London close: Shares end little changed as Brexit uncertainty dampens sentiment
London stocks finished the Monday session little changed as investors mulled over the long-term outlook for Sino-US trade relations, amid ongoing worries about Brexit, but managed to overcome selling in the housebuilding sector.
The FTSE 100 was up 0.07% at 7,183.74, while the pound was 0.02% higher against the US dollar at 1.30547 and 0.04% lower versus the euro at 1.1512.
There was some good news on the trade front after US President Donald Trump said overnight that the 1 March deadline for the implementation of higher tariffs on Chinese imports will be delayed.
Trump tweeted: "I am pleased to report that the U.S. has made substantial progress in our trade talks with China on important structural issues including intellectual property protection, technology transfer, agriculture, services, currency, and many other issues.
"As a result of these very productive talks, I will be delaying the US increase in tariffs now scheduled for March 1. Assuming both sides make additional progress, we will be planning a summit for President Xi and myself, at Mar-a-Lago, to conclude an agreement."
But investors were also reacting to an article from China’s state news agency, Xinhua, which stressed that talks between the two nations would prove more challenging in the final stages and were subject to unspecified "new uncertainties". It went on to say that the trade conflict will be "long-term, complex and difficult".
Meanwhile, worries about Brexit continued to weigh on investors’ minds as Prime Minister Theresa May announced the postponement of the meaningful vote on her deal until 12 March - just two weeks before the UK is set to leave the EU.
"This is a gamble that she hopes will buy her more time for negotiations," said London Capital Group analyst Jasper Lawler. "But she risks infuriating ministers who are already prepared to revolt against her."
To say business leaders were also frustrated was putting it mildly. CBI deputy director-general Josh Hardie said: “This is the latest signal to businesses that no deal is hurtling closer. It must be averted. Every day without a deal means less investment and fewer jobs created. That’s the cost of running down the clock, and it’s irresponsible to treat that as a price worth paying.”
In equity markets, housebuilders were under the cosh as Persimmon tanked following a report that it could lose its right to sell Help to Buy homes. According to The Times, housing minister James Brokenshire is reviewing the company’s participation in the scheme following allegations of poor building standards and punitive leasehold charges, with the company receiving widespread criticism for the £500m pay package awarded to management last year.
Russ Mould, investment director at AJ Bell, said: "If these rumours prove accurate it would be a damaging blow for the company given that around 50% of the homes it built in 2018 were sold through the scheme.
"It’s not just Fairburn’s pay packet, and that of other senior directors at Persimmon, which is behind the scrutiny of the business. The company is also apparently under the microscope for build quality and for having homes with rising leasehold charges which makes them hard to sell on in the future.
"This shows the importance of paying more than lip service to good governance and corporate social responsibility. These things really matter and can have a significant impact on the success or failure of a company over the longer term.
"It also demonstrates the risks of being overly reliant on government support which can then be unilaterally withdrawn."
Peers Taylor Wimpey and Barratt Developments were also in the red.
Publisher Pearson was sharply lower as Berenberg said in a note that the company was "far from a turnaround" and profits are likely to decline in 2020.
Elsewhere, Associated British Foods was weaker as it said like-for-like sales at its Primark retail arm fell 2% in the first half of the year but full year guidance remained unchanged. At the top line, Primark grew sales 4% due to expansion of selling space, while the grocery, agriculture and ingredients divisions all reported improved revenues, while sugar sales have been strongly diluted by the new EU price regime.
Doorstep lender Provident Financial recovered from early weakness after it rejected a £1.3bn offer from smaller rival Non-Standard Finance, calling it "highly opportunistic", even though more than 50% of shareholders have already backed the offer.
Distribution group Bunzl retreated after saying it was stockpiling goods to mitigate against border delays if the UK crashed out of the European Union without a deal as it reported a rise in full year pre-tax profits.
Centamin tumbled as it reported a slump in full-year earnings, revenue and gold production.
Market Movers
FTSE 100 (UKX) 7,183.74 0.07%
FTSE 250 (MCX) 19,246.98 -0.12%
techMARK (TASX) 3,516.74 0.04%
FTSE 100 - Risers
Prudential (PRU) 1,583.00p 3.13%
GVC Holdings (GVC) 647.00p 3.03%
Hiscox Limited (DI) (HSX) 1,641.00p 2.95%
Smith (DS) (SMDS) 341.00p 2.43%
Kingfisher (KGF) 237.95p 2.31%
Melrose Industries (MRO) 177.85p 2.21%
InterContinental Hotels Group (IHG) 4,698.50p 2.21%
Antofagasta (ANTO) 966.80p 2.20%
AstraZeneca (AZN) 6,290.00p 2.13%
Centrica (CNA) 125.15p 2.12%
FTSE 100 - Fallers
Pearson (PSON) 854.20p -5.40%
Persimmon (PSN) 2,352.00p -4.70%
Bunzl (BNZL) 2,445.00p -3.70%
Fresnillo (FRES) 977.40p -1.75%
Associated British Foods (ABF) 2,275.00p -1.64%
Vodafone Group (VOD) 139.60p -1.55%
Taylor Wimpey (TW.) 165.35p -1.31%
ITV (ITV) 132.35p -1.19%
Rentokil Initial (RTO) 338.60p -1.17%
Glencore (GLEN) 305.25p -1.17%
FTSE 250 - Risers
Metro Bank (MTRO) 1,546.00p 7.90%
Fidelity China Special Situations (FCSS) 227.00p 3.89%
Provident Financial (PFG) 610.00p 3.50%
Superdry (SDRY) 535.00p 3.48%
Rotork (ROR) 293.10p 3.35%
Intu Properties (INTU) 114.85p 2.82%
John Laing Group (JLG) 386.20p 2.49%
Syncona Limited NPV (SYNC) 284.50p 2.34%
Just Eat (JE.) 720.60p 2.27%
Aston Martin Lagonda Global Holdings (AML) 1,254.60p 2.22%
FTSE 250 - Fallers
Centamin (DI) (CEY) 95.92p -28.60%
Vivo Energy (VVO) 128.00p -6.09%
Acacia Mining (ACA) 234.90p -5.96%
Funding Circle Holdings (FCH) 355.55p -4.87%
IG Group Holdings (IGG) 551.00p -4.09%
Hochschild Mining (HOC) 195.75p -4.04%
CLS Holdings (CLI) 239.00p -3.24%
Royal Mail (RMG) 277.70p -3.14%
Apax Global Alpha Limited (APAX) 144.00p -3.03%
Sports Direct International (SPD) 263.90p -2.76%