London midday: Stocks maintain gains as pound pops higher

London stocks were still in the green by midday on Tuesday, helped along by a solid performance from the housebuilding sector, while sterling popped higher as hardline Brexiteer Jacob Rees-Mogg signalled that he would back Theresa May's Brexit deal.

The FTSE 100 was 0.3% higher at 7,195.36, while the pound was up 0.3% against the dollar and the euro at 1.3231 and 1.1693, respectively, after MPs voted overnight 329-302 in favour of holding a series of non-binding ‘indicative votes’ on various Brexit options on Wednesday.

Spreadex analyst Connor Campbell said an interview with European Research Group chair Jacob Rees-Mogg was likely responsible for sterling perking up. Speaking on a podcast, Mogg said May's deal was "better than not leaving at all".

"The prime minister will not deliver a no-deal Brexit," he added. When asked if that meant the options left were "deal or potentially no Brexit", he said: "That I think, becomes the choice eventually.

"Whether we are there yet is another matter, but I have always thought that no-deal is better than Ms May's deal, but Ms May's deal is better than not leaving at all."

Campbell said: "The pound would take either option, especially the latter."

Meanwhile, David Cheetham, chief market analyst at XTB, said that while the continued uncertainty is not good for the pound, the eventual outcome is looking increasingly favourable.

"Assuming no-deal doesn't rear its ugly head once more, then the outcomes seem to range from slightly positive for sterling (May’s deal) across a spectrum of increasingly supportive alternatives (customs union, Norway+) to the most beneficial which would be a second referendum.

"May’s deal has now shifted from the best case scenario for the pound in a two-horse race with no-deal, to the worst-case in an increasingly more positive field. There will no doubt be substantial intra-day volatility driven by the latest headlines on this front, but unless the prospect of no-deal looks anything more than remotely possible then the path of least resistance for the pound remains higher. "

With most eyes firmly on Brexit, the release of the latest mortgage approvals from UK Finance - which showed a slump in February to a near six-year low amid heightened Brexit uncertainty - came and went with little fuss.

Housebuilders were the best-performing sector in equity markets, buoyed by a bullish note from HSBC, which upped its stance on Bovis Homes and Persimmon to 'buy' from 'hold'.

Crest Nicholson shares rose after it said it had poached Peter Truscott from construction group Galliford Try to be its new chief executive, as well as giving investors an update on trading.

Galliford was weaker on the news, as Truscott has stepped down as chief executive with immediate effect, to be succeeded by current group finance director Graham Prothero.

Ocado rallied to the top of the FTSE 100 as it won a contract to develop an online grocery business for Australian supermarket and liquor store giant Coles Group.

Medical equipment maker Convatec surged after Sweden's Dagens Industri reported that Swedish private equity group EQT may consider a bid for the company.

Debenhams shares were up 37% as Sports Direct said overnight that it was considering a possible cash offer for the department store chain to avert a refinancing process that could wipe out its 30% stake.

Plumbing and heating products distributor Ferguson was under pressure as it said trading profit for the full year will be towards the lower end of analysts' expectations. Equipment rental firm Ashtead and building materials group CRH, which like Ferguson have a large exposure to US construction markets, also fell.

Russ Mould, investment director at AJ Bell, said Ferguson's warning about a slowdown in second-half sales growth raises questions about the economic health of its largest market, the USA.

"For the first half, it looks like the villain of the piece was the UK, where sales fell again on an underlying basis in the second quarter. However, what has really spooked investors is management’s forecast of sales growth for the year of 3% to 5%. That implies a modest growth in the second half after that 6.5% increase in the first.

"The only logical conclusion here is that the US is now seeing a slackening in growth too, since America represents some 80% of group sales and 90% of profits. This also explains why Ashtead’s shares are weaker today since the equipment rental specialist also generates around 90% of its profits the USA via its Sunbelt operations."

IP Group fell after the release of its full-year results, as it highlighted a "disappointing" performance for 2018 and Spectris was hit by a downgrade to 'sell' at Goldman Sachs.

Market Movers

FTSE 100 (UKX) 7,195.36 0.25%
FTSE 250 (MCX) 18,906.90 0.57%
techMARK (TASX) 3,484.19 0.16%

FTSE 100 - Risers

Ocado Group (OCDO) 1,308.00p 4.18%
Hikma Pharmaceuticals (HIK) 1,757.00p 2.96%
Just Eat (JE.) 745.00p 2.62%
Evraz (EVR) 609.20p 2.42%
Persimmon (PSN) 2,202.51p 2.20%
Associated British Foods (ABF) 2,356.00p 1.82%
Barratt Developments (BDEV) 600.48p 1.78%
NMC Health (NMC) 2,386.00p 1.71%
Taylor Wimpey (TW.) 178.10p 1.51%
Fresnillo (FRES) 862.20p 1.44%

FTSE 100 - Fallers

Ferguson (FERG) 4,652.00p -10.02%
Ashtead Group (AHT) 1,759.00p -3.75%
easyJet (EZJ) 1,124.78p -2.62%
CRH (CRH) 2,280.00p -2.36%
Carnival (CCL) 4,070.00p -1.95%
International Consolidated Airlines Group SA (CDI) (IAG) 511.15p -1.89%
Mondi (MNDI) 1,643.00p -1.73%
Smurfit Kappa Group (SKG) 2,118.73p -1.73%
Rolls-Royce Holdings (RR.) 880.20p -1.65%
Smith (DS) (SMDS) 324.80p -1.61%

FTSE 250 - Risers

Clarkson (CKN) 2,368.50p 7.17%
Crest Nicholson Holdings (CRST) 377.80p 7.03%
Convatec Group (CTEC) 143.25p 6.98%
Bakkavor Group (BAKK) 118.40p 4.78%
Funding Circle Holdings (FCH) 396.92p 4.02%
Premier Oil (PMO) 89.70p 3.52%
Bovis Homes Group (BVS) 1,121.50p 3.17%
Intermediate Capital Group (ICP) 1,071.50p 3.03%
Mediclinic International (MDC) 309.80p 2.82%
Indivior (INDV) 103.95p 2.57%

FTSE 250 - Fallers

Spectris (SXS) 2,475.00p -4.44%
Galliford Try (GFRD) 659.50p -3.86%
Computacenter (CCC) 1,086.00p -2.86%
Sophos Group (SOPH) 297.80p -2.81%
Just Group (JUST) 65.03p -2.58%
Morgan Advanced Materials (MGAM) 238.00p -2.06%
Kaz Minerals (KAZ) 615.00p -1.63%
Hunting (HTG) 561.50p -1.49%
PZ Cussons (PZC) 200.40p -1.47%
Babcock International Group (BAB) 490.50p -1.37%