London close: Stocks dip ahead of key vote in Parliament
London stocks dipped on Tuesday even as the pound continued to languish near its post-referendum lows ahead of a key vote scheduled for later in the session in Parliament to try and force the government to ensure that it would not risk a 'no deal' Brexit.
The FTSE 100 ended down 0.19% at 7,268.19. At the same time, the pound was in fact slightly higher against the US dollar to 1.20880, but only after news broke that Philip Lee, MP for Bracknell, had switched to the LibDems, robbing the Prime Minister of his majority in the House of Commons.
Sterling was also higher against the euro, adding 0.20% to 1.1021.
Further boosting the pound was the key US ISM manufacturing sector Purchasing Managers Index, published late in the session, which at a reading of 49.1 economists said pointed to rising risks of a recession in the States and therefore weighed on the Greenback.
Neil Wilson, chief market analyst at Markets.com, said sterling could fall to as low as $1.10 in the coming weeks.
"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.
Meanwhile, across the Pond, some analysts were growing more concerned regarding the most likely end game for the US-China trade war.
According to analysts at Bank of America-Merrill Lynch, more pain lay ahead with Washington likely to impose the remaining tranches of already announced trade tariffs before the year was out while Chine was likely to play the 'long game' and hope that the US elections might result in a less aggressive occupant in the White House.
A prolonged trade war pause was then likely to ensue until the next US elections in November 2019, they said.
But BofA-ML added a caveat: "One problem with this prediction is that 10 months seems like a mighty long period without a major new US action."
Highlighting the costs to the UK from the dash or Brexit meanwhile, the Markit/CIPS construction purchasing managers’ index fell to 45.0 last month from 45.3 in July, led lower by the sharpest reduction in new work since March 2009 amid worries about Brexit. This was below expectations for an improvement to 46.5.
In equity markets, stocks with UK exposure weighed, with banks RBS and Lloyds and housebuilders Barratt Developments and Persimmon all lower.
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.
On the upside, plumbing and heating products distributor Ferguson was the standout gainer as it revealed 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.
Market Movers
FTSE 100 (UKX) 7,268.19 -0.19%
FTSE 250 (MCX) 19,464.14 -0.09%
techMARK (TASX) 3,852.52 0.04%
FTSE 100 - Risers
Fresnillo (FRES) 764.00p 2.41%
Micro Focus International (MCRO) 1,113.80p 2.41%
Ferguson (FERG) 6,270.00p 2.12%
Associated British Foods (ABF) 2,324.00p 1.66%
Coca-Cola HBC AG (CDI) (CCH) 2,800.00p 1.60%
NMC Health (NMC) 2,593.00p 1.49%
Johnson Matthey (JMAT) 3,003.00p 1.49%
Sage Group (SGE) 711.20p 1.46%
Aveva Group (AVV) 3,762.00p 1.24%
Ocado Group (OCDO) 1,344.00p 1.17%
FTSE 100 - Fallers
Auto Trader Group (AUTO) 508.60p -4.51%
Smith (DS) (SMDS) 329.70p -3.48%
Informa (INF) 849.60p -2.88%
Just Eat (JE.) 754.40p -2.76%
Antofagasta (ANTO) 833.60p -2.59%
Carnival (CCL) 3,410.00p -2.52%
Smurfit Kappa Group (SKG) 2,460.00p -2.46%
Persimmon (PSN) 1,861.00p -2.13%
International Consolidated Airlines Group SA (CDI) (IAG) 417.70p -1.76%
Evraz (EVR) 486.30p -1.74%
FTSE 250 - Risers
Barr (A.G.) (BAG) 645.00p 9.51%
Syncona Limited NPV (SYNC) 243.00p 5.88%
Aston Martin Lagonda Global Holdings (AML) 498.00p 5.20%
Go-Ahead Group (GOG) 2,170.00p 4.43%
Contour Global (GLO) 183.00p 4.33%
Centamin (DI) (CEY) 151.55p 3.80%
Polypipe Group (PLP) 397.40p 3.76%
Greencore Group (GNC) 217.00p 3.38%
Ted Baker (TED) 957.00p 3.33%
Hammerson (HMSO) 229.00p 3.15%
FTSE 250 - Fallers
Restaurant Group (RTN) 135.40p -12.19%
Intu Properties (INTU) 34.64p -9.34%
Ferrexpo (FXPO) 190.00p -6.08%
Kaz Minerals (KAZ) 380.30p -5.26%
Amigo Holdings (AMGO) 73.30p -4.06%
FDM Group (Holdings) (FDM) 762.00p -4.03%
B&M European Value Retail S.A. (DI) (BME) 346.90p -3.88%
BlackRock Smaller Companies Trust (BRSC) 1,360.00p -3.82%
Vesuvius (VSVS) 448.80p -3.61%
Coats Group (COA) 72.20p -3.41%