London close: Stocks and pound drop as PM calls off vote
London stocks finished sharply lower on Monday even as the pound slid on news that Theresa May has called off this week's parliamentary vote on the Brexit deal until she has been able to speak with her counterparts in the European Union.
The FTSE 100 was down 0.83% or 56.57 points to 6,721.54, reversing earlier gains, as sterling dropped 1.36% against the US dollar to 1.25691, having earlier fallen to $1.2506. Against the euro, it was down 1.18% at 1.1053.
Over on the second-tier index the selling pressure was even more intense, with the stockmarket gauge down by 1.97% or 351.80 points to 17,492.31.
Speaking in the House of Commons, the Prime Minister told MPs: "Until those discussions have properly started, it's impossible to say how long [they will take]."
"We need to enter into those discussions and until we have done that it's not possible to give a date."
Thursday's European Council meeting offered a possible window for May to discuss matters with EU leaders, analysts at Oxford Economics wrote.
Yet with Parliament set to go into recess on 20 December "it is increasingly likely that the vote will be delayed until the new year," Oxford Economics's Andrew Goodwin said.
"When the Government subsequently returns to Parliament with a new plan, the Grieve amendment would come into force, allowing MPs to propose their own amendments to the Government's plan. We suspect that this would reveal that there is no majority for "no deal", a second referendum or a "soft" Brexit.
"Therefore, once these other options are proven unachievable, and the prospect of "no deal" becomes very real, we suspect that Parliament will eventually pass something close to the current deal. But the risk of an "accidental no deal" is not insignificant."
Adding to the gloom, data out earlier from the Office for National Statistics showed that UK economic growth remains very sluggish, held back by an unexpectedly steep decline in manufacturing activity.
Gross domestic product in October increased 0.1% compared to the preceding month, which economists had expected after two flat months. On a three-month basis, GDP growth in the period from August to October slowed to 0.4%, from 0.6% in the three months to September, which also matched the consensus forecast.
Industrial production unexpectedly fell 0.6% month-on-month, dragged down by a 0.9% collapse in manufacturing output. The manufacturing decline reflected a big drop in pharmaceuticals output and slower car production.
Year on year, industrial production was down 0.8% in October after being flat in September, while manufacturing output was down by 1.0% after having risen 0.5% during the previous month.
The retail sector was also in focus after figures released by Springboard and the British Retail Consortium revealed that footfall fell 3.2% last month compared to a 0.2% increase the year before, marking the twelfth consecutive month of decline.
The 'Black Friday' effect was blamed for the drop, as it meant shoppers opted to make purchases online, where deals were available for longer, rather than shop in-store.
High street footfall was down 3.8% in the four weeks from 28 October to 24 November, marking the biggest drop since April, when it fell by 4%. The East Midlands and the South East suffered the worst declines, with footfall there down 6.5% and 6%, respectively.
Helen Dickinson, chief executive of the BRC, said: "With one-in-every-three-pounds of non-food purchases made online last month, Black Friday accelerated the movement from in store to online in the lead up to Christmas. The Black Friday discounting period also began earlier for a large number of retailers negatively impacting footfall across a longer period over the month."
On the corporate front, Randgold Resources was the top gainer as gold prices were solid and holding on to last week's gains.
Smith & Nephew and Spire Healthcare advanced on the back of upgrades to 'overweight' at Morgan Stanley, while AstraZeneca was boosted as Deutsche Bank upped its target price to 6,900p from 6,500p.
NMC Health was on the front foot as it said its cash flow generation was improving in the second half of the year, as the Gulf region hospital operator reaffirmed full-year sales and profit guidance.
Retirement products specialist Just Group surged after the Bank of England's regulatory arm confirmed a less onerous plan for equity release mortgage providers than some feared. The Prudential Regulation Authority confirmed that transitional relief will remain available for business arranged pre-2016.
Centrica was the worst performer on the top-flight index as Deutsche Bank cut its price target on the British Gas owner to 135p from 155p.
Domino's Pizza suffered heavy losses following a Sunday Times report that disgruntled franchisees have written to the company's board threatening to "declare war" on the pizza chain if they are not given a bigger share of the profits.
Housebuilders were in focus as Peel Hunt said the short-term outlook for the sector remains volatile, mainly due to the economic uncertainty caused Brexit. However, the longer-term prognosis for the industry is "favourable" whether the Brexit deal passes through Parliament this week or not.
Peel Hunt cut Berkeley Group and Barratt Developments to 'add' from 'buy'. It also downgraded Crest Nicholson to 'reduce' from 'hold' and Taylor Wimpey to 'hold' from 'add'.
Outside the FTSE 350, support services and construction group Interserve tumbled 52% after confirming that it was in talks with its banks about converting much of its sizeable debt pile into new shares. The government contractor said it would announce its finalised deleveraging plan, which will be subject to shareholder approval, in early 2019.
Market Movers
FTSE 100 (UKX) 6,721.54 -0.83%
FTSE 250 (MCX) 17,492.31 -1.97%
techMARK (TASX) 3,321.32 -0.65%
FTSE 100 - Risers
Randgold Resources Ltd. (RRS) 7,020.00p 5.53%
GlaxoSmithKline (GSK) 1,469.60p 2.24%
British American Tobacco (BATS) 2,731.00p 2.16%
3i Group (III) 780.40p 1.93%
Imperial Brands (IMB) 2,377.50p 1.71%
AstraZeneca (AZN) 6,007.00p 1.35%
BAE Systems (BA.) 454.00p 0.98%
Kingfisher (KGF) 230.40p 0.88%
Diageo (DGE) 2,807.00p 0.57%
Coca-Cola HBC AG (CDI) (CCH) 2,381.00p 0.51%
FTSE 100 - Fallers
GVC Holdings (GVC) 630.00p -5.90%
Melrose Industries (MRO) 146.95p -5.31%
easyJet (EZJ) 1,053.00p -5.17%
Barratt Developments (BDEV) 439.00p -5.16%
Centrica (CNA) 133.45p -4.58%
Antofagasta (ANTO) 740.20p -4.54%
Persimmon (PSN) 1,861.00p -4.37%
ITV (ITV) 126.00p -4.07%
Berkeley Group Holdings (The) (BKG) 3,258.00p -3.75%
Rolls-Royce Holdings (RR.) 759.20p -3.70%
FTSE 250 - Risers
Just Group (JUST) 97.75p 19.06%
Centamin (DI) (CEY) 103.30p 3.09%
Sanne Group (SNN) 570.00p 2.69%
Daejan Holdings (DJAN) 5,740.00p 2.50%
HICL Infrastructure Company Ltd (HICL) 154.70p 2.11%
Bakkavor Group (BAKK) 144.00p 1.98%
WH Smith (SMWH) 1,908.00p 1.50%
Caledonia Investments (CLDN) 2,775.00p 1.27%
Spire Healthcare Group (SPI) 107.10p 1.23%
Polymetal International (POLY) 813.80p 1.09%
FTSE 250 - Fallers
Thomas Cook Group (TCG) 26.58p -13.98%
Crest Nicholson Holdings (CRST) 309.40p -8.35%
Stagecoach Group (SGC) 156.70p -8.31%
Superdry (SDRY) 618.50p -8.30%
Indivior (INDV) 76.08p -8.27%
Cairn Energy (CNE) 154.00p -8.17%
Domino's Pizza Group (DOM) 238.10p -7.96%
Galliford Try (GFRD) 593.50p -7.87%
FirstGroup (FGP) 80.35p -7.32%
Premier Oil (PMO) 70.70p -6.66%