London open: Stocks nudge higher as sterling dips below $1.20

London stocks nudged up in early trade on Tuesday following solid gains in the previous session, as sterling fell below $1.20 for the first time since 2017.

At 0820 BST, the FTSE 100 was up 0.1% at 7,291.39. At the same time, the pound was trading at its worst level against the dollar in more than two and half years, down 0.8% at 1.1968 after Prime Minister Boris Johnson said he would trigger a general election in October if lawmakers pass legislation later in the day to force a Brexit delay in the event of a no-deal.

MPs are planning to put forward legislation forcing a delay until the end of January if Johnson is unable to reach a deal with the EU by mid-October.

Against the euro, sterling was 0.5% lower at 1.0947.

Neil Wilson, chief market analyst at Markets.com, said the pound could fall to as low as $1.10 in the coming weeks.

"Sterling is under the cosh early doors and it could get worse before it gets better," he said.

"It’s set to be a day of tumult in Westminster as rebel Tory MPs collude with the opposition to take control of parliamentary business and force the government to take no-deal off the table.

"Boris Johnson appears likely to lose the vote, which should almost certainly mean he will call for an election, likely to be Oct 14th. What happens next? Two-thirds of MPs must vote for the election. Boris will need opposition votes. Labour may not wish to fall into this ‘elephant trap’, yet Corbyn is almost duty bound to agree to it as the official opposition leader.

"The continued political uncertainty will do nothing to lift sterling from its torpor. GBPUSD sank to the 1.19 handle in early trade, dropping to a low of 1.19697. There is more downside risk and very little to give bulls encouragement. A 1.18 handle is possible today as bears target the 1.19 round number. Ignoring the flash crash, we are very much in uncharted waters here. We could feasibly see 1.15 or even 1.10 in the coming weeks if traders decide to move against the pound."

In equity markets, plumbing and heating products distributor Ferguson was standout gainer as it announced plans to spin off its UK operations and list them as Wolseley, as chief executive John Martin announced he would step down on November 19.

Wizz Air flew a little higher as it said August passenger numbers rose 16% year-on-year after it added new routes to and from Ukraine, Georgia, the UK and Austria.

DS Smith was a touch weaker even as it said the business continues to progress well despite continued macroeconomic uncertainty.

Wagamama owner Restaurant Group was trading down after saying it swung to a first-half pre-tax loss of £87.7m from a profit of £12.2m the previous year as it took a hit from an exceptional pre-tax charge of £115.7m. Still, revenue surged nearly 60% and the company said trading remains in line with its expectations for the year.

Elsewhere, Tesco said it had sold its mortgage portfolio to Lloyds Banking Group for around £3.8bn in cash. As a result of the deal, Tesco Bank’s 23,000 mortgage customers will be transferred to Halifax, a division of Bank of Scotland, which is a wholly owned subsidiary of Lloyds.

Market Movers

FTSE 100 (UKX) 7,291.39 0.13%
FTSE 250 (MCX) 19,482.34 0.00%
techMARK (TASX) 3,853.35 0.06%

FTSE 100 - Risers

Ferguson (FERG) 6,334.00p 3.16%
Micro Focus International (MCRO) 1,103.20p 1.43%
Direct Line Insurance Group (DLG) 287.50p 0.98%
Sage Group (SGE) 706.40p 0.77%
GlaxoSmithKline (GSK) 1,747.80p 0.63%
St James's Place (STJ) 926.60p 0.63%
Scottish Mortgage Inv Trust (SMT) 520.67p 0.52%
SEGRO (SGRO) 792.97p 0.50%
ITV (ITV) 117.10p 0.47%
Centrica (CNA) 70.55p 0.46%

FTSE 100 - Fallers

Prudential (PRU) 1,360.00p -0.84%
Berkeley Group Holdings (The) (BKG) 3,875.82p -0.70%
Glencore (GLEN) 235.45p -0.61%
Lloyds Banking Group (LLOY) 50.07p -0.50%
Intertek Group (ITRK) 5,558.00p -0.47%
Melrose Industries (MRO) 183.30p -0.46%
Just Eat (JE.) 772.24p -0.46%
Anglo American (AAL) 1,774.80p -0.42%
Morrison (Wm) Supermarkets (MRW) 183.75p -0.41%
Whitbread (WTB) 4,394.00p -0.34%

FTSE 250 - Risers

SIG (SHI) 129.80p 2.37%
Brewin Dolphin Holdings (BRW) 314.20p 2.35%
Dunelm Group (DNLM) 893.00p 1.65%
Greencore Group (GNC) 212.90p 1.43%
Games Workshop Group (GAW) 4,509.98p 1.35%
Crest Nicholson Holdings (CRST) 350.26p 1.23%
Hikma Pharmaceuticals (HIK) 2,062.00p 1.23%
Energean Oil & Gas (ENOG) 998.00p 1.22%
Sirius Minerals (SXX) 10.41p 1.17%
John Laing Group (JLG) 355.00p 1.14%

FTSE 250 - Fallers

Stagecoach Group (SGC) 121.80p -2.33%
Oxford Instruments (OXIG) 1,292.72p -1.77%
Equiniti Group (EQN) 203.20p -1.65%
Restaurant Group (RTN) 152.00p -1.43%
Aston Martin Lagonda Global Holdings (AML) 467.80p -1.18%
Jupiter Fund Management (JUP) 339.90p -1.11%
Woodford Patient Capital Trust (WPCT) 41.89p -1.08%
JPMorgan Indian Investment Trust (JII) 704.48p -1.06%
Ashmore Group (ASHM) 450.60p -1.05%
Inmarsat (ISAT) 601.20p -1.02%