London close: Stocks finish weaker amid EU withdrawal fears
London stocks closed in negative territory on Tuesday, while sterling slumped further on reports the head of the UK government’s legal department has quit over Prime Minister Boris Johnson’s plans to rewrite the EU withdrawal agreement.
The FTSE 100 ended the session down 0.12% at 5,930.30, and the FTSE 250 was off 0.1% at 17,625.18.
Sterling was weaker against both of its major trading pairs, last falling 1.06% on the dollar to $1.3026, and losing 0.87% against the euro to €1.1046.
“A no-deal Brexit increasingly feels like government policy,” said Spreadex analyst Connor Campbell.
“The Tories even admitted that their plans for Northern Ireland will ‘break international law’ - the threat of which has sent sterling into a tailspin.
“There have been many lows for UK-EU relations in the last few years, but this might just be the nadir.”
The pound dropped sharply earlier in the session, after reports that one of the government’s most senior legal experts had resigned over Downing Street proposals to challenge parts of the 2019 Brexit Withdrawal Agreement.
According to the Financial Times, Sir Jonathan Jones - Treasury solicitor and permanent secretary of the Government Legal Department - quit after plans were put forward by prime minister Boris Johnson that would enable the UK to backtrack on parts of the Withdrawal Agreement, including the Northern Ireland protocol.
The government said any new legislation would only be used if trade talks with the EU failed.
“While we should caution that [Jones’s resignation] indicates disharmony, it is also possible an overreaction by the market to a negative headline and does not necessarily make a deal with the EU less likely that it was before,” said Neil Wilson, chief market analyst at Markets.com.
“Nonetheless, it highlights the brinkmanship pursued by Johnson’s government in the talks – even suggesting that Britain could unilaterally rewrite the Withdrawal Agreement has raised the EU’s hackles and clearly raises the stakes.
“Expect more negative headlines, more risk and more volatility.”
In equity markets, worries about a hard Brexit dented the housebuilding sector, with Persimmon down 2.07%, Barratt Developments off 2.18%, Taylor Wimpey falling 2.01%, Berkeley 1.5% weaker, Crest Nicholson sliding 3.94%, and Bellway 1.9% lower.
Builders’ merchant Travis Perkins fell 6.6% after saying it swung to a first-half loss as revenue declined due to the Covid crisis.
On the upside, JD Sports Fashion managed gains of 8.53% as it forecast annual pre-tax profits of at least £265m, scrapped its interim dividend and reported a slump in half-year earnings.
Packaging company DS Smith was in the black by 8.02% after saying it will pay an interim dividend as trading has improved.
Credit-checking firm Experian gained 3.55% as it lifted its second-quarter expectations following stronger trading in July and August.
Royal Mail surged 25.03% after a well-received update on trading for the first five months of the 2021 financial year.
Market Movers
FTSE 100 (UKX) 5,930.30 -0.12%
FTSE 250 (MCX) 17,625.18 -0.10%
techMARK (TASX) 3,820.94 0.55%
FTSE 100 - Risers
JD Sports Fashion (JD.) 787.60p 8.69%
Smith (DS) (SMDS) 294.60p 7.95%
RSA Insurance Group (RSA) 461.60p 4.69%
Experian (EXPN) 2,924.00p 4.47%
Aviva (AV.) 285.70p 2.77%
Diageo (DGE) 2,599.00p 2.18%
Hargreaves Lansdown (HL.) 1,632.00p 2.00%
St James's Place (STJ) 971.40p 1.89%
Standard Life Aberdeen (SLA) 236.30p 1.85%
Johnson Matthey (JMAT) 2,570.00p 1.82%
FTSE 100 - Fallers
Whitbread (WTB) 2,451.00p -3.54%
Associated British Foods (ABF) 1,968.50p -3.41%
Royal Dutch Shell 'A' (RDSA) 1,067.20p -3.12%
Melrose Industries (MRO) 118.50p -3.11%
Royal Dutch Shell 'B' (RDSB) 1,023.60p -3.10%
BP (BP.) 258.50p -3.06%
Rolls-Royce Holdings (RR.) 218.90p -2.93%
M&G (MNG) 160.95p -2.69%
Evraz (EVR) 319.30p -2.68%
Standard Chartered (STAN) 375.60p -2.59%
FTSE 250 - Risers
Royal Mail (RMG) 218.30p 25.03%
Genus (GNS) 3,932.00p 10.51%
William Hill (WMH) 191.50p 5.80%
UK Commercial Property Reit Limited (UKCM) 69.80p 5.12%
C&C Group (CCR) 215.00p 4.88%
Shaftesbury (SHB) 553.50p 4.83%
Carnival (CCL) 1,164.00p 4.54%
Hammerson (HMSO) 282.00p 4.41%
Trainline (TRN) 415.60p 4.06%
Hiscox Limited (DI) (HSX) 745.00p 3.33%
FTSE 250 - Fallers
FirstGroup (FGP) 46.20p -8.42%
SSP Group (SSPG) 253.40p -6.84%
Go-Ahead Group (GOG) 678.50p -6.67%
Travis Perkins (TPK) 1,139.00p -6.60%
Vistry Group (VTY) 601.00p -5.43%
easyJet (EZJ) 595.80p -5.19%
National Express Group (NEX) 120.60p -4.81%
WH Smith (SMWH) 1,199.00p -4.61%
Micro Focus International (MCRO) 278.60p -4.43%
Crest Nicholson Holdings (CRST) 199.40p -4.23%