London close: FTSE led higher by retailers, builders
London stocks on Tuesday recouped the losses from the day before, helped along by the retail and housebuilding sectors, while sterling made its way tentatively higher on faint hopes for some progress in Westminster.
The FTSE 100 closed 0.3% higher at 7,196.29, while the pound was up 0.4% against the euro at 1.1710 and 0.1% versus the dollar at 1.3208, after MPs voted overnight 329-302 in favour of holding a series of non-binding ‘indicative votes’ on various Brexit options on Wednesday.
Traders suggested European Research Group chair Jacob Rees-Mogg was responsible for sterling perking up. Speaking on a podcast on the Conservative Home website, the hardline Brexiteer signalled that he would back Theresa May's Brexit deal as it was "better than not leaving at all".
"The prime minister will not deliver a no-deal Brexit," he added. When asked if that meant the options left were "deal or potentially no Brexit", he said: "That I think, becomes the choice eventually. Whether we are there yet is another matter, but I have always thought that no-deal is better than Ms May's deal, but Ms May's deal is better than not leaving at all."
News then emerged that Northern Ireland's DUP, whose support May needs to get any votes through the Commons, now view a long extension as preferable to May’s withdrawal agreement.
There were also reports that up to 20 ministers could resign if Tory MPs are not allowed a free reign with Wednesday's indicative votes to try and find some potential new Brexit solutions.
David Cheetham, chief market analyst at XTB, said that while the continued uncertainty is not good for the pound, the eventual outcome is looking increasingly favourable.
"Assuming no-deal doesn't rear its ugly head once more, then the outcomes seem to range from slightly positive for sterling (May’s deal) across a spectrum of increasingly supportive alternatives (customs union, Norway+) to the most beneficial which would be a second referendum."
With most eyes firmly on Brexit, the release of the latest mortgage approvals from UK Finance - which showed a slump in February to a near six-year low amid heightened Brexit uncertainty - came and went with little fuss.
Housebuilders were the best-performing sector in equity markets, buoyed by a bullish note from HSBC, which upped its stance on Bovis Homes and Persimmon to 'buy' from 'hold'.
The housebuilding sector and general retails were both swathed in green, which has in recent months been a reflection of the market's optimism about the Brexit process.
Builder Crest Nicholson gave a boost to its own shares by poaching Peter Truscott from construction group Galliford Try to be its new chief executive, as well as giving investors an update on trading.
Galliford was weaker on the news, as Truscott has stepped down as chief executive with immediate effect, to be succeeded by current group finance director Graham Prothero.
Top of the FTSE 100 was Ocado, hitting an all-time high as it won a contract to develop an online grocery business for Australian supermarket and liquor store giant Coles. It was the company's first overseas contract since last month's fire at its Andover depot.
Medical equipment maker Convatec surged after Sweden's Dagens Industri reported that Swedish private equity group EQT may consider a bid for the company.
Debenhams shares were up 37% as Sports Direct said overnight that it was considering a possible cash offer for the department store chain to avert a refinancing process that could wipe out its 30% stake.
Sinking below the waterline was Carnival as the cruise line operator cut its guidance for full-year earnings per share, blaming higher fuel costs and headwinds in currency markets for the shortfall. Company boss Arnold Donald said Carnival remained on course to deliver double-digit earnings growth and a higher return on invested capital "over time" and that earnings per share were still rising from the prior year level.
Plumbing and heating products distributor Ferguson was under pressure as it said trading profit for the full year will be towards the lower end of analysts' expectations. Equipment rental firm Ashtead and building materials group CRH, which like Ferguson have plenty of exposure to US construction markets, also fell.
Russ Mould, investment director at AJ Bell, said Ferguson's warning about a slowdown in second-half sales growth raises questions about the economic health of its largest market, the USA.
"For the first half, it looks like the villain of the piece was the UK, where sales fell again on an underlying basis in the second quarter. However, what has really spooked investors is management’s forecast of sales growth for the year of 3% to 5%. That implies a modest growth in the second half after that 6.5% increase in the first.
"The only logical conclusion here is that the US is now seeing a slackening in growth too, since America represents some 80% of group sales and 90% of profits. This also explains why Ashtead’s shares are weaker today since the equipment rental specialist also generates around 90% of its profits the USA via its Sunbelt operations."
Airlines EasyJet and IAG flew lower as oil prices rose, with Brent at its highest level since 12 November, while IP Group fell after reporting a "disappointing" performance for 2018.
Rolls Royce slipped as JPMorgan Cazenove cut its price target on the stock, while Spectris was hit by a downgrade to 'sell' at Goldman Sachs.
Market Movers
FTSE 100 (UKX) 7,196.29 0.26%
FTSE 250 (MCX) 18,896.24 0.51%
techMARK (TASX) 3,489.56 0.32%
FTSE 100 - Risers
Ocado Group (OCDO) 1,307.00p 4.10%
Just Eat (JE.) 753.80p 3.83%
Evraz (EVR) 610.20p 2.59%
Fresnillo (FRES) 872.00p 2.59%
Associated British Foods (ABF) 2,369.00p 2.38%
Hikma Pharmaceuticals (HIK) 1,745.50p 2.29%
Paddy Power Betfair (PPB) 5,930.00p 2.24%
Next (NXT) 5,482.00p 1.97%
Anglo American (AAL) 1,993.60p 1.87%
DCC (DCC) 6,595.00p 1.85%
FTSE 100 - Fallers
Carnival (CCL) 3,800.00p -8.46%
Ferguson (FERG) 4,800.00p -7.16%
easyJet (EZJ) 1,123.50p -2.73%
Smurfit Kappa Group (SKG) 2,100.00p -2.60%
CRH (CRH) 2,279.00p -2.40%
International Consolidated Airlines Group SA (CDI) (IAG) 509.80p -2.15%
Tesco (TSCO) 228.70p -1.76%
Barclays (BARC) 153.30p -1.44%
Smith (DS) (SMDS) 325.40p -1.42%
Smiths Group (SMIN) 1,384.00p -1.28%
FTSE 250 - Risers
Clarkson (CKN) 2,385.00p 7.92%
Sanne Group (SNN) 543.00p 6.05%
Convatec Group (CTEC) 141.75p 5.86%
Crest Nicholson Holdings (CRST) 370.80p 5.04%
Premier Oil (PMO) 90.90p 4.90%
Funding Circle Holdings (FCH) 396.35p 3.87%
Contour Global (GLO) 174.80p 3.74%
Jupiter European Opportunities Trust (JEO) 733.00p 3.53%
Vivo Energy (VVO) 127.72p 3.40%
Domino's Pizza Group (DOM) 241.00p 3.30%
FTSE 250 - Fallers
Computacenter (CCC) 1,074.80p -3.86%
Just Group (JUST) 64.20p -3.82%
Spectris (SXS) 2,520.00p -2.70%
Amigo Holdings (AMGO) 158.00p -2.47%
Ted Baker (TED) 1,572.00p -2.42%
Galliford Try (GFRD) 669.50p -2.41%
IP Group (IPO) 88.50p -2.21%
Restaurant Group (RTN) 112.90p -2.17%
Sophos Group (SOPH) 300.00p -2.09%
PZ Cussons (PZC) 199.30p -2.02%