London midday: Stocks steady ahead of Spring Statement; sterling rallies

London stock markets were eerily calm by midday on Wednesday, treading water ahead of the Spring Statement as sterling gained amid hopes of an extension to Article 50.

Just before midday, the FTSE 100 was steady at 7,149.56, while the pound was up 0.6% against the US dollar and the euro at 1.3158 and 1.1651, respectively, ahead of another Commons vote later on whether to leave the EU with no deal after MPs voted down Theresa May's Brexit plan on Tuesday night.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said that taking a 'no deal' scenario off the table and extending Article 50 would be a tailwind for the pound, at least in the short term.

"These measures would buy politicians a bit more time to resolve the gridlock, but it’s a stay of execution rather than a full pardon.

"The stock market will likely take further meaningful direction when Brexit actually takes shape. An orderly withdrawal would benefit domestic stocks within the FTSE 100, a chaotic withdrawal would see confidence fall, but a weaker pound would help buoy the share prices of the big international blue chips.

"It’s hard to conceive right now but the current chaotic situation will pass, and the stock market will ultimately be driven by the growth in company earnings. In the short term though, sentiment takes a bigger role, for better or worse."

Amid all the Brexit shenanigans, Chancellor Philip Hammond's Spring Statement is due at around 1230 GMT.

With the main budget now in autumn, no major tax or spending changes are expected but investors will be watching out for figures from the Office for Budget Responsibility amid expectations it will downgrade its growth forecast for this year.

Pantheon Macroeconomics said it expects negligible forecast revisions.

"We think the OBR will cut its forecast for public borrowing this year to £23.5bn from £25.5bn. But it also will revise down its forecast for GDP growth this year. As a result, it probably will revise up its forecast for borrowing in 2019/20 to about £33.5bn, from £31.8bn. This will absorb only a small fraction of the Chancellor's fiscal headroom, which he will keep in reserve for now, but spend in the Budget later this year."

Ahead of the budget, the government announced its tariff plans for a no-deal situation. As it stands, 80% of imports are tariff free. However, under a temporary scheme in the event of a no-deal Brexit, 87% of imports by value would be eligible for zero-tariff access. The plan would exclude some agricultural products such as beef, lamb, pork and dairy.

The government also said it would remove all border checks between Ireland and Northern Ireland bar a "small number of measures strictly to comply with international obligations, protect the biosecurity of the island of Ireland, or to avoid the highest risks to Northern Ireland business."

In corporate news, Standard Life Aberdeen was sitting pretty at the top of the FTSE 100 after the asset manager posted a dip in full-year pre-tax profit but a 19% rise in IFRS profit attributable to equity holders as it abandoned its co-chief executive set-up, with Martin Gilbert stepping down to leave Keith Skeoch in charge.

Prudential ticked just a touch higher as it posted a jump in annual profits thanks to a solid performance from its Asian business and updated investors on plans to spin off its UK savings and investment arm.

On the downside, Hikma Pharmaceuticals was weaker as its full-year core operating profit missed analysts' expectations.

Wm Morrison Supermarkets reversed earlier losses to trade a little lower even as it declared a special dividend on top of its full-year payout after a third consecutive year of strong sales and profit growth.

Doorstep lender Provident Financial - which is currently fending off a hostile £1.3bn bid from smaller rival Non-Standard Finance - also gave back gains despite saying it swung to a statutory pre-tax profit of£90.7m in 2018 from a loss of £147.9m the year before.

British American Tobacco retreated even as its Canadian subsidiary was given creditor protection as it looks to avoid bankruptcy after a court ordered it to fork out CAD15.6bn in a class action lawsuit.

Cyber security firm Avast saw its shares drop as its annual organic growth came in light of expectations and outsourcer Capita fell as it confirmed late on Tuesday that it had received an unsolicited offer for the non-core travel businesses from Corporate Travel Management Limited several weeks ago.

Market Movers

FTSE 100 (UKX) 7,149.56 -0.02%
FTSE 250 (MCX) 19,124.68 -0.10%
techMARK (TASX) 3,494.73 0.07%

FTSE 100 - Risers

Standard Life Aberdeen (SLA) 251.95p 2.84%
TUI AG Reg Shs (DI) (TUI) 773.40p 2.14%
Micro Focus International (MCRO) 1,908.50p 1.35%
Melrose Industries (MRO) 179.00p 1.13%
Carnival (CCL) 4,166.54p 1.13%
Reckitt Benckiser Group (RB.) 6,196.00p 1.13%
Antofagasta (ANTO) 938.60p 1.08%
Sage Group (SGE) 679.76p 0.97%
Schroders (SDR) 2,701.00p 0.97%
Glencore (GLEN) 306.85p 0.94%

FTSE 100 - Fallers

GVC Holdings (GVC) 540.50p -4.84%
Hikma Pharmaceuticals (HIK) 1,580.50p -4.53%
British American Tobacco (BATS) 3,025.00p -1.98%
United Utilities Group (UU.) 845.00p -1.90%
Taylor Wimpey (TW.) 179.05p -1.59%
Severn Trent (SVT) 2,035.00p -1.36%
NMC Health (NMC) 2,646.00p -0.97%
HSBC Holdings (HSBA) 620.70p -0.93%
Morrison (Wm) Supermarkets (MRW) 223.25p -0.84%
Marks & Spencer Group (MKS) 266.90p -0.82%

FTSE 250 - Risers

Elementis (ELM) 158.60p 4.69%
Indivior (INDV) 117.00p 4.42%
Aston Martin Lagonda Global Holdings (AML) 1,172.70p 4.26%
SIG (SHI) 136.00p 2.95%
Hochschild Mining (HOC) 198.40p 2.93%
Playtech (PTEC) 420.90p 2.91%
Stobart Group Ltd. (STOB) 159.00p 2.45%
Acacia Mining (ACA) 211.90p 2.37%
Equiniti Group (EQN) 190.60p 2.36%
Intermediate Capital Group (ICP) 1,056.00p 2.23%

FTSE 250 - Fallers

Avast (AVST) 292.90p -4.89%
Capita (CPI) 116.10p -4.37%
G4S (GFS) 196.80p -3.43%
Cairn Energy (CNE) 162.30p -3.22%
Bakkavor Group (BAKK) 127.20p -2.90%
IntegraFin Holding (IHP) 340.00p -2.43%
Intu Properties (INTU) 108.85p -2.34%
Contour Global (GLO) 173.40p -2.20%
Games Workshop Group (GAW) 2,865.00p -2.05%
Metro Bank (MTRO) 842.50p -2.03%