London midday: Stocks fall further amid election uncertainty
London stocks had fallen further by midday on Friday as the prospect of an election threw up yet more uncertainty, but there were some bright spots in the form of well-received updates from the likes of WPP and Barclays.
The FTSE 100 was 0.6% lower at 7,286.30, while the pound was down 0.1% against the dollar at 1.2837 and 0.2% weaker versus the euro at 1.1550 amid news that Prime Minister Boris Johnson is looking to hold an election on 12 December.
Johnson is planning to ask the House of Commons on Monday to vote on a general election in December. He will require a two-thirds majority in order for it to pass. In the event of a successful vote, the government will continue to try and pass the current Withdrawal Agreement until parliament is dissolved on 6 November.
If it is unsuccessful, the debate on the WA will be frozen and Westminster will be turned into a 'zombie parliament'.
"Effectively here the government has tied any further discussion on its deal to a general election being held," Rabobank said.
"The basic stance of Labour on this topic appears to be that, before voting for a general election, it wants to assure that the prospect of no deal has been taken off the table. In practice this means that it needs the EU to have agreed an extension to the Brexit deadline that takes us beyond the date of the general election (i.e. 12th December). It also thinks that only having the ability to debate Brexit legislation to 6th November is not sufficient.
"Adding further difficulty to the situation is that it appears that the EU would like to wait for the outcome of Monday’s vote before deciding on the length of the extension to be granted. This makes it look like Labour will be unable to vote in favour of holding a general election on Monday and therefore the PM will freeze debate on the WA. This will put the ball back into the court of the EU, with the current Brexit deadline of the 31st October getting worryingly close (although ultimately we view it as very unlikely that an extension to 31st January will not be granted)."
On the trade front, sentiment took a hit after US Vice President Mike Pence criticised China's behaviour, saying it had become more aggressive and destabilising in the last year. In a long-awaited speech about the Trump administration's policy on China, he also attacked the country for its human rights record in Hong Kong. However, he did stress that the US remained open to practical cooperation.
China hit back, saying Pence's speech was full of lies and suggesting that the US address its own problems rather than criticise others.
Joshua Mahony, senior market analyst at IG, said: "For markets this is simply another issue that could complicate or derail trade talks, with the Chinese largely combative when pressed by foreign powers on the Hong Kong issue."
In corporate news, advertising giant WPP was sitting pretty at the top of the FTSE 100 after saying it had returned to net sales growth in the third quarter, but reiterating its expectations for like-for-like revenues to fall this year.
Barclays was in the green as it said pre-tax profit in the first nine months of the year rose to £3.3bn from £3.1bn the year before, even as it took a £1.4bn hit from payment protection insurance claims.
Luxury fashion brand Burberry was on the up after a well-received update from Gucci owner Kering.
On the downside, Synthomer shares tumbled after it warned that full-year underlying pre-tax profit would be below current consensus expectations.
Ascential fell after saying that the Money 20/20 China event had been deferred and would not take place this year.
Hastings Group was under the cosh after it warned that its full-year loss ratio, before the impact of the Ogden rate change, could move from the top of the target range to slightly above if elevated claims inflation continues.
Market Movers
FTSE 100 (UKX) 7,286.30 -0.57%
FTSE 250 (MCX) 20,004.14 -0.73%
techMARK (TASX) 3,882.91 0.03%
FTSE 100 - Risers
WPP (WPP) 973.00p 5.95%
Aveva Group (AVV) 4,206.00p 2.24%
Burberry Group (BRBY) 2,005.00p 1.24%
Fresnillo (FRES) 662.80p 1.07%
Barclays (BARC) 168.06p 1.00%
Rolls-Royce Holdings (RR.) 707.20p 0.74%
Just Eat (JE.) 757.60p 0.61%
Flutter Entertainment (FLTR) 7,740.00p 0.57%
Carnival (CCL) 3,176.00p 0.57%
Johnson Matthey (JMAT) 3,086.75p 0.55%
FTSE 100 - Fallers
Prudential (PRU) 1,389.00p -2.53%
British Land Company (BLND) 609.20p -2.50%
Sainsbury (J) (SBRY) 211.84p -2.20%
3i Group (III) 1,082.50p -2.17%
Centrica (CNA) 72.40p -2.06%
BT Group (BT.A) 202.15p -2.01%
National Grid (NG.) 907.30p -2.00%
Scottish Mortgage Inv Trust (SMT) 485.80p -1.86%
TUI AG Reg Shs (DI) (TUI) 1,005.00p -1.81%
Phoenix Group Holdings (PHNX) 705.10p -1.80%
FTSE 250 - Risers
Airtel Africa (AAF) 58.40p 4.29%
PayPoint (PAY) 916.00p 2.81%
Watches of Switzerland Group (WOSG) 289.50p 2.48%
Micro Focus International (MCRO) 1,058.80p 2.48%
Network International Holdings (NETW) 538.00p 2.48%
Morgan Advanced Materials (MGAM) 237.00p 1.98%
Centamin (DI) (CEY) 117.25p 1.69%
AVI Global Trust (AGT) 732.00p 1.53%
Syncona Limited NPV (SYNC) 234.97p 1.28%
Mitchells & Butlers (MAB) 408.00p 1.24%
FTSE 250 - Fallers
Synthomer (SYNT) 276.53p -10.68%
Ascential (ASCL) 347.20p -4.51%
OneSavings Bank (OSB) 368.20p -3.61%
Wood Group (John) (WG.) 336.50p -3.53%
Dunelm Group (DNLM) 796.00p -3.52%
Hammerson (HMSO) 306.10p -3.26%
Elementis (ELM) 145.90p -3.25%
TBC Bank Group (TBCG) 1,284.00p -3.17%
IP Group (IPO) 59.30p -2.95%
Riverstone Energy Limited (RSE) 495.00p -2.94%