London midday: Stocks little changed after inflation data; housebuilders weak

London equity markets were little changed by midday on Wednesday as investors mulled the latest UK inflation data ahead of this week’s Bank of England policy announcement, with domestic stocks such as housebuilders under the cosh amid lingering concerns about a no-deal Brexit.

The FTSE 100 was up just 0.1% at 7,534.89, while the pound was down 0.3% against the dollar at 1.3094 and 0.1% lower versus the euro at 1.1769.

Neil Wilson, chief market analyst at Markets.com, said: "Sterling has completely retraced the election night move now, with cable again taking a 1.30 handle. The abrupt shift is because Boris Johnson is said to be legislating to compel his own government to exit the transition arrangements with the EU in Dec 2020, with a deal in place or not.

"This seems an odd move. It creates new cliff edge and no-deal risk - the pound’s abrupt unwinding is a sign the market thinks so. And it’s pointless to from a technical perspective (hence why it appears odd), as Boris can go back on it anytime should it be required.

"We should look at this for what it really is: legislation that can be overturned with a one-line bill at any stage should the need arise. Boris as we’ve argued is no arch-Brexiter and has shown little appetite (despite the war drums) of leaving without a deal. This is more about sending a message to new Tory leave voters - campaign 2024 begins now. And it’s about sending a message to the EU again that no deal is always on the table."

Data released earlier by the Office for National Statistics showed that Inflation remained at 1.5% in November, slightly higher than markets expected.

The annual rise in the consumer price index stayed at a three-year low established in October. Accommodation and tobacco costs fell while food and recreation prices rose, the ONS said.

Economists on average had expected inflation to dip to 1.4%. November's figure is well below the Bank of England's 2% target as the BoE's monetary policy committee meets to decide on interest rates.

Analysts expect the BoE to keep rates on hold at 0.75% on Thursday but for two MPC members to vote again for a cut in borrowing costs amid continuing economic uncertainty and with signs the economy is slowing.

Ruth Gregory, senior UK economist at Capital Economics, said: "November’s inflation figures support our view that the MPC will sit tight at its meeting tomorrow and keep interest rates on hold throughout 2020.

"The figures confirmed that price pressures at the start of the production process remain very weak … Even so, coupled with yesterday’s robust labour market figures the pressure on the MPC to cut interest rates at its meeting tomorrow appears to have eased somewhat."

In equity markets, Pearson was sitting pretty at the top of the FTSE 100 after the education publisher said chief executive John Fallon was stepping down and announced that it was selling its remaining 25% stake in Penguin Random House to partner Bertelsmann for $675m (£530m). The company said it would return £350m to shareholders through a buyback.

Cairn Energy was boosted by an upgrade to ‘overweight’ from ‘equalweight’ at Morgan Stanley.

Boeing supplier Senior was in the green, having slumped on Wednesday after Boeing said it would suspend production of its 737 MAX jet.

On the downside, housebuilders were the biggest losers, with Barratt, Persimmon, Berkeley and Taylor Wimpey all weaker amid renewed concerns about a possible no-deal Brexit. The latest house price figures from the ONS also weighed as they showed that average prices rose in October at their weakest pace since September 2012. Prices were up 0.7% to £233,000.

IG market analyst Joshua Mahony said: "The housebuilders have seen a volatile week, with previous gains being sold into following the release of a disappointing HPI figure for October.

"With the HPI showing a mere 0.7% increase in UK property prices over the year to October, 2019 has clearly been a difficult period for housebuilders. However, the short-term picture has also provided a clue of how difficult it has been to sell properties in the lead up to the election, with a 0.7% decline for the month of October highlighting the unwillingness of buyers to commit until the election result was known."

Market Movers

FTSE 100 (UKX) 7,534.89 0.13%
FTSE 250 (MCX) 21,561.86 -0.59%
techMARK (TASX) 4,128.12 -0.28%

FTSE 100 - Risers

Pearson (PSON) 662.80p 2.92%
Fresnillo (FRES) 596.80p 2.16%
Ashtead Group (AHT) 2,411.00p 1.82%
Imperial Brands (IMB) 1,800.60p 1.49%
Rolls-Royce Holdings (RR.) 700.20p 1.48%
British American Tobacco (BATS) 3,246.00p 1.45%
Smurfit Kappa Group (SKG) 2,888.00p 1.12%
Glencore (GLEN) 234.70p 1.08%
Johnson Matthey (JMAT) 3,009.00p 1.04%
Burberry Group (BRBY) 2,180.00p 1.02%

FTSE 100 - Fallers

Persimmon (PSN) 2,618.00p -3.79%
JD Sports Fashion (JD.) 800.00p -2.56%
Meggitt (MGGT) 643.00p -2.55%
Next (NXT) 7,102.00p -2.50%
Flutter Entertainment (FLTR) 8,632.00p -2.49%
Berkeley Group Holdings (The) (BKG) 4,963.00p -2.34%
Barratt Developments (BDEV) 742.80p -2.24%
Taylor Wimpey (TW.) 191.55p -2.22%
Halma (HLMA) 2,118.00p -2.13%
TUI AG Reg Shs (DI) (TUI) 962.60p -1.96%

FTSE 250 - Risers

Cairn Energy (CNE) 199.20p 5.40%
Tullow Oil (TLW) 66.30p 4.21%
PZ Cussons (PZC) 185.60p 3.80%
Senior (SNR) 171.00p 3.20%
Cineworld Group (CINE) 228.40p 2.33%
Hunting (HTG) 391.60p 1.98%
Games Workshop Group (GAW) 5,890.00p 1.90%
Wood Group (John) (WG.) 388.30p 1.78%
Aston Martin Lagonda Global Holdings (AML) 559.40p 1.67%
Moneysupermarket.com Group (MONY) 326.90p 1.55%

FTSE 250 - Fallers

Vivo Energy (VVO) 119.80p -4.77%
Frasers Group (FRAS) 450.40p -4.17%
Trainline (TRN) 500.00p -3.85%
Royal Mail (RMG) 234.10p -3.46%
Marshalls (MSLH) 837.50p -3.24%
Dunelm Group (DNLM) 1,135.00p -2.83%
Polypipe Group (PLP) 530.50p -2.66%
Derwent London (DLN) 3,762.00p -2.64%
Hays (HAS) 178.20p -2.62%
Workspace Group (WKP) 1,144.00p -2.56%