London close: FTSE finishes lower as pound strengthens on Brexit news

The FTSE 100 closed Friday’s session in the red as the pound strengthened against the dollar on reports some MPs are prepared to vote against triggering the formal Brexit process.

London’s top tier index fell 1.43% to 6,730.43 points, while the pound rose 0.21% versus the dollar and was changing hands at $1.2581.

Sterling received a boost after Liberal Democrat, Labour and SDLP MPs told the BBC they are willing to vote against invoking Article 50 in Parliament. Lib Dem leader Tim Farron said his party would oppose Brexit unless promised a second referendum on the UK's deal with the European Union.

“The pound was expected to rise on last week’s realisation that Article 50 is now in the hands of Brexit-sceptic MPs, and with the US election now out of the way, we are seeing that pound rebound take shape,” said IG’s Johsua Mahony.

“Much like a weakening euro was perceived to be good for UK stocks, today’s pound rally is doing little to help the FTSE, which has suffered more than most.”

S&P Global said a so-called “hard Brexit”, in which Britain loses its access to the single market, is the most likely outcome of negotiations. S&P’s chief sovereign credit officer Mortiz Kraemer said it is hard see how a hard Brexit can be avoided unless both sides become more flexible.

“Nothing today suggests that a common quest for compromise will overcome the gulf that now looks as wide as the English Channel," Kraemer said.

In economic data, UK construction output hit its lowest level in four years in July to September. The Office for National Statistics said construction volumes fell by 1.1% in the third quarter compared to the April to June period, marking the weakest performance since the third quarter of 2012. Still, this was less steep than the 1.4% drop expected.

Data from Destatis confirmed German inflation was at a two-year high in October. Consumer prices last month rose 0.2% from September and 0.8% from October last year, which is its highest level since October 2014. Meanwhile, the annual rate of inflation came in at 0.7%. This was in line with consensus and the original estimate.

In the European Union, consumer prices were up 0.2% on the month and 0.7% compared to October 2015.

Stateside, consumer sentiment improved more than expected in November, hitting its highest level since mid-2016, according to data released on Friday. The University of Michigan’s preliminary US consumer sentiment index rose to 91.6 in November from 87.2 the month before and 91.3 in the same month last year, beating expectations for a reading of 87.5.

Meanwhile, oil prices plunged after OPEC said its production increased by 240,000 barrels a day in October, reaching an average of 33.64 million barrels per day. Brent crude dropped 3.2% to $44.39 per barrel and West Texas Intermediate declined 3.1% to $43.28 per barrel at 1649 GMT.

Among corporate stocks, miners were under pressure as prices of gold, silver and copper dropped. Fresnillo and Randgold Resources were among the biggest fallers.

Shares in BT Group bounced back from a three-year low on Thursday, as the telecommunications company barred Deutsche Telekom from selling its 12% stake in the company.

EasyJet's shares rose after Berenberg started the budget airline at ‘buy’ with a 1,250p price target.

Standard Chartered was weaker on its exposure to emerging markets, which could be hindered on protectionist policies affecting emerging markets under Donald Trump’s leadership.

Royal Dutch Shell slumped as it announced plans to invest $10bn in Brazil over five years and as oil prices retreated.

SIG plummeted as the building products distributor issued a profit warning and announced that its chief executive has stepped down, as its like-for-like, third quarter sales fell. Jefferies downgraded SIG to ‘hold’ from ‘buy’ and slashed the price target to 90p from 140p following the profit warning.

Tullow Oil’s shares were under the cosh as Canaccord Genuity downgraded its rating to ‘sell’ from ‘hold’ but raised its target price to 230p from 220p.

Cranswick advanced after Liberum upgraded the stock to ‘buy’ from ‘hold’ saying the recent de-rating offers a buying opportunity.

Market Movers

FTSE 100 (UKX) 6,730.43 -1.43%
FTSE 250 (MCX) 17,444.97 -1.21%
techMARK (TASX) 3,309.46 -1.28%

FTSE 100 - Risers

BT Group (BT.A) 361.00p 3.78%
Marks & Spencer Group (MKS) 327.20p 3.28%
Next (NXT) 5,040.00p 3.05%
Severn Trent (SVT) 2,177.00p 2.21%
Associated British Foods (ABF) 2,598.00p 2.16%
Sainsbury (J) (SBRY) 235.20p 2.04%
easyJet (EZJ) 1,055.00p 1.64%
Taylor Wimpey (TW.) 145.60p 1.61%
Hammerson (HMSO) 551.00p 1.57%
United Utilities Group (UU.) 879.00p 1.56%

FTSE 100 - Fallers

Fresnillo (FRES) 1,435.00p -8.95%
Randgold Resources Ltd. (RRS) 5,955.00p -6.73%
Standard Chartered (STAN) 617.20p -6.34%
Smiths Group (SMIN) 1,374.00p -4.98%
Polymetal International (POLY) 836.50p -4.94%
Mondi (MNDI) 1,517.00p -4.65%
Royal Dutch Shell 'B' (RDSB) 2,038.00p -4.57%
Royal Dutch Shell 'A' (RDSA) 1,949.00p -4.37%
Rolls-Royce Holdings (RR.) 740.50p -3.89%
BAE Systems (BA.) 590.50p -3.51%

FTSE 250 - Risers

Daejan Holdings (DJAN) 5,610.00p 3.69%
Countryside Properties (CSP) 237.40p 3.46%
Sports Direct International (SPD) 320.70p 3.02%
Euromoney Institutional Investor (ERM) 1,122.00p 2.97%
Cranswick (CWK) 2,213.00p 2.88%
Workspace Group (WKP) 682.00p 2.87%
IP Group (IPO) 153.10p 2.63%
Countrywide (CWD) 202.30p 2.28%
Kaz Minerals (KAZ) 359.80p 2.22%
AO World (AO.) 169.70p 2.17%

FTSE 250 - Fallers

SIG (SHI) 90.50p -21.85%
Acacia Mining (ACA) 452.30p -9.45%
Ashmore Group (ASHM) 298.80p -8.96%
Centamin (DI) (CEY) 141.10p -7.17%
Aberdeen Asset Management (ADN) 288.40p -7.03%
IMI (IMI) 915.50p -6.29%
Tullow Oil (TLW) 246.80p -6.05%
Hochschild Mining (HOC) 246.80p -5.87%
Amec Foster Wheeler (AMFW) 425.40p -5.61%
Vedanta Resources (VED) 821.50p -5.25%