London close: Stocks dip as investors mull prospect of general elections
London stocks dipped on Tuesday as Britain looked set for a December general election, with oil giant BP pacing the decline after its third-quarter results.
The FTSE 100 was 0.34% lower at 7,306.26 and the second-tier index was off by 0.21% at 20,168.33, while the pound was edging up by 0.13% versus the US dollar at 1.2878 and 0.07% firmer against the euro at 1.1594 after Labour leader Jeremy Corbyn said his party would support an early election.
Corbyn told the shadow cabinet: "I have consistently said that we are ready for an election and our support is subject to no-deal Brexit being off the table.
"We have now heard from the EU that the extension of article 50 to 31st January has been confirmed, so for the next three months, our condition of taking no deal off the table has now been met.
"We will now launch the most ambitious and radical campaign for real change our country has ever seen."
The news comes as Prime Minister Boris Johnson was set to publish a bill proposing a poll on 12 December that would require only a simple majority to get through.
"The UK looks set for a busy end to an already historic year, with Labour finally set to approve a December election after yesterday’s failed vote. For markets they are seeing this as a positive, with the Brexit deadlock finally expected to be broken," said IG's Josh Mahony.
"The risk of a no-deal Brexit appears to have dissipated for now, yet traders will pay close attention to Nigel Farage’s response given the ability to divide the Conservative vote."
On the Sino-US trade front, meanwhile, expectations were building after US President Donald Trump said on Monday that he hoped a deal would be agreed next month.
"China’s Xi Jinping plus President Trump are due to attend the Asia-Pacific Economic Cooperation meeting in Chile next month. Phase one of the trade deal is tipped to be signed then," said CMC Markets analyst David Madden.
In equity markets, BP was the standout loser after the oil company posted a 41% decline in third-quarter profits due to lower upstream earnings, weaker oil prices and weather impacts. Replacement cost profit, which is BP's definition of net income, came in at $2.3bn from $3.8bn the year before and $2.8bn in the second quarter. Still, it was above expectations of $1.7bn.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: "At first glance these might not seem like the best set of results, with a low oil price weighing on revenues and writedowns from asset sales taking a big chunk out of profits. However, at the cash level things look far brighter and ultimately it’s cash that funds future investment and pays BP’s not inconsiderable dividend.
"The challenge for BP is to get an increasing proportion of its significant cash flow back to investors. Unfortunately for shareholders a couple of things stand in the way at the moment. The first is the ongoing cost of the Gulf of Mexico oil spill - which soaked up $0.4bn of cash this quarter almost ten years after the disaster. The second is BP’s increased level of debt, which is now some way above the company’s long run target.
"BP is relying on more disposals to help get debt under control by the middle of 2020. With market conditions what they are that might be less than ideal, but it’s probably a necessary evil."
Energy services company Hunting gushed lower as it warned that full-year core profit would be at the lower end of market expectations "given current trading momentum".
Online food delivery service Just Eat fell after shares of US peer Grubhub slumped on the back of disappointing third-quarter sales and weaker-than-expected fourth-quarter guidance.
Royal Mail was knocked lower by a downgrade to 'underweight' at JPMorgan.
On the upside, online contracts-for-difference trading provider Plus500 rallied after it reported a 10% jump in third-quarter revenue as customer numbers grew.
Market Movers
FTSE 100 (UKX) 7,306.26 -0.34%
FTSE 250 (MCX) 20,168.33 -0.21%
techMARK (TASX) 3,900.73 -0.48%
FTSE 100 - Risers
3i Group (III) 1,153.00p 2.04%
Scottish Mortgage Inv Trust (SMT) 509.00p 1.39%
WPP (WPP) 989.00p 1.31%
Informa (INF) 772.00p 1.23%
DCC (DCC) 7,270.00p 1.00%
Antofagasta (ANTO) 913.80p 0.97%
Polymetal International (POLY) 1,229.00p 0.94%
Coca-Cola HBC AG (CDI) (CCH) 2,320.00p 0.91%
CRH (CRH) 2,873.00p 0.91%
British Land Company (BLND) 623.40p 0.91%
FTSE 100 - Fallers
BP (BP.) 492.55p -3.80%
Centrica (CNA) 71.08p -2.92%
Smurfit Kappa Group (SKG) 2,532.00p -2.62%
Royal Bank of Scotland Group (RBS) 219.20p -1.97%
SSE (SSE) 1,271.50p -1.97%
United Utilities Group (UU.) 856.20p -1.83%
Severn Trent (SVT) 2,234.00p -1.80%
ITV (ITV) 135.00p -1.78%
Just Eat (JE.) 748.40p -1.66%
Evraz (EVR) 386.80p -1.58%
FTSE 250 - Risers
Plus500 Ltd (DI) (PLUS) 832.00p 5.50%
Riverstone Energy Limited (RSE) 478.00p 3.91%
Dunelm Group (DNLM) 852.00p 2.71%
Mitchells & Butlers (MAB) 430.00p 2.38%
AJ Bell (AJB) 380.50p 2.28%
Fisher (James) & Sons (FSJ) 1,994.00p 1.94%
Avast (AVST) 420.80p 1.94%
Card Factory (CARD) 174.80p 1.92%
Sanne Group (SNN) 564.00p 1.81%
Cairn Energy (CNE) 180.60p 1.75%
FTSE 250 - Fallers
Royal Mail (RMG) 211.50p -4.82%
Vivo Energy (VVO) 124.60p -3.86%
Capita (CPI) 159.90p -3.27%
Drax Group (DRX) 299.00p -2.86%
Hochschild Mining (HOC) 194.90p -2.74%
Ascential (ASCL) 350.00p -2.56%
Aston Martin Lagonda Global Holdings (AML) 424.10p -2.44%
Spectris (SXS) 2,431.00p -2.41%
Energean Oil & Gas (ENOG) 909.00p -2.26%
IP Group (IPO) 57.50p -2.21%