London close: Stocks finish weaker amid no-deal Brexit warnings
London stocks closed in negative territory on Friday, after Prime Minister Boris Johnson warned there was a "strong possibility" of a no-deal Brexit.
The FTSE 100 ended the session down 0.8% at 6,546.75, and the FTSE 250 was off 0.68% at 19,622.15.
Sterling was weaker against its major trading pairs, last falling 0.68% on the dollar to $1.3204 and sliding 0.49% against the euro to €1.0898.
The market was hit not just by Johnson’s words, but also by comments from European Commission President Ursula von der Leyen, who reportedly told EU leaders that "the probability of a no deal is higher than of a deal".
“Stock markets in Europe are set to finish in the red as traders are increasingly worried about the prospect of the UK and the EU not reaching a trade deal,” said CMC Markets analyst David Madden.
“Sunday has been touted as the deadline but then again numerous deadlines have come and gone in the saga.
“This time is a bit different though as the rhetoric has been upped and the transition period ends in less than three weeks.”
Madden said that, in light of how things had gone recently and with the weekend around the corner, some dealers were trimming their exposure to equities.
“Typically the softer pound helps the FTSE 100 but in light of the selling pressure on banking, oil and mining stocks, the index is in the red.
“The regulatory arm of the Bank of England has announced that banks can resume paying dividends, but the fears of a no-deal scenario are too great, and the sector is in the red.
“Banks are the lifeblood of an economy so any shock to the economy because of no deal situation is likely to be felt by the banks.”
Sentiment was also knocked by news that GlaxoSmithKline and Sanofi had delayed their Covid-19 vaccine programme after the vaccine showed a weak response in people aged 50 and over.
Meanwhile, hopes of further US stimulus before the end of the year were dashed after House Speaker Nancy Pelosi suggested that talks could go on after Christmas if necessary.
In equity markets, banks were under the cosh amid Brexit worries, with NatWest down 6.67%, Barclays off 4.02% and Lloyds Banking Group 4.49% lower.
NatWest was also dented by a rating downgrade to ‘neutral’ at JPMorgan.
Meanwhile, Morgan Stanley said in an equity strategy note that UK domestic banks could fall by as much as 20% in the event of a no-deal Brexit.
It said banks would be likely to lead UK equities lower initially given their high correlation to sterling and UK risk premia in general.
"Fears of a subsequent move to negative interest rates could provide a further hit to sentiment," Morgan Stanley added.
In the same note, the investment bank also said that the FTSE 250 could fall by as much as 10% in the event of a no deal.
Housebuilders were also in the red, with Persimmon, Taylor Wimpey and Barratt Developments all weaker, by 2.03%, 1.79% and 2.5% respectively.
Aircraft engine maker Rolls-Royce fell 7.87%, despite saying it expected to turn cash flow positive in the second half of 2021 as air travel demand started to recover from the Covid-19 crisis driven by vaccination programmes.
Bellway was on the back foot by 1/59% after saying it expected annual volumes to rise by a quarter as the stamp duty holiday and government help drove higher demand for new homes.
The company said its forward order book was up 18.7% to £1.77bn in the 17 weeks to 2 November.
On the upside, Calisen shares surged 24.69% after it agreed to be bought by a consortium of investors in a deal that valued the smart meter company at £1.4bn.
Qinetiq rallied 1.1% after an upgrade to ‘buy’ from ‘neutral’ at UBS.
Just Eat Takeaway and online supermarket Ocado - both of which have benefited from Covid-19 restrictions and lockdowns - were on the rise, gaining 1.05% and 0.66%, respectively.
Market Movers
FTSE 100 (UKX) 6,546.75 -0.80%
FTSE 250 (MCX) 19,622.15 -0.68%
techMARK (TASX) 4,071.20 -0.66%
FTSE 100 - Risers
Spirax-Sarco Engineering (SPX) 11,485.00p 2.13%
Burberry Group (BRBY) 1,815.00p 1.88%
Bunzl (BNZL) 2,462.00p 1.74%
Scottish Mortgage Inv Trust (SMT) 1,145.00p 1.60%
Polymetal International (POLY) 1,704.50p 1.22%
Avast (AVST) 493.20p 1.19%
Croda International (CRDA) 6,384.00p 1.17%
Just Eat Takeaway.Com N.V. (CDI) (JET) 7,918.00p 1.05%
Ferguson (FERG) 8,638.00p 1.03%
B&M European Value Retail S.A. (DI) (BME) 494.10p 0.94%
FTSE 100 - Fallers
Rolls-Royce Holdings (RR.) 117.40p -7.87%
NATWEST GROUP PLC ORD 100P (NWG) 150.35p -6.67%
Lloyds Banking Group (LLOY) 34.07p -4.49%
JD Sports Fashion (JD.) 751.80p -4.38%
Barclays (BARC) 136.06p -4.02%
Next (NXT) 6,386.00p -3.97%
International Consolidated Airlines Group SA (CDI) (IAG) 156.25p -3.73%
Antofagasta (ANTO) 1,411.00p -3.62%
Royal Dutch Shell 'B' (RDSB) 1,337.40p -3.45%
British Land Company (BLND) 475.60p -3.43%
FTSE 250 - Risers
Calisen (CLSN) 257.60p 24.69%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 392.00p 3.43%
Chemring Group (CHG) 261.00p 2.96%
Trainline (TRN) 452.80p 2.91%
Royal Mail (RMG) 332.60p 2.86%
Games Workshop Group (GAW) 10,210.00p 2.77%
Brewin Dolphin Holdings (BRW) 290.50p 2.65%
Electrocomponents (ECM) 863.00p 2.55%
PureTech Health (PRTC) 312.00p 2.44%
Telecom Plus (TEP) 1,464.00p 2.38%
FTSE 250 - Fallers
Frasers Group (FRAS) 437.60p -13.03%
Aston Martin Lagonda Global Holdings (AML) 70.85p -8.93%
Rank Group (RNK) 134.00p -7.33%
BMO Commercial Property Trust Limited (BCPT) 74.70p -6.04%
Vistry Group (VTY) 802.50p -5.42%
Marks & Spencer Group (MKS) 129.65p -5.19%
Henderson Smaller Companies Inv Trust (HSL) 932.00p -5.19%
TUI AG Reg Shs (DI) (TUI) 403.70p -5.08%
Dixons Carphone (DC.) 101.70p -4.95%
4Imprint Group (FOUR) 2,560.00p -4.83%