London midday: Stocks turn lower as focus shifts back to Brexit deal
London stocks had slipped into the red by midday on Thursday, in line with their European peers, as initial relief over Theresa May's confidence vote victory gave way to concerns about how she's going to get her Brexit deal through parliament.
The FTSE 100 was down 0.1% to 6,873.44, reversing course as the pound traded up 0.2% against the dollar at 1.2649 and 0.1% versus the euro at 1.1120, paring gains after surging late on Wednesday as May survived her leadership challenge, albeit the 117 dissenting Conservative MPs was more than expected.
May was in Brussels again seeking further reassurances from the EU that the Irish backstop - which will prevent the return of a hard border with Ireland - will not last indefinitely, as she scrambles to get support for her Brexit deal ahead of the Commons vote in January.
Neil Wilson, chief market analyst at Markets.com, summed up the mood eloquently: "Theresa May, blah, sterling, blah, Brexit, blah blah. Nothing has changed after a truly Pyrrhic victory for the PM. She cannot get her deal through parliament, and cannot govern essentially. The question is how long she teases it out.
"The longer she does the greater the chance of no deal. The base case must still be that the EU will not reopen the deal and all it can really offer are some warm words around implementation."
Meanwhile, investors were digesting the latest housing sector survey from the Royal Institution of Chartered Surveyors, which showed that the UK property market was at its weakest level in more than six years in November as worries about Brexit meant that buyers and sellers opted to sit tight.
The RICS house price balance slumped to -11 last month from -10 in October, marking its lowest reading since September 2012. Meanwhile, the number of people looking for a new home fell again in November, with the net balance down to -21 from -15 in October, its lowest level since September 2017, mostly on the back of Brexit-related uncertainty.
The outlook was equally downbeat, with sales expectations for the coming three months slumping to -23 in November from -6 the month before. This was the most substantial decline in this series since the EU referendum.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Until households can be sure that the economic status quo won’t change next year, we expect house prices to struggle. But even further ahead, house prices are set to rise less quickly than households’ incomes, as the MPC likely will pick up the pace of interest rate hikes next year."
Miners were among the best performers as copper prices rallied amid signs of easing trade tensions between the US and China, with Antofagasta, Glencore and BHP all higher.
Oil producers and services companies were a weight on the FTSE indices with crude prices in the red. Heavyweights Shell and BP were both down at least 1.5%, while Cairn Energy, Premier and Tullow Oil were all around 4% lower.
After OPEC and other big producers, including Russia, agreed last week to reduce supply to try to trim the surplus, oil prices were under pressure from high inventories on Thursday as supply continued to outstrip demand. However, analyst Dean Popplewell at Oanda said prices were fairly steady as they were receiving some support from drawdown in US crude inventories "and on signs that the Sino-U.S trade war may be easing".
Holiday group Tui was the standout gainer on the top-flight index as it reported a 10.9% increase in full-year earnings and said it expects similar growth next year.
Ocado rose as the online grocery specialist reported 12% revenue growth from its UK retail operations in the final three months of 2018, in line with guidance for the full year.
Logistics company Bunzl advanced as it said full-year group revenue is expected to increase by between 8% and 9% at constant exchange rates and announced the acquisition of Copenhagen-based foodservice distributor CM Supply.
Security services firm G4S surged after saying it was reviewing its options to separate its cash solutions division, while Serco racked up strong gains as the outsourcer backed its recently-upgraded expectations for 2018. It also benefited from an upgrade to 'hold' from 'sell' at Liberum.
On the downside, Sports Direct was in the red as it posted a 27% drop in underlying interim profit weighed by losses at House of Fraser, which it bought back in August.
Spire Healthcare was also a big loser as JPMorgan cut its price target on the stock to 146p from 256p, while Imperial Leather maker PZ Cussons fell after saying it expects consumer to remain under pressure in all of its markets as its Nigerian operations were hit by a weaker economy and currency.
Ultra Electronics slumped on the back of a Barclays downgrade to 'underweight', even as it said in an update that full-year results should be in line with expectations and that it continues to experience strong order inflow.
3i Group, Associated British Foods, Assura, BCA Marketplace, Halfords and Grainger were among the companies whose stock went ex-dividend.
Market Movers
FTSE 100 (UKX) 6,873.44 -0.10%
FTSE 250 (MCX) 17,909.62 -0.44%
techMARK (TASX) 3,369.84 -0.20%
FTSE 100 - Risers
TUI AG Reg Shs (DI) (TUI) 1,201.00p 5.44%
Antofagasta (ANTO) 809.61p 2.56%
CRH (CRH) 2,067.00p 2.28%
Glencore (GLEN) 298.10p 2.25%
Standard Life Aberdeen (SLA) 238.00p 2.12%
Shire Plc (SHP) 4,630.00p 1.98%
Fresnillo (FRES) 836.80p 1.87%
Ocado Group (OCDO) 808.40p 1.86%
BHP Group (BHP) 1,637.20p 1.79%
Evraz (EVR) 488.50p 1.73%
FTSE 100 - Fallers
3i Group (III) 777.20p -3.48%
Next (NXT) 4,452.00p -2.58%
Marks & Spencer Group (MKS) 269.68p -2.47%
NMC Health (NMC) 3,090.00p -2.40%
Barratt Developments (BDEV) 457.50p -2.26%
DCC (DCC) 6,010.00p -1.80%
BP (BP.) 507.30p -1.78%
Kingfisher (KGF) 228.60p -1.72%
Mondi (MNDI) 1,672.00p -1.59%
RSA Insurance Group (RSA) 506.60p -1.52%
FTSE 250 - Risers
Serco Group (SRP) 97.30p 8.84%
G4S (GFS) 199.00p 8.54%
Superdry (SDRY) 376.86p 6.10%
Thomas Cook Group (TCG) 31.08p 5.57%
Centamin (DI) (CEY) 106.00p 3.26%
Saga (SAGA) 102.90p 2.80%
RHI Magnesita N.V. (DI) (RHIM) 3,536.00p 2.31%
Ibstock (IBST) 212.20p 1.92%
AA (AA.) 81.06p 1.91%
Hochschild Mining (HOC) 171.85p 1.72%
FTSE 250 - Fallers
Sports Direct International (SPD) 251.50p -8.98%
Spire Healthcare Group (SPI) 105.60p -8.33%
Ultra Electronics Holdings (ULE) 1,279.00p -7.39%
Elementis (ELM) 168.60p -6.28%
PZ Cussons (PZC) 211.40p -5.88%
Grainger (GRI) 208.40p -4.75%
Ted Baker (TED) 1,447.00p -4.24%
Ascential (ASCL) 357.60p -4.03%
Rank Group (RNK) 137.00p -3.93%
Premier Oil (PMO) 70.65p -3.88%