London close: FTSE ends flat as traders digest Supreme Court Brexit ruling

The FTSE 100 finished flat on Tuesday as the pound weakened after the Supreme Court ruled that Parliamentary consent is needed before invoking Article 50 of the formal Brexit process.

The index closed down 0.01% to 7,150.34 points, reversing gains from earlier in the session when the pound reacted negatively to the Supreme Court upholding a ruling by the High Court, which said Parliament must vote on whether the government can trigger Article 50 of the Lisbon Treaty.

The pound dropped 0.16% versus the dollar at $1.254 and fell 0.05% against the euro to €1.1638.

Justices voted with a majority of eight to three on Article 50, which starts a two-year clock on formal Brexit negotiations with the European Union.

However, the court also ruled that the government does not have to consult devolved administrations in Scotland, Wales and Northern Ireland before triggering Article 50.

Connor Campbell, financial analyst at Spreadex, said the ruling on government not having to consult the devolved parliaments of Scotland, Wales and Northern Ireland means Leave supporters were dealt the “softest blow of the possible outcomes”.

Following the Supreme Court ruling, Brexit secretary David Davis said a bill to invoke Article 50 will be published “within days”.

While it is widely expected parliament will give its consent to trigger Article 50, IG market analyst Joshua Mahony said the court decision adds a “layer of uncertainty that is not particularly welcome”.

On the data front, the Office for National Statistics said UK public sector borrowing, excluding banks, in December dropped 5% year-on-year to £6.9bn, beating expectations of £6.7bn. November’s shortfall was also revised down to £11.3bn from a previously reported £12.6bn.

Borrowing in the first nine months of the 2016/17 tax year declined 14.3% to £63.8bn compared to a year ago, putting Chancellor Philip Hammond on track to reach his goal for the current fiscal year of £68.2bn.

Howard Archer, chief UK and European economist at IHS Global Insight, said based on the figures in the first nine months, borrowing looks set to reach £64.6bn in the current fiscal year.

In the eurozone, traders were digesting services and manufacturing data.

Markit’s eurozone manufacturing purchasing managers’ index rose to 55.1 in January from 54.9 in December, exceeding analysts’ estimates for a reading of 54.8 and remaining above the 50 level that separates an expansion in sector activity from a contraction.

Eurozone services PMI, however, fell to 53.6 in January from 53.7 a month earlier, below projections for a level of 53.9.

It sent the composite PMI, which measures both services and manufacturing, down to 54.3 from 54.4, missing forecasts of 54.5.

In the US, Markit’s manufacturing PMI rose to 55.1 in January from 54.3 in December, exceeding forecasts of 54.5.

Existing home sales in the US fell more than expected as the supply of houses on the market dropped. The National Association of Realtors said existing home sales fell 2.8% to a seasonally adjusted annual rate of 5.49m units, falling shy of analysts’ estimates of 5.50m.

November sales were revised up to 5.65m units from the previously reported 5.61m units.

In company news, Anglo American shone as De Beers reaped $720m in rough diamond sales from the first cycle of 2017.

Shares in ITV rallied following a report the Virgin Media owner Liberty Global could be facing competition from some of the world’s largest companies to buy out the London-listed broadcaster.

Rio Tinto advanced after agreeing the $2.45bn-plus-royalties sale of its Coal & Allied Industries thermal coal business in New South Wales to Yancoal Australia.

On the downside, BT Group tumbled as it cut its profit guidance for the next two years after an investigation into accounting blunders at the telecoms giant's Italian business forced it to more than triple its expected write-downs to £530m, while the UK business has also seen a deterioration in its outlook.

Budget airline easyJet flew lower after saying profit for 2017 would take a £105m hit instead of £90m from the impact of a weaker pound.

Dixons Carphone was weaker despite posting its fifth consecutive year of Christmas growth, with revenue ahead 4% on a like-for-like basis for the 10 weeks to 7 January.

Standard Life retreated after UBS downgraded the stock to ‘sell’ from ‘neutral’ and cut the price target to 310p from 320p. “Our rating is driven by our expectation for earnings pressure to emerge in Standard Life Investments in 2017 resulting from increased asset outflows from its flagship £42bn GARS fund.”

Market Movers

FTSE 100 (UKX) 7,150.34 -0.01%
FTSE 250 (MCX) 18,100.70 -0.08%
techMARK (TASX) 3,243.79 -1.93%

FTSE 100 - Risers

Anglo American (AAL) 1,386.00p 5.92%
Antofagasta (ANTO) 824.00p 4.37%
Rio Tinto (RIO) 3,615.00p 4.04%
ITV (ITV) 209.30p 3.97%
Pearson (PSON) 611.50p 3.21%
BHP Billiton (BLT) 1,480.50p 2.99%
Fresnillo (FRES) 1,482.00p 2.21%
Glencore (GLEN) 326.90p 2.03%
RSA Insurance Group (RSA) 573.50p 1.96%
Royal Bank of Scotland Group (RBS) 220.00p 1.90%

FTSE 100 - Fallers

BT Group (BT.A) 303.00p -20.79%
easyJet (EZJ) 981.00p -8.83%
Dixons Carphone (DC.) 315.00p -6.28%
Paddy Power Betfair (PPB) 7,940.00p -4.28%
Capita (CPI) 504.00p -3.45%
Bunzl (BNZL) 2,081.00p -2.12%
Babcock International Group (BAB) 914.50p -1.93%
Vodafone Group (VOD) 199.35p -1.89%
British Land Company (BLND) 586.00p -1.84%
Next (NXT) 3,826.00p -1.80%

FTSE 250 - Risers

Renishaw (RSW) 2,845.00p 4.56%
Vedanta Resources (VED) 1,059.00p 4.33%
Kaz Minerals (KAZ) 439.70p 3.87%
Evraz (EVR) 232.00p 3.57%
Ferrexpo (FXPO) 140.40p 2.78%
Marshalls (MSLH) 290.80p 2.61%
Petra Diamonds Ltd.(DI) (PDL) 156.50p 2.56%
Polymetal International (POLY) 965.50p 2.55%
Centamin (DI) (CEY) 154.80p 2.52%
HICL Infrastructure Company Ltd (HICL) 164.00p 2.18%

FTSE 250 - Fallers

PZ Cussons (PZC) 299.70p -10.94%
William Hill (WMH) 261.00p -5.71%
BTG (BTG) 550.50p -4.01%
AA (AA.) 242.90p -3.15%
Ocado Group (OCDO) 253.30p -3.10%
TalkTalk Telecom Group (TALK) 158.60p -2.94%
Carillion (CLLN) 228.30p -2.93%
Greencore Group (GNC) 223.50p -2.87%
Essentra (ESNT) 421.40p -2.86%
Ladbrokes Coral Group (LCL) 122.90p -2.61%