London close: Stocks gain, but Brexit worries back on front burner

London stocks extended their gains on Tuesday as the pound fell after Bank of England Governor, Mark Carney, told an audience that "a global trade war and a No Deal Brexit remain growing possibilities not certainties" and a key survey of construction sector conditions undershot market forecasts.

"While yesterday’s manufacturing survey could be explained as a reflection of global growth concerns, the construction sector is much more domestically focused and reflects a widespread lack of confidence in the future," said IG's Josh Mahony.

"Interestingly, it has taken the BoE to finally turn the pound around, with GBPUSD declining sharply after Mark Carney laid out expectations of a "considerably weaker" H2 and potential for a "near term policy response as insurance to maintain the expansion."

The FTSE 100 was up 0.82% at 7,559.19, while the pound was down 0.31% against the US dollar at 1.2601 and 0.46% weaker versus the euro at 1.1150.

Hot on the heels of Monday's dismal manufacturing figures, the IHS Markit CIPS construction total activity index fell to 41.3 last month from 48.6 in May, missing expectations for a rise to around 49.2.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, called the PMI data a "worrying step change in the impact of the Brexit uncertainty".

However, Tombs argued that the downturn could be brief, saying: "if, as we expect, the Brexit deadline is pushed back again in October, the construction sector should experience a quick recovery around the turn of the year."

Also weighing on the pound perhaps, speaking at the Tory leadership husting in Belfast, Jeremy Hunt, reportedly vowed that there would be no border with Ireland after the UK left the European Union, but shortly afterwards told ITV that a no deal Brexit could be as bad as the 2008 financial crisis.

As an aside, in the background the media spotlight was on the reported plans for the likes of HSBC and Deutsche Bank to let go thousands of staff in the UK in the wake of Brexit.

More broadly, trade relations between the US and China remained very much in focus after US President Trump said on Monday evening that talks between the two nations were underway again following the G20 summit in Japan during the previous week.

Trump's trade adviser, Peter Navarro, who was one of the foremost 'China hawks' in the US administration, backed up his boss, telling broadcaster CNBC that talks between Washington and Beijing were headed in a "very good direction".

Simultaneously, on the other side of the Pacific, Chinese Premier, Li Keqiang, announced at the World Economic Forum that his country would speed up the opening up of its financial services sector.

Despite the apparently positive news, technical analysts at JP Morgan were reportedly pointing out to clients how the recent rally in US stocks had in fact - at least for now - been led by so-called defensive issues.

Stagecoach was boosted by an upgrade at Liberum.

To the downside, advertising giant WPP was in the red after confirming late on Monday that it was in exclusive discussions with private equity firm Bain Capital about the sale of its majority stake in market research group Kantar, in a deal that would value the business at $4bn.

Funding Circle suffered heavy losses as it slashed full-year revenue growth expectations from 40% to approximately 20%, warning that an increasingly uncertain economic outlook has reduced demand for loans.

Jupiter Fund Management was under the cosh after it revealed a day earlier that fund manager Alexander Darwall was leaving the company to set up his own business. Darwall, who manages its European Opportunities Trust, has taken steps to launch a new investment management company, Devon, in London.

Croda International was the worst performer on the FTSE 100 after a downgrade to 'neutral' at UBS, while InterContinental Hotels was dented by a downgrade to 'sell' at UBS, and Auto Trader was knocked lower by a downgrade to 'hold' by Peel Hunt.

Market Movers

FTSE 100 (UKX) 7,559.19 0.82%
FTSE 250 (MCX) 19,659.33 0.13%
techMARK (TASX) 3,707.97 0.81%

FTSE 100 - Risers

Ferguson (FERG) 5,854.00p 3.39%
Reckitt Benckiser Group (RB.) 6,379.00p 3.29%
National Grid (NG.) 862.70p 2.81%
Severn Trent (SVT) 2,107.00p 2.68%
Imperial Brands (IMB) 1,937.00p 2.57%
Rentokil Initial (RTO) 405.70p 2.45%
Hiscox Limited (DI) (HSX) 1,756.00p 2.21%
Unilever (ULVR) 5,016.00p 2.19%
Aviva (AV.) 430.80p 2.06%
Coca-Cola HBC AG (CDI) (CCH) 3,040.00p 2.01%

FTSE 100 - Fallers

Croda International (CRDA) 4,888.00p -3.97%
Antofagasta (ANTO) 922.80p -2.78%
Auto Trader Group (AUTO) 539.00p -2.46%
WPP (WPP) 990.00p -2.17%
InterContinental Hotels Group (IHG) 5,228.00p -1.71%
ITV (ITV) 109.20p -1.62%
Ocado Group (OCDO) 1,191.50p -1.57%
NMC Health (NMC) 2,480.00p -1.51%
Mondi (MNDI) 1,799.50p -1.34%
Persimmon (PSN) 1,966.50p -1.28%

FTSE 250 - Risers

Oxford Instruments (OXIG) 1,412.00p 8.62%
Plus500 Ltd (DI) (PLUS) 562.80p 4.42%
Wizz Air Holdings (WIZZ) 3,505.00p 3.51%
Stagecoach Group (SGC) 121.40p 3.50%
Pennon Group (PNN) 761.00p 2.67%
Entertainment One Limited (ETO) 406.20p 2.52%
Hikma Pharmaceuticals (HIK) 1,795.00p 2.45%
Go-Ahead Group (GOG) 2,034.00p 2.26%
Sabre Insurance Group (SBRE) 276.00p 2.22%
Senior (SNR) 225.40p 2.18%

FTSE 250 - Fallers

Funding Circle Holdings (FCH) 115.60p -29.08%
Jupiter Fund Management (JUP) 395.30p -8.50%
Premier Oil (PMO) 76.00p -7.25%
Future (FUTR) 979.00p -5.89%
Kaz Minerals (KAZ) 590.40p -4.03%
Tullow Oil (TLW) 207.90p -3.26%
Wood Group (John) (WG.) 461.10p -3.13%
FDM Group (Holdings) (FDM) 943.00p -3.08%
Drax Group (DRX) 266.80p -2.98%
Hunting (HTG) 521.00p -2.71%