London close: Stocks fall as pound strengthens and investors await FOMC minutes

The FTSE 100 closed in the red as investors awaited the latest Federal Reserve meeting minutes and as the pound recovered.

London’s top tier index dropped 0.66% to 7,024.01 points while the pound rose 0.59% versus the dollar to $1.2195.

Sterling regained ground after May caved into pressure to allow Tory MPs to vote for a Labour motion calling for greater scrutiny of her proposals in Britain’s exit from the European Union. However, she ruled out letting parliament vote on whether to trigger Article 50, the formal Brexit procedure.

May has said she will invoke Article 50 by the end of March.

“Investors haven’t appreciated operating in the dark over the UK’s Brexit terms,” said Jasper Lawler at CMC Markets. “The prospect of a bit more transparency from Theresa May could mark the beginning of more stable trading in the pound.”

Bank of England official John Cunliffe also tried to soothe worries about Brexit by saying it is “highly unlikely” that major financial institutions will move to European cities once Britain leaves the EU.

Speaking at the House of Lord’s EU Affairs Sub-Committee on Wednesday, the Deputy Governor for Financial Stability also warned that government negotiations in trying to keep passporting rights will be a difficult progress.

Elsewhere, investors are looking ahead to the Federal Reserve’s minutes on its 20-21 September meeting when policymakers decided against an interest rate hike increase but said they expected at least one hike by the end of the year. The market will be closely scrutinising the minutes for clues on the timing on the next rate rise. The minutes will be published at 1900 BST.

Oanda’s Craig Erlam said: “Three of the 10 voting FOMC members dissented at the last meeting, all of whom are permanent voters, which would strongly suggest that a majority is not far away, not with a number of other policy makers appearing to lean that way, including chair Yellen herself.

“The minutes today could offer good insight into just how close others are to voting for a hike, what it is they want to see before doing so and just how many voters are currently on the fence. We tend to have quite a good idea of all this from the large number of appearances we now get from Fed officials, but more information is always welcome and could spark some volatility in the markets.”

In company news, EasyJet flew higher after the budget airline priced the issue of €500m bonds maturing in October 2023 at a coupon of 1.125%. Cantor Fitzgerald said the low coupon rate was attractive.

International Airlines Group also rallied on the rebound in the pound and as a rescue plan for Monarch with its biggest shareholder lifted sentiment in the sector.

Lloyds Banking Group declined after confirming plans to axe 1,230 jobs as it looks to cut costs and improve shareholder returns as part of its three-year strategy.

Peers RBS and Standard Chartered were also on the back foot.

Investors lost their appetite for Domino’s Pizza after the company reported a slowdown in growth at its UK operations, although it did confirm it is on track to meet full-year expectations.

Recruiter PageGroup gained after Kepler Cheuvreux lifted the stock to ‘hold’ from ‘reduce’.

On the commodities front, oil prices fell with Brent crude down 1.1% to $51.83 per barrel and West Texas Intermediate down 1.4% to $50.07 per barrel.

Market Movers

FTSE 100 (UKX) 7,024.01 -0.66%
FTSE 250 (MCX) 17,956.28 -0.65%
techMARK (TASX) 3,535.77 -1.01%

FTSE 100 - Risers

Glencore (GLEN) 236.20p 6.44%
Direct Line Insurance Group (DLG) 362.60p 3.30%
Aviva (AV.) 455.70p 1.90%
Centrica (CNA) 215.50p 1.56%
Capita (CPI) 591.50p 1.28%
Legal & General Group (LGEN) 217.00p 1.07%
Rio Tinto (RIO) 2,707.50p 1.04%
Anglo American (AAL) 1,041.50p 1.02%
International Consolidated Airlines Group SA (CDI) (IAG) 379.40p 0.88%
Standard Life (SL.) 348.90p 0.87%

FTSE 100 - Fallers

Taylor Wimpey (TW.) 143.70p -2.71%
Rolls-Royce Holdings (RR.) 754.00p -2.65%
Dixons Carphone (DC.) 333.30p -2.54%
Smith & Nephew (SN.) 1,215.00p -2.33%
Royal Bank of Scotland Group (RBS) 176.90p -2.27%
Whitbread (WTB) 3,800.00p -2.24%
Barclays (BARC) 168.55p -2.23%
Hargreaves Lansdown (HL.) 1,232.00p -2.22%
Standard Chartered (STAN) 654.30p -2.15%
Persimmon (PSN) 1,691.00p -2.14%

FTSE 250 - Risers

Evraz (EVR) 216.70p 3.68%
Mitie Group (MTO) 206.40p 3.30%
Pagegroup (PAGE) 379.90p 3.26%
Booker Group (BOK) 175.60p 2.21%
Electrocomponents (ECM) 371.20p 1.98%
Countryside Properties (CSP) 235.10p 1.86%
Kaz Minerals (KAZ) 260.40p 1.68%
Cairn Energy (CNE) 210.50p 1.45%
Vedanta Resources (VED) 651.00p 1.40%
CYBG (CYBG) 262.90p 1.35%

FTSE 250 - Fallers

Domino's Pizza Group (DOM) 353.50p -5.15%
Sports Direct International (SPD) 279.70p -4.70%
IP Group (IPO) 152.20p -4.70%
Polypipe Group (PLP) 270.60p -3.39%
Britvic (BVIC) 571.00p -3.14%
Pets at Home Group (PETS) 220.00p -3.04%
Sophos Group (SOPH) 252.80p -2.73%
Just Eat (JE.) 548.50p -2.66%
Countrywide (CWD) 202.10p -2.65%
William Hill (WMH) 298.50p -2.55%