London midday: Stocks fall further; Labour backs early election
London stocks had fallen further into the red by midday 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 0.8% lower at 7,275.29, while the pound was flat versus the dollar at 1.2864 and 0.2% firmer against the euro at 1.1608 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.
David Cheetham, chief market analyst at XTB, said it now seems likely that Johnson will get his wish.
"Elections are often seen as bringing heightened uncertainty and therefore negative in the near-term for affected markets, but in this case there is a hope that it will bring an end to the present quandary we find ourselves in," he said. "The pound will likely stay fairly well supported unless a no-deal outcome becomes more than marginally possible once more and there is also the hope that a softer version of Brexit than the latest WAB could receive greater support."
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) 7,275.29 -0.76%
FTSE 250 (MCX) 20,122.94 -0.43%
techMARK (TASX) 3,900.28 -0.49%
FTSE 100 - Risers
CRH (CRH) 2,890.00p 1.51%
International Consolidated Airlines Group SA (CDI) (IAG) 526.40p 1.35%
Ashtead Group (AHT) 2,347.00p 1.12%
Informa (INF) 768.20p 0.73%
Carnival (CCL) 3,241.00p 0.71%
Melrose Industries (MRO) 218.20p 0.51%
BAE Systems (BA.) 568.00p 0.46%
DCC (DCC) 7,228.00p 0.42%
Rio Tinto (RIO) 4,153.00p 0.31%
Standard Life Aberdeen (SLA) 303.60p 0.23%
FTSE 100 - Fallers
BP (BP.) 496.60p -3.01%
United Utilities Group (UU.) 854.60p -2.02%
Sainsbury (J) (SBRY) 208.70p -1.88%
Centrica (CNA) 71.86p -1.86%
Hargreaves Lansdown (HL.) 1,727.50p -1.82%
Royal Bank of Scotland Group (RBS) 219.65p -1.77%
NMC Health (NMC) 2,323.00p -1.69%
Legal & General Group (LGEN) 268.10p -1.58%
Severn Trent (SVT) 2,240.00p -1.54%
National Grid (NG.) 887.30p -1.48%
FTSE 250 - Risers
Plus500 Ltd (DI) (PLUS) 834.80p 5.86%
Future (FUTR) 1,322.53p 3.65%
Aston Martin Lagonda Global Holdings (AML) 445.10p 2.39%
Dunelm Group (DNLM) 844.72p 1.83%
Daejan Holdings (DJAN) 5,000.00p 1.63%
Card Factory (CARD) 174.18p 1.56%
Cairn Energy (CNE) 180.20p 1.52%
Sanne Group (SNN) 562.00p 1.44%
FDM Group (Holdings) (FDM) 742.00p 1.37%
Avast (AVST) 418.40p 1.36%
FTSE 250 - Fallers
Vivo Energy (VVO) 124.60p -3.86%
Royal Mail (RMG) 214.10p -3.65%
Watches of Switzerland Group (WOSG) 279.60p -3.25%
Hunting (HTG) 408.00p -2.86%
Trainline (TRN) 421.19p -2.73%
Energean Oil & Gas (ENOG) 906.00p -2.58%
Convatec Group (CTEC) 180.10p -2.28%
Dixons Carphone (DC.) 134.70p -2.25%
Spectris (SXS) 2,437.00p -2.17%
Capita (CPI) 161.75p -2.15%