London close: Pound weakness on Brexit worries buoys Footsie
Weakness in Sterling helped to cushion the blow to London stocks from the worst retail sales data on record even as investors waited on a potentially key speech from the head of the US Federal Reserve scheduled for the next day.
By the end of trading, the FTSE 100 was down 0.17% at 7,536.47, while sterling was 0.52% weaker against the US dollar at $1.24517 and 0.43% lower versus the euro at €1.1112
Weighing on the pound, mid-morning the Speaker of the House of Commons, John Bercow, did not select the so-called Grieve amendment, which might have allowed MPs to block any future attempt by the government to prorogue Parliament, for a vote.
And before Conservative Party leadership candidates Jeremy Hunt and Boris Johnson faced each other in a televised debate on Tuesday evening, reports had surfaced that Dublin might be willing to accept some physical checks on the border with Northern Ireland in the event of a no deal Brexit.
Losses on the second-tier index were a tad bigger, with the FTSE 250 trading down by 0.58% to 19,467.37.
In the background meanwhile, at 1500 BST on Wednesday, Fed chairman Jerome Powell was scheduled to deliver his semi-annual monetary report to Congress and traders were hoping that he would keep the door open to interest rate cuts.
"Stocks are in the red heading into the close as traders are less hopeful that the Federal Reserve will adopt a very dovish stance. The non-farm payrolls update on Friday prompted dealers to adopt a less dovish prediction for the Fed, and that has led to a move lower in stocks," said David Madden at CMC Markets UK.
There were also reports on Tuesday of ongoing preparations for the resumption of trade talks between the US and China to resume, possibly including face-to-face talks, although according to sources cited by Reuters, the differences between the two sides remained substantial.
There was also some sabre-rattling to be heard from some Chinese media over the possible sale of armament to Taiwan by Washington.
Back on home turf, in June British retail sales advanced at the slowest average pace on record in the last twelve months as Brexit-related concerns continued to weigh on consumer spending.
Average sales growth slowed to just 0.6% over the year ending 30 June, according to the British Retail Consortium, which was the slowest increase since the industry group began recording figures back in 1995.
“The continued risk of a no-deal Brexit is harming consumer confidence and forcing retailers to spend hundreds of millions of pounds putting in place mitigations,” said BRC chief executive Helen Dickinson.
Samuel Tombs at Pantheon Macroeconomics was more upbeat, however, pointing out how wage growth hit an 11-year high in April, the increase - the biggest in five years - in the personal allowance at the start of the tax year and above average consumer confidence.
“None of these developments suggest that a downturn in consumers’ spending is imminent,” Tombs noted.
On the corporate front, Ocado shares continued to soar after an in-line set of interim results, rising almost 9% by midday.
The company said its interim pre-tax loss widened from £13.6m to £142.8m for the six months ended 2 June as the online retailer dealt with the impact of a fire that damaged property and goods at its Andover distribution centre in February.
Housebuilder Bovis reversed nearly all of its earlier gains, even after saying it expected to make "significant" progress in the second half to deliver an improved full year operational and financial performance despite Brexit worries, although it did manage to eke out a small gain.
Bovis reported a 4% rise in completions for the half year to 1,647, adding that market fundamentals remained stable with good demand for new homes across all regions.
Software company Micro Focus fell more than 5% after posting a 5.3% drop in its revenue on a constant currency basis for the six months ended 30 April, to $1.66bn - in line with its guidance - while its adjusted EBITDA was ahead 1.8% to $662.3m.
In broker note action, Just Eat slumped after a downgrade to ‘hold’ at Berenberg, while Antofagasta was hit by a downgrade to ‘neutral’ at Macquarie.
Intertek was weaker after a downgrade to ‘sell’ at Goldman Sachs, while Babcock was lifted to ‘neutral’ at Citi and Diageo was cut to ‘hold’ at Kepler Cheuvreux.
Market Movers
FTSE 100 (UKX) 7,536.47 -0.17%
FTSE 250 (MCX) 19,467.37 -0.58%
techMARK (TASX) 3,674.15 -0.31%
FTSE 100 - Risers
Ocado Group (OCDO) 1,236.50p 5.64%
Centrica (CNA) 88.26p 1.20%
Royal Bank of Scotland Group (RBS) 228.20p 1.06%
Auto Trader Group (AUTO) 560.00p 1.01%
Barratt Developments (BDEV) 576.40p 0.95%
Informa (INF) 845.20p 0.86%
Compass Group (CPG) 1,942.50p 0.83%
Reckitt Benckiser Group (RB.) 6,420.00p 0.80%
GlaxoSmithKline (GSK) 1,640.20p 0.75%
SEGRO (SGRO) 757.40p 0.74%
FTSE 100 - Fallers
NMC Health (NMC) 2,314.00p -5.46%
Micro Focus International (MCRO) 1,986.00p -5.32%
Melrose Industries (MRO) 179.10p -4.15%
Antofagasta (ANTO) 848.00p -3.83%
Glencore (GLEN) 266.20p -2.88%
TUI AG Reg Shs (DI) (TUI) 768.40p -2.61%
Smith (DS) (SMDS) 352.00p -2.61%
ITV (ITV) 110.40p -2.40%
British American Tobacco (BATS) 2,964.50p -2.16%
Hargreaves Lansdown (HL.) 1,974.50p -2.08%
FTSE 250 - Risers
AJ Bell (AJB) 404.00p 3.06%
IWG (IWG) 342.90p 2.91%
Ted Baker (TED) 824.50p 2.79%
Intu Properties (INTU) 80.26p 2.50%
Cineworld Group (CINE) 260.90p 2.11%
Energean Oil & Gas (ENOG) 1,000.00p 2.04%
FirstGroup (FGP) 104.30p 1.96%
Ascential (ASCL) 357.60p 1.94%
Dechra Pharmaceuticals (DPH) 2,812.00p 1.88%
Acacia Mining (ACA) 181.30p 1.57%
FTSE 250 - Fallers
RHI Magnesita N.V. (DI) (RHIM) 4,628.00p -5.93%
Bodycote (BOY) 780.50p -5.34%
IP Group (IPO) 71.00p -5.33%
Renishaw (RSW) 3,816.00p -4.60%
Vesuvius (VSVS) 520.00p -4.41%
Kaz Minerals (KAZ) 530.00p -4.23%
Funding Circle Holdings (FCH) 130.80p -4.03%
Amigo Holdings (AMGO) 172.60p -3.88%
Rank Group (RNK) 153.00p -3.68%
GVC Holdings (GVC) 606.20p -3.62%