way markets are moving at the moment, this could slip further over the next 24 hours," he said. Among the reasons for the change in expectations were stronger data last week, improved risk appetite, trade war optimism and even higher inflation potential following the oil price spike, the analyst added.

In equity markets, luxury brand Burberry rose as Exane BNP Paribas lifted its price target on the stock to 2,050p from 1,700p in a note on the luxury goods sector.

On the downside, shares of Sirius Minerals tumbled as it said "poor market conditions" had forced it to cancel a $500.0m bond issue that was needed to start the next phase of construction on a fertiliser mine in Yorkshire.

Russ Mould, investment director at AJ Bell, said: "Although the share price has taken a beating on today’s news, it isn’t game over for Sirius and its shareholders. The miner has a few options to try and salvage the project.

"It has enough cash to give it six months’ breathing space to either find a different solution for the financing or bring in a new strategic investor who could theoretically provide cash upfront in exchange for a stake in the business."

Johnson Matthey was in the red after a downgrade to 'equalweight' at Barclays, while InterContinental Hotels traded higher after being initiated at 'buy' by Jefferies.

Market Movers

FTSE 100 (UKX) 7,320.40 -0.01%
FTSE 250 (MCX) 20,040.54 -0.10%
techMARK (TASX) 3,849.02 0.40%

FTSE 100 - Risers

Aveva Group (AVV) 3,690.00p 3.19%
Relx plc (REL) 1,884.50p 2.89%
Rentokil Initial (RTO) 443.90p 2.83%
Sage Group (SGE) 677.80p 2.60%
Halma (HLMA) 1,990.00p 2.23%
Compass Group (CPG) 1,998.00p 2.17%
Experian (EXPN) 2,494.00p 2.13%
Fresnillo (FRES) 736.40p 1.99%
Intertek Group (ITRK) 5,468.00p 1.98%
SEGRO (SGRO) 778.60p 1.88%

FTSE 100 - Fallers

TUI AG Reg Shs (DI) (TUI) 841.60p -4.62%
Evraz (EVR) 497.90p -3.88%
Mondi (MNDI) 1,625.00p -3.04%
Smurfit Kappa Group (SKG) 2,528.00p -2.99%
Barclays (BARC) 149.20p -2.79%
Legal & General Group (LGEN) 245.80p -2.77%
Centrica (CNA) 72.90p -2.75%
Morrison (Wm) Supermarkets (MRW) 202.70p -2.74%
Persimmon (PSN) 2,048.00p -2.52%
Smith (DS) (SMDS) 358.50p -2.50%

FTSE 250 - Risers

Sophos Group (SOPH) 427.20p 6.24%
Intermediate Capital Group (ICP) 1,427.00p 3.48%
Man Group (EMG) 168.00p 2.91%
Ashmore Group (ASHM) 485.40p 2.62%
Games Workshop Group (GAW) 4,674.00p 2.46%
Avast (AVST) 381.00p 2.42%
Woodford Patient Capital Trust (WPCT) 46.30p 2.32%
SSP Group (SSPG) 668.00p 2.14%
Safestore Holdings (SAFE) 656.50p 2.10%
Derwent London (DLN) 3,140.00p 2.08%

FTSE 250 - Fallers

Sirius Minerals (SXX) 4.67p -53.34%
Intu Properties (INTU) 40.12p -6.70%
Elementis (ELM) 155.90p -6.08%
Aston Martin Lagonda Global Holdings (AML) 541.00p -5.91%
Kaz Minerals (KAZ) 439.20p -4.75%
Wood Group (John) (WG.) 430.20p -4.70%
Premier Oil (PMO) 90.22p -4.18%
Tullow Oil (TLW) 232.80p -3.40%
Petrofac Ltd. (PFC) 440.60p -3.36%
Polypipe Group (PLP) 393.20p -2.82%