London midday: Stocks rise as pound reaches 31-year low on Brexit worries

London stocks rose on Tuesday as the pound fell to a 31-year low against the dollar after Prime Minister Theresa May said she would trigger Article 50 by March 2017.

The pound, which has fallen 14% since the UK voted to leave the European Union, hit its lowest level in three decades after May revealed the timing of the formal Brexit negotiation progress at the weekend. The timing means Britain will leave the EU by the summer of 2019.

The pound was down 0.69% against the dollar to $1.2753 at 1134 BST.

Adding downward pressure on the currency, Chancellor Philip Hammond on Monday warned Brexit may cause "turbulence" and business confidence would be on a "bit of a rollercoaster".

“Hammond’s warnings of economic difficulty and fiscal uncertainty have added to the sterling blues over the last 24 hours and could have triggered a new wave of weakness for the currency,” said Craig Erlam, senior market analyst at Oanda.

“With the post-Brexit lows now having been broken, we could see the pound trading back towards 1.25 against the dollar in the not too distant future, and at more than five year lows against the euro.”

Better-than-expected data on UK construction activity gave an initial boost to the sterling in morning trade but the slight pick-up in the currency was short-lived.

The Markit/CIPS UK construction purchasing managers’ index rose to 52.3 from 49.2 in August, above the 50 mark that separates contraction from expansion for the first time in four months. Economists had been expecting a drop to 49.0.

“While the commercial construction sector appears to be suffering some fallout from the Brexit vote, other parts of the construction sector look to be holding up better,” said Dominic Bryant, senior European economist and head of UK economics at BNP Paribas.

“This may, in part, reflect the action taken by the Bank of England; construction is the area of the economy most sensitive to financial and monetary conditions. “

Meanwhile, oil prices slipped back as investors continued to mull over last week’s agreement by the Organisation of Petroleum Exporting Countries. West Texas Intermediate was down 0.33% at $50.72 a barrel and Brent crude was 0.47% weaker at $48.58 at 1147 BST.

On the corporate front, Pearson rallied as Morgan Stanley reiterated its ‘overweight’ rating on the stock and 1,050p price target, saying the market’s expectations of another profit warning are unlikely to materialise.

Quality assurance provider Intertek was lifted by a double upgrade from Jefferies, which raised its stance on the stock to ‘buy’ from ‘underperform’ and upped the price target to 4,300p from 3,000p.

Astrazeneca shares climbed as disappointment over the unsuccessful conclusion of a huge drug trial was offset by a win with the NHS drug regulator for one of its big cancer drugs and a licence deal for a beta-blocker medicine.

St.Ives gained as the AIM-listed marketing services company reported a 7% increase in revenue to £367.5m and an 8% drop in pre-tax profit to £30.4m that was in line with analysts’ forecasts.

Market Movers

FTSE 100 (UKX) 7,093.29 1.57%
FTSE 250 (MCX) 18,543.44 1.98%
techMARK (TASX) 3,606.54 1.97%

FTSE 100 - Risers

Provident Financial (PFG) 3,318.00p 6.62%
Pearson (PSON) 806.00p 5.64%
Intertek Group (ITRK) 3,705.00p 4.60%
Micro Focus International (MCRO) 2,289.00p 3.86%
CRH (CRH) 2,680.00p 3.84%
Rolls-Royce Holdings (RR.) 763.00p 3.46%
Persimmon (PSN) 1,879.00p 3.19%
Standard Chartered (STAN) 653.00p 2.96%
Anglo American (AAL) 1,023.00p 2.77%
Rio Tinto (RIO) 2,678.50p 2.76%

FTSE 100 - Fallers

International Consolidated Airlines Group SA (CDI) (IAG) 394.30p -0.66%
Mediclinic International (MDC) 919.50p -0.49%
easyJet (EZJ) 1,002.00p -0.40%
Land Securities Group (LAND) 1,057.00p -0.09%
United Utilities Group (UU.) 1,000.00p 0.00%
SABMiller (SAB) 4,496.00p 0.02%
Severn Trent (SVT) 2,500.00p 0.04%
AstraZeneca (AZN) 5,050.00p 0.18%
British Land Company (BLND) 630.50p 0.24%
Hammerson (HMSO) 595.00p 0.34%

FTSE 250 - Risers

Evraz (EVR) 193.90p 7.30%
Fidessa Group (FDSA) 2,598.00p 5.78%
BGEO Group (BGEO) 3,147.00p 5.57%
International Personal Finance (IPF) 285.40p 5.12%
Electrocomponents (ECM) 362.90p 5.07%
OneSavings Bank (OSB) 282.10p 4.99%
PayPoint (PAY) 1,122.00p 4.96%
Aberforth Smaller Companies Trust (ASL) 1,117.00p 4.88%
Marshalls (MSLH) 307.90p 4.87%
Senior (SNR) 243.30p 4.56%

FTSE 250 - Fallers

Henderson Group (HGG) 266.90p -1.40%
Phoenix Group Holdings (DI) (PHNX) 872.50p -1.30%
McCarthy & Stone (MCS) 172.50p -0.86%
Acacia Mining (ACA) 505.50p -0.49%
Kaz Minerals (KAZ) 235.40p -0.25%
Derwent London (DLN) 2,584.00p -0.23%
Close Brothers Group (CBG) 1,372.00p -0.15%
Greencore Group (GNC) 336.40p -0.09%
Shawbrook Group (SHAW) 248.60p -0.04%
John Laing Group (JLG) 275.30p -0.00%