London midday: Stocks in the red amid Brexit concerns, but BTG surges

London stocks were still in the red by midday on Tuesday having taken their cue from a downbeat session on Wall Street, as worries about Brexit continued to weigh on investors' minds.

The FTSE 100 was down 0.6% at 6,961.25, nearing its worst level since the end of October, while the pound was flat against the dollar at 1.2856 and 0.2% firmer versus the euro at 1.1244.

Overnight, US stocks fell sharply, led lower by the tech sector as Apple, Amazon and Facebook slumped. Apple was weighed down by reports that it had slashed production orders in recent weeks for all three iPhone models that were unveiled in September.

On home shores, the focus was on politics as it appeared that the much-vaunted threshold of 48 letters needed to trigger a vote of no confidence in Prime Minister Theresa May still had not been reached.

Shares in banks, life insurers and much of the wider financial services sector were in the red as Brexit worries were renewed, exacerbated as the Tory party was given a "shot across the bows" in parliament by the DUP as it withdrew its support from the government in votes over the finance bill on Monday evening. "We had to do something to show our displeasure," a DUP spokesman said, referring to the Northern Irish party's disappointment with May's Brexit deal.

"Markets like to climb a wall of worry, but it really looks like there are just far too many concerns to encourage investors back in," said Chris Beauchamp, chief market analyst at IG.

"Attention will now focus on the parliamentary arithmetic. So far the coup against the PM looks to be stuck in the mud, with the plotters unable to muster the requisite number of letters. That at least has helped to support sterling in the near term. But the numbers game does not currently stack up for the deal, with only a mass defection of Labour MPs likely to save the prime minister at this point. And across the Channel, the chorus of voices wanting further negotiations is growing, while others such as the Dutch government make more preparations for a no-deal scenario. This is still very much a fluid situation."

In a speech to the Treasury committee earlier, Bank of England governor Mark Carney gave his backing to May's Brexit deal, which he said would "support economic outcomes". He also warned that a no-deal Brexit would be a "large, negative shock to the economy".

Meanwhile, the latest survey from the Confederation of British Industry showed that factory orders unexpectedly rebounded in November after a bid drop in October. The CBI's monthly order book balance rose to +10 from -6 in October, versus expectations for a reading of -7.

In corporate news, EasyJet flew lower even as it posted a 41% jump in profits in the past 12 months and said it sees potential for greater growth by expanding its holiday business. The budget airline reported headline profit before tax for year ending 30 September of £578m as revenues grew 17% to £5.9bn.

George Salmon, equity analyst at Hargreaves Lansdown, said Brexit remains one of several concerns for the company. "While EasyJet has delivered a strong set of results, attention is likely to focus on what’s happening next. The tailwind from cheap fuel is fading fast, and revenue per seat is set to dip. That puts the emphasis on EasyJet to increase operating efficiency over the costs it can control, but the group hasn’t got a great recent record here and looking ahead underlying costs are expected to flatline rather than descend."

Entertainment One was in the red even as the Peppa Pig parent's interim results met expectations, while CYBG was sharply lower after the Clydesdale and Yorkshire Bank owner increased underlying profits 13% in the past 12 months but fell into a loss at the statutory level due to PPI costs.

Halma bucked the trend, however, sitting pretty at the top of the FTSE 100 as the fire alarm and security technology company posted record first-half results, with revenue and profit up amid good performances across its business sectors.

Contract caterer Compass Group followed close behind after it reported a rise in full-year operating profit and revenue thanks to "excellent" growth in North America and strong net new business in the UK.

Shares in medical technology company BTG rocketed to the top of the FTSE 250 as it agreed to be bought by US-based Boston Scientific for £3.3bn.

Spectris surged after posting an 8% jump in like-for-like sales growth for the four months to the end of October, online trading platform Plus500 gained as it said 2018 results should be ahead of market expectations and Telecom Plus rallied on the back of record first-half numbers.

In broker note action, Bodycote was initiated at 'outperform', IMI was started at 'sector perform', Melrose Industries was boosted to 'top pick' and Rotork was upgraded to 'outperform' in an RBC Capital Markets note on UK engineering. RBC also downgraded Smiths and Spirax Sarco to 'underperform', added Melrose and Vesuvius to its 'best ideas' list and started RHI Magnesita at 'outperform'.

Market Movers

FTSE 100 (UKX) 6,961.25 -0.57%
FTSE 250 (MCX) 18,442.23 -0.53%
techMARK (TASX) 3,413.01 1.06%

FTSE 100 - Risers

Halma (HLMA) 1,368.00p 4.35%
Compass Group (CPG) 1,638.50p 3.21%
Reckitt Benckiser Group (RB.) 6,549.00p 1.27%
United Utilities Group (UU.) 753.60p 1.18%
Intertek Group (ITRK) 4,566.00p 1.11%
Fresnillo (FRES) 904.00p 1.10%
Bunzl (BNZL) 2,319.00p 1.09%
AstraZeneca (AZN) 6,229.00p 0.89%
Diageo (DGE) 2,808.00p 0.81%
Shire Plc (SHP) 4,632.50p 0.71%

FTSE 100 - Fallers

Evraz (EVR) 524.20p -4.41%
Antofagasta (ANTO) 783.60p -3.71%
Ashtead Group (AHT) 1,732.85p -3.62%
easyJet (EZJ) 1,132.60p -3.61%
Royal Mail (RMG) 297.90p -3.50%
Smurfit Kappa Group (SKG) 2,156.00p -3.14%
Scottish Mortgage Inv Trust (SMT) 460.23p -3.11%
Johnson Matthey (JMAT) 2,801.00p -2.64%
International Consolidated Airlines Group SA (CDI) (IAG) 619.00p -2.58%
Informa (INF) 713.60p -2.54%

FTSE 250 - Risers

BTG (BTG) 823.50p 33.90%
Plus500 Ltd (DI) (PLUS) 1,396.95p 8.71%
Spectris (SXS) 2,285.00p 8.65%
Telecom Plus (TEP) 1,259.35p 4.77%
IG Group Holdings (IGG) 622.00p 3.32%
Euromoney Institutional Investor (ERM) 1,286.00p 2.88%
Drax Group (DRX) 389.40p 2.74%
Bakkavor Group (BAKK) 144.20p 2.71%
Indivior (INDV) 211.80p 2.62%
Hiscox Limited (DI) (HSX) 1,648.00p 2.42%

FTSE 250 - Fallers

CYBG (CYBG) 220.00p -11.43%
Electrocomponents (ECM) 551.80p -9.78%
Spirax-Sarco Engineering (SPX) 6,105.00p -7.43%
Metro Bank (MTRO) 1,975.00p -4.96%
Capita (CPI) 101.10p -3.67%
Sophos Group (SOPH) 315.40p -3.55%
UDG Healthcare Public Limited Company (UDG) 582.00p -3.40%
Cineworld Group (CINE) 271.40p -3.35%
Ascential (ASCL) 383.60p -3.13%
Polar Capital Technology Trust (PCT) 1,102.90p -3.08%