London open: Stocks edge lower ahead of Brexit talks
London stocks edged lower in early trade on Tuesday as investors eyed the latest round of Brexit talks.
At 0830 BST, the FTSE 100 was down 0.4% at 5,905.14, while sterling was 0.1% firmer against the dollar at 1.2850.
CMC Markets analyst David Madden said: "Trade talks between the UK and the EU will continue this week. Not long ago, Prime Minister Johnson said that if a deal was not reached by mid-October, the British side would walk away from the negotiating table, so the pressure is mounting to broker an agreement.
"Yesterday, there was some cautiously optimistic language from the British side. A spokesperson for the Prime Minister said that a gulf between the two sides existed, but it is still possible to reach a deal. The CMC GBP Index was one of the best performers yesterday."
Pantheon Macroeconomics said investors have kept their faith that a deal will be agreed and remain slightly net long sterling.
"This is in contrast to last year, when investors positioned for the pound to decline further. We continue to think that investors are right to anticipate a deal - we still see only a 20% chance of no-deal - though we expect negotiations to continue deep into Q4," it said.
In corporate news, British Airways owner IAG, engine maker Rolls-Royce and GKN owner Melrose were all in the red as investors continue to fret about the impact of the Covid-19 crisis and restrictions on the airline industry.
Other travel-related stocks were under the cosh, with Upper Crust owner SSP, budget airline easyJet and travel company TUI all weaker.
Elsewhere, retailer Next was knocked lower by a downgrade to ‘sell’ from ‘hold’ at Berenberg.
High Street baker Greggs fell sharply as it warned of job cuts in the face of expected lower demand and the closure of the government’s Job Retention Scheme ends next month. The company said like-for-like sales in company-managed shops averaged 76.1% of 2019 levels in the four weeks to September 26 - in line with planning assumptions.
On the upside, plumbing and heating products distributor Ferguson rallied after it posted a small drop in full-year profit and revenue but said it was reinstating its dividend after better-than-expected recent trading and announced the appointment of a new chief financial officer.
Discount retailer B&M European Value Retail was on the rise after it said first-half group adjusted earnings before interest, tax, depreciation and amortisation were set to be above its previously-guided range following strong sales.
Insurers were in focus after the Financial Conduct Authority said it had filed an appeal in a test case on business interruption claims related to the Covid-19 pandemic in case insurers failed to reach a deal on payouts to policyholders by Wednesday.
The FCA said discussions continued "at speed" with the eight insurers and two intervenors that took part in a test case to reach an agreement in principle on a range of issues to avoid an appeal.
RSA said it had sought leave to appeal and that a court hearing in relation to the appeal applications would take place on October 2, while Hiscox said it had prepared to apply for an expedited appeal, adding that it "has not yet made a decision on whether it will seek to appeal".
FTSE 100 - Risers
Ferguson (FERG) 7,858.00p 5.96%
B&M European Value Retail S.A. (DI) (BME) 510.20p 4.04%
National Grid (NG.) 867.60p 1.90%
Standard Life Aberdeen (SLA) 224.80p 1.72%
SSE (SSE) 1,206.00p 1.39%
Ashtead Group (AHT) 2,802.00p 1.05%
Auto Trader Group (AUTO) 559.40p 0.47%
Polymetal International (POLY) 1,658.50p 0.45%
Fresnillo (FRES) 1,177.50p 0.34%
Just Eat Takeaway.Com N.V. (CDI) (JET) 8,656.00p 0.25%
FTSE 100 - Fallers
International Consolidated Airlines Group SA (CDI) (IAG) 91.88p -2.67%
Melrose Industries (MRO) 115.35p -2.20%
Smith (DS) (SMDS) 288.30p -2.11%
Rolls-Royce Holdings (RR.) 146.15p -2.08%
Pearson (PSON) 546.20p -2.01%
HSBC Holdings (HSBA) 302.75p -1.88%
Next (NXT) 5,882.00p -1.84%
British Land Company (BLND) 340.00p -1.65%
Compass Group (CPG) 1,210.50p -1.59%
Schroders (SDR) 2,710.00p -1.56%
FTSE 250 - Risers
CMC Markets (CMCX) 335.00p 4.52%
Rank Group (RNK) 106.40p 4.31%
TI Fluid Systems (TIFS) 149.98p 3.32%
4Imprint Group (FOUR) 1,942.00p 2.21%
Calisen (CLSN) 168.95p 1.90%
Law Debenture Corp. (LWDB) 507.00p 1.81%
Allianz Technology Trust (ATT) 2,500.00p 1.42%
Scottish Inv Trust (SCIN) 721.00p 1.41%
Fidelity China Special Situations (FCSS) 327.00p 1.40%
Mediclinic International (MDC) 270.00p 1.35%
FTSE 250 - Fallers
SSP Group (SSPG) 198.60p -3.12%
Just Group (JUST) 42.90p -2.77%
TUI AG Reg Shs (DI) (TUI) 281.80p -2.39%
easyJet (EZJ) 493.60p -2.37%
Jupiter Fund Management (JUP) 215.40p -2.36%
Capita (CPI) 29.14p -2.21%
Unite Group (UTG) 846.50p -2.14%
Aggreko (AGK) 370.60p -1.96%
Wetherspoon (J.D.) (JDW) 860.00p -1.94%
Capital & Counties Properties (CAPC) 111.40p -1.85%