London midday: Stocks maintain losses as pound gains ground

London stocks were still in the red by midday on Tuesday as sterling gained ground.

The FTSE 100 was down 0.2% at 7,082.54, while the pound was up 0.4% against the dollar at 1.2265 and 0.3% firmer versus the euro at 1.1041.

David Cheetham, chief market analyst at XTB, attributed the rise in the pound to comments from shadow Brexit secretary Keir Starmer, who suggested earlier putting legislation in place to stop a no-deal Brexit as opposed to pursuing a vote of no-confidence in the government.

"This suggestion may well be the best approach to halt a no-deal Brexit as there’s still a fair chance that a no-confidence vote would fail and therefore further embolden the government in their current stance," said Cheetham.

"Lawmakers remain on their summer recess before returning next week and time is becoming very much of the essence for MPs who want to block a no-deal Brexit with the October 31st deadline looming ever larger."

More broadly, market participants were still trying to decipher the latest goings-on in Sino-US trade relations.

Han Tan, market analyst at FXTM, said: "Although Trump’s recent comments allow investors to cling on to hope that a US-China trade deal is still possible, it remains to be seen whether or not Trump’s comments prove to be green shoots or a false dawn over the prospects of a meaningful US-China trade deal. Despite the seemingly hopeful commentary, investors are well aware that multiple rounds of trade talks have only led to the current dismal situation, whereby repeated tariff threats have become the norm.

"Global investors have had their emotions toyed with amidst the ever-shifting sands of the US-China trade conflict. Market nerves have been left raw, with the delicate sentiment prompting knee-jerk reactions to every nuance pertaining to the highly unpredictable US-China trade impasse. Until there are clear signs of progress in US-China trade negotiations, risk-aversion will continue to dominate market sentiment, with safe haven assets maintaining their appeal among investors."

Investors were also digesting the latest figures from UK Finance, which showed that mortgage approvals rose to 43,342 in July from 42,775 in June, hitting their highest level since February 2017 and beating expectations for an increase to 42,800.

Howard Archer, chief economic advisor to the EY Item Club, said it's possible that mortgage activity is being lifted by some people looking to complete their house purchases before the Brexit deadline on 31 October.

"Improved earnings growth in tandem with current record high and rising employment may also be providing some help to housing market activity," he said. "Nevertheless, house prices remain soft on most measures and look unlikely to rise by more than 1.5% this year."

He said that if the UK leaves the EU with a deal on 31 October, reduced uncertainty and modestly improved economic growth will provide some help to the housing market and see prices rise around 2% in 2020. However, in the event of a no-deal Brexit, house prices could quickly fall by around 5%.

In equity markets, plumbing supplier Ferguson fell after a downgrade to 'underperform' from 'neutral' at Bank of America Merrill Lynch.

Distribution and outsourcing group Bunzl retreated as it posted a rise in interim profit and revenue but pointed to "continuing economic uncertainties". Some analysts also argued that the 2% hike to the dividend was disappointing.

On the upside, UAE-based healthcare operator NMC Health racked up strong gains again, having rallied last week on a report that two groups, including one backed by China's Fosun, were competing to buy a 40% stake in the company worth up to $1.9bn.

Polymetal advanced as it reported a jump in interim adjusted core earnings thanks to higher production, as its Kyzyl operation delivered at full capacity.

Outside the FTSE 350, shares of Carpetright pushed higher as the embattled floor coverings retailer said its largest shareholder, Meditor European Master Fund, will buy its £40.7m revolving credit facility from lenders NatWest and AIB.

IWG, formerly Regus, was on the front foot following reports over the weekend that the office space provider was looking to spin off its US business and list it in New York.

Market Movers

FTSE 100 (UKX) 7,082.54 -0.18%
FTSE 250 (MCX) 19,280.05 0.23%
techMARK (TASX) 3,806.49 -0.41%

FTSE 100 - Risers

NMC Health (NMC) 2,266.00p 5.05%
Standard Life Aberdeen (SLA) 249.20p 3.53%
TUI AG Reg Shs (DI) (TUI) 828.40p 3.06%
Smith (DS) (SMDS) 332.00p 2.41%
Smurfit Kappa Group (SKG) 2,468.00p 2.32%
British Land Company (BLND) 507.40p 2.13%
Hargreaves Lansdown (HL.) 1,928.00p 2.06%
Whitbread (WTB) 4,345.00p 1.61%
Centrica (CNA) 66.60p 1.61%
Land Securities Group (LAND) 772.00p 1.61%

FTSE 100 - Fallers

Just Eat (JE.) 750.80p -2.77%
British American Tobacco (BATS) 2,890.50p -2.38%
Sainsbury (J) (SBRY) 192.15p -2.36%
Ferguson (FERG) 5,846.00p -2.31%
Imperial Brands (IMB) 2,014.00p -2.00%
Smiths Group (SMIN) 1,552.50p -1.96%
AstraZeneca (AZN) 7,199.00p -1.56%
Carnival (CCL) 3,387.00p -1.37%
Pearson (PSON) 807.00p -1.34%
Spirax-Sarco Engineering (SPX) 7,772.02p -1.31%

FTSE 250 - Risers

AJ Bell (AJB) 404.00p 8.31%
Provident Financial (PFG) 407.24p 6.83%
Go-Ahead Group (GOG) 2,144.00p 6.45%
Future (FUTR) 1,126.53p 4.89%
Sirius Minerals (SXX) 10.63p 4.32%
IWG (IWG) 421.50p 3.54%
Tullow Oil (TLW) 214.20p 3.53%
Intu Properties (INTU) 36.07p 3.50%
Contour Global (GLO) 182.60p 3.40%
Hochschild Mining (HOC) 213.00p 3.00%

FTSE 250 - Fallers

TI Fluid Systems (TIFS) 165.80p -7.06%
Playtech (PTEC) 359.90p -4.94%
Woodford Patient Capital Trust (WPCT) 41.19p -4.87%
Clarkson (CKN) 2,375.00p -3.85%
Ted Baker (TED) 916.00p -3.68%
Ferrexpo (FXPO) 194.80p -3.47%
CYBG (CYBG) 134.55p -3.24%
Avast (AVST) 382.00p -2.90%
Intermediate Capital Group (ICP) 1,316.00p -2.59%
Renishaw (RSW) 3,472.00p -2.47%