London open: Stocks fall on weak Wall St cues, pound hit by Brexit woes

London stocks fell in early trade on Tuesday, taking their cue from a downbeat session in the US amid rising bond yields, as Brexit concerns hit the pound.

At 0835 GMT, the FTSE100 was down 0.3% to 7,647.19, while the pound was down 0.5% against the greenback to 1.4002 and 0.3% lower versus the euro at 1.1344 after a secret Brexit impact report for the Cabinet was leaked overnight.

Spreadex analyst Connor Campbell said a lot of sterling’s weakness stems from the week’s early focus on Brexit and the “innumerable issues” attached.

“Yesterday it was all about Theresa May’s shaky position atop the Tory party and the UK’s lack of ability to secure an EU divorce bill. Today, however, investors are concerned about a leaked cabinet report highlighting the myriad ways Brexit will be bad for the UK economy, regardless of whether Britain comes out the other side with a wide-ranging free trade deal, single market access or no deal at all.”

Bond markets were in focus after yields in Europe and the US rose on Monday following comments from Dutch Central Bank president and European Central Bank governing council member Klaas Knot and ahead of this week’s rate announcement by the Federal Reserve.

The 10-year US Treasury yield pushed above the 2.7% level for the first time since April 2014 and the two-year yield hit its highest level since September 2008.

Eurozone yields were driven by Knot’s comments, after he said the European Central Bank’s asset purchase programme should “as soon as possible”. He argued that there is not a single reason left to continue the quantitative easing in the euro area and said the ECB’s bond buying programme has already achieved “what could realistically be expected of it”. Some fairly hawkish rhetoric from ECB board member Benoit Coeure pushed yields higher.

Meanwhile, the move higher in US yields was prompted by the prospect that US policymakers could revise their forecasts higher for the US economy in light of the recent tax changes brought in by the Trump administration.

On the UK data front, net lending to individuals, consumer credit and mortgage approvals are at 0930 GMT.

In corporate news, Anglo American fell as it said the value of rough diamond sales for De Beers' first sales cycle of 2018 came to $665m.

Imperial Leather and Original Source maker PZ Cussons was weaker as it reported a drop in adjusted interim profit amid margin pressures and “tough” trading conditions, while CYBG was in the red despite posting a jump in first-quarter lending.

Film and television producer and distributor Entertainment One slipped after it confirmed that it had raised £53m in an placing with City institutions at a price of 305p as part of its plan to snap up the rest of US television producer The Mark Gordon Company.

On the upside, Irish convenience foods group Greencore was trading higher after it said revenue grew 54% in the 13 weeks to 29 December.

Zoopla and uSwitch operator ZPG advanced as it reported a good start to the financial year across both divisions, with its websites and mobile apps attracting 53 million average monthly visits during the three months to 31 December.

UBM rallied after agreeing to be bought by Informa for £3.9bn, as it looks to create a business-to-business information giant that will operate as a single business by the start of 2019. Informa edged higher

Domino’s Pizza was on the front foot after saying it expects annual profit to beat market forecasts after strong performance in the fourth quarter as British families ordered pizza while watching television.

UDG Healthcare gained after saying it expects adjusted earnings per share to rise by 18% to 21% in 2018 following strong trading in the first quarter.

Dechra Pharmaceuticals was boosted by an upgrade to buy at Jefferies, but Mediclinic was hit by a downgrade to neutral at UBS.

Market Movers

FTSE 100 (UKX) 7,647.19 -0.32%
FTSE 250 (MCX) 20,537.65 -0.20%
techMARK (TASX) 3,480.26 0.08%

FTSE 100 - Risers

Reckitt Benckiser Group (RB.) 6,860.00p 1.08%
Relx plc (REL) 1,568.50p 0.51%
Compass Group (CPG) 1,500.50p 0.47%
BAE Systems (BA.) 591.00p 0.44%
Rolls-Royce Holdings (RR.) 865.80p 0.44%
Tesco (TSCO) 211.40p 0.28%
WPP (WPP) 1,293.50p 0.23%
Imperial Brands (IMB) 2,921.00p 0.21%
Rentokil Initial (RTO) 297.00p 0.20%
Shire Plc (SHP) 3,481.50p 0.20%

FTSE 100 - Fallers

Anglo American (AAL) 1,717.00p -2.22%
Mediclinic International (MDC) 600.00p -1.64%
BHP Billiton (BLT) 1,575.40p -1.54%
Antofagasta (ANTO) 937.80p -1.51%
Micro Focus International (MCRO) 2,163.00p -1.50%
Glencore (GLEN) 409.45p -1.34%
Rio Tinto (RIO) 3,974.50p -1.24%
Standard Chartered (STAN) 828.30p -1.24%
3i Group (III) 929.00p -1.19%
Evraz (EVR) 380.60p -1.14%

FTSE 250 - Risers

Domino's Pizza Group (DOM) 365.10p 4.17%
Greencore Group (GNC) 209.70p 3.71%
UBM (UBM) 895.00p 2.93%
ZPG Plc (ZPG) 355.00p 2.07%
Dechra Pharmaceuticals (DPH) 2,370.00p 2.07%
Renishaw (RSW) 4,881.00p 1.69%
UDG Healthcare Public Limited Company (UDG) 824.50p 1.54%
RDI Reit (RDI) 35.70p 1.42%
Herald Investment Trust (HRI) 1,223.35p 1.10%
Sanne Group (SNN) 765.00p 1.06%

FTSE 250 - Fallers

PZ Cussons (PZC) 316.20p -4.18%
Hill & Smith Holdings (HILS) 1,195.00p -2.05%
Cineworld Group (CINE) 505.00p -1.94%
Ferrexpo (FXPO) 304.70p -1.90%
CYBG (CYBG) 325.20p -1.81%
Intermediate Capital Group (ICP) 1,143.00p -1.80%
Kier Group (KIE) 1,079.45p -1.78%
Tullow Oil (TLW) 206.67p -1.77%
Hochschild Mining (HOC) 225.00p -1.75%
Cairn Energy (CNE) 217.00p -1.72%