London close: FTSE finishes higher after late wobble
London stocks wobbled late on but managed to end Tuesday a little higher, helped along by solid earnings from BP and a housebuilding sector rally.
The FTSE 100 closed up 0.14% to 7,035.85, helped as the pound dropped below $1.28 to a 10-week low, trading down 0.66% against the dollar to 1.27094 and by 0.51% lower versus the euro to 1.1192 as investors continued to digest Monday's Budget.
Sterling fell against the dollar amid strong US consumer confidence data and ongoing Brexit concerns, highlighted by a report from credit agency S&P that warned a no-deal exit would be likely to tip the UK into a recession.
“The market is certain that the British economy will only be able to benefit from the attested end of austerity announced yesterday if an orderly Brexit is achieved,” said currency strategists at Commerzbank. “An agreement does not seem to be any closer so there is still the threat of a no-deal Brexit... And that is all that matters for sterling at the moment.”
Losses for the pound have grown more prominent of late, said Joshua Mahony, market analyst at IG, as fears over a possible no-deal Brexit are heightened with the realisation that the UK may not find it easy to replicate the current EU relationships with nations around the world.
"The US economic outperformance also highlights why the monetary picture is so far ahead of its counterparts, and with the UK and EU wrestling with the issues of Brexit and Italian fiscal expansion, there is reason to believe we will continue to see a widening disparity between US and European rates."
Trade relations between the US and China were back in focus earlier as US President Trump was reported to be expecting a "great deal" with China, but threatened tariffs on a further $257bn worth of goods if a deal isn't agreed.
On the UK data front, a survey of the retail sector from the Confederation of British Industry revealed a sharp softening in the sales balance to +5 this month from +23 in September and below consensus expectations for a level of +20.
"The CBI’s survey provides more evidence that consumers have slowed down again after the summer splurge," said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.
"On past form, the reported sales balance points to a slowdown in year-over-year growth in retail sales volumes to about 2.0% in October, from 3.2% in September. As ever, the balance should be taken with a large pinch of salt. It is derived from responses from just 45 retailers and covers only the first half of the reference month.
"The survey often is too downbeat if the official measure of sales fell in the prior month, as it did in September. Nonetheless, the fundamentals - subdued consumer confidence, slowing employment growth and meagre real wage increases - had suggested a pullback in spending was on the cards, after an extended run of strength in Q2 and most of Q3."
In terms of sectors, housebuilders were the best of the bunch, with Taylor Wimpey, Persimmon, Barratt Developments, Berkeley Group and Crest Nicholson all higher after the Chancellor extended the Help to Buy scheme, which had been due to end in March 2021, through to March 2023, with more restrictive terms not coming until 2021.
Canaccord Genuity said: "This extension to Help to Buy should be welcome news as it removes the uncertainty and looks supportive; particularly given the ongoing macro uncertainty around Brexit. The extension provides more visibility out to 2023, avoids a cliff edge removal and the non-first time buyer use of HtoB should be able to be comfortably managed by industry and the mortgage market."
BP was the standout gainer as the oil giant enjoyed its best quarterly result in more than five years as profits gushed much higher than expected thanks to strong oil prices.
Online grocery specialist Ocado rallied after saying it expects to receive the first three orders for high-tech warehouses from US supermarket giant Kroger before the end of the year after the pair signed a formal services and operational agreement.
Elsewhere in retail, WH Smith racked up strong gains after announcing the acquisition of US airport retailer InMotion for $198m (£155m) to double its international travel business, while just before the close Sports Direct said it had bought Evans Cycles from the administrators.
Drug developer AstraZeneca rose as it agreed to sell certain rights to two drugs for $815m, while Polymetal nudged up after agreeing to sell its Kapan mine in Armenia to Chaarat Gold Holdings for £$55m.
Online trading platform IG Group marched sharply higher as it appointed former Verifone executive June Felix as its new chief executive officer with immediate effect.
On the downside, Reckitt Benckiser was the worst performer on the FTSE 100 after the consumer goods giant posted a 2% rise in third-quarter like-for-like sales, missing consensus expectations for a 4% increase as its European infant formula and child nutrition plant was hit by a manufacturing disruption.
Hunting was also in the red after the energy services group said North American third-quarter revenues were steady as shale oil production continued, but warned that geopolitical tensions were hitting US offshore and international markets.
Precious metals miners Fresnillo and Randgold were on the fallers list as the price of gold was hit by the rise in the US dollar. "The metal has had a strong inverse relationship with the greenback recently, and that is playing out today. US stocks are a little higher, so gold is missing out on the flight to quality play," said analyst David Madden at CMC Markets.
In broker note action, Antofagasta was lifted to 'neutral' from 'sell' by UBS, while Drax was hit by a downgrade to 'hold' from 'buy' at Jefferies.
Electrocomponents was lifted to 'neutral' at Credit Suisse, while Travis Perkins was raised to 'equalweight' by Barclays.
Market Movers
FTSE 100 (UKX) 7,035.85 0.14%
FTSE 250 (MCX) 18,667.73 0.54%
techMARK (TASX) 3,271.16 0.28%
FTSE 100 - Risers
Ocado Group (OCDO) 840.60p 4.97%
CRH (CRH) 2,293.00p 3.71%
Taylor Wimpey (TW.) 160.80p 3.47%
Berkeley Group Holdings (The) (BKG) 3,486.00p 3.11%
Barratt Developments (BDEV) 511.00p 2.43%
NMC Health (NMC) 3,358.00p 2.38%
Halma (HLMA) 1,300.00p 2.28%
BT Group (BT.A) 243.65p 2.27%
Persimmon (PSN) 2,279.00p 2.25%
Smith (DS) (SMDS) 386.30p 2.14%
FTSE 100 - Fallers
Reckitt Benckiser Group (RB.) 6,313.00p -4.51%
Fresnillo (FRES) 867.60p -3.08%
British American Tobacco (BATS) 3,448.00p -2.85%
BAE Systems (BA.) 508.40p -2.76%
Randgold Resources Ltd. (RRS) 6,144.00p -2.48%
Wood Group (John) (WG.) 707.80p -1.83%
Barclays (BARC) 170.02p -1.76%
Coca-Cola HBC AG (CDI) (CCH) 2,300.00p -1.37%
Rolls-Royce Holdings (RR.) 820.00p -1.37%
Just Eat (JE.) 586.80p -1.28%
FTSE 250 - Risers
IG Group Holdings (IGG) 613.50p 5.16%
WH Smith (SMWH) 1,830.79p 4.90%
Kier Group (KIE) 897.00p 4.68%
Kaz Minerals (KAZ) 504.80p 4.64%
Cineworld Group (CINE) 287.60p 4.58%
Crest Nicholson Holdings (CRST) 342.80p 4.07%
Hikma Pharmaceuticals (HIK) 1,843.50p 3.68%
Travis Perkins (TPK) 1,070.00p 3.63%
Entertainment One Limited (ETO) 402.20p 3.28%
Grafton Group Units (GFTU) 715.00p 3.26%
FTSE 250 - Fallers
Hunting (HTG) 667.50p -5.23%
On The Beach Group (OTB) 407.00p -3.33%
Drax Group (DRX) 397.40p -3.13%
Inchcape (INCH) 510.00p -3.04%
Amigo Holdings (AMGO) 225.95p -2.78%
Hill & Smith Holdings (HILS) 974.50p -2.75%
Premier Oil (PMO) 102.50p -2.68%
IP Group (IPO) 105.60p -2.61%
Millennium & Copthorne Hotels (MLC) 465.00p -2.41%
TalkTalk Telecom Group (TALK) 116.40p -2.26%