London midday: Stocks fall further as pound slips back; US mid-terms eyed
London stocks had fallen further into the red by midday on Tuesday even as the pound slipped back, as the US mid-term elections loomed.
The FTSE 100 was down 0.8% to 7,049.87, while the pound was flat against the dollar at 1.3039 and 0.1% higher versus the euro at 1.1441, giving up earlier gains amid Brexit doom and gloom as the Prime Minister convenes her cabinet in a week month for talks with the European Union.
"Looks like we’re heading for no deal," said Jeffrey Donaldson, chief whip of the DUP, on Twitter. "Such an outcome will have serious consequences for economy of Irish Republic. In addition, UK won’t have to pay a penny more to EU, which means big increase for Dublin. Can’t understand why Irish Government seems so intent on this course."
The DUP are crucial to Theresa May's Conservatives as the Northern Irish party's handful of seats is crucial in propping up the government in Westminster.
Said David Cheetham, chief market analyst at XTB: "Today had been rumoured to be a possible landmark day for PM May who was hopeful to make strides towards reaching a deal, but it seems to have gotten off on the wrong foot."
Meanwhile, the impending US mid-term elections were likely to be keeping investors jittery.
"It appears unlikely that the Democrats can take control of the Senate due to 26 of the 35 seats up for re-election already being in their possession so a split Congress is seen as the expected outcome," said Cheetham. "Given what happened back in 2016 when Trump’s victory shocked the world with an outcome that was contrary to the polls, investors appear to be understandably treading carefully ahead of the vote, in a case of 'once bitten twice shy'."
Back on home shores, the latest survey from the British Retail Consortium and KPMG released overnight showed that retail sales rose 0.1% on the month in October on a like-for-like basis, with total sales up 1.3% on the year.
Chief executive Helen Dickinson said: "Brighter weather and the anticipation of better deals in the Black Friday November sales have dampened demand for discretionary purchases. Moreover, low real wage growth over an extended period has left consumers with less money in their pocket, squeezing retailers’ margins in the face of higher costs.
"Furthermore, the very real possibility of a no-deal Brexit presents a huge challenge for retailers who must contend with the prospect of higher import prices, and further drops to consumer demand."
In UK corporate news, Morrisons was the standout loser as it said further strong expansion of its wholesale arm lifted sales at in the third quarter, but growth slowed from the rapid rate in the preceding quarter. Group like-for-like sales were up 5.6% in the 13 weeks to 4 November, excluding fuel, as the supermarkets business grew 1.3% and the wholesale business 4.3%.
Imperial Brands reversed earlier gains after the tobacco company said full-year operating profits rose 5.7% to £2.4bn, but it took a hit from a write-off relating to its bankrupt Palmer & Harvey (P&H) distribution operation.
BT remained in the red following a brief spike higher as rumours swirled again that Deutsche Telekom - which has a stake in the company - has been working with advisors on plans for a full takeover.
William Hill slumped after the bookmaker warned that 2018 profit would be down on last year as its online business takes a hit from regulatory and tax changes, while weaker footfall and challenging high street conditions also weigh.
On the upside, Associated British Foods was the top gainer as it reported stronger earnings per share for the year to September but said it expects growth to be flat in the coming year. Strong growth from its Primark retail arm, along with its grocery, agriculture and ingredients divisions, offsetting a decline in the sugar business, resulted in adjusted profits before tax of £1.37bn and adjusted earnings per share of 134.9p, up 5% and 6% respectively.
Packaging company DS Smith gained after saying it expects return on sales and adjusted operating profit in the half year to the end of October to be "materially" ahead of the same period a year ago.
Direct Line edged up after the insurer posted a 5.8% drop in third-quarter gross written premiums but said it was on track to meet its goals for 2018.
Hikma Pharmaceuticals was boosted by an upgrade to 'equalweight' at Barclays while Flybe was lifted to 'buy' at HSBC.
FTSE 100 - Risers
Associated British Foods (ABF) 2,448.00p 2.51%
Smith (DS) (SMDS) 385.40p 1.31%
Experian (EXPN) 1,792.00p 1.13%
Randgold Resources Ltd. (RRS) 6,405.00p 1.03%
Smurfit Kappa Group (SKG) 2,512.00p 0.88%
Burberry Group (BRBY) 1,814.50p 0.81%
Centrica (CNA) 148.95p 0.74%
Rolls-Royce Holdings (RR.) 829.10p 0.74%
Shire Plc (SHP) 4,559.00p 0.70%
Rentokil Initial (RTO) 309.10p 0.65%
FTSE 100 - Fallers
Morrison (Wm) Supermarkets (MRW) 238.45p -6.32%
Melrose Industries (MRO) 165.55p -3.75%
British American Tobacco (BATS) 3,319.50p -2.57%
Intertek Group (ITRK) 4,560.00p -2.33%
Persimmon (PSN) 2,330.00p -1.81%
CRH (CRH) 2,282.00p -1.72%
Kingfisher (KGF) 250.30p -1.65%
Vodafone Group (VOD) 147.92p -1.65%
Tesco (TSCO) 213.90p -1.61%
Just Eat (JE.) 624.80p -1.61%
FTSE 250 - Risers
IWG (IWG) 253.00p 6.80%
Weir Group (WEIR) 1,605.50p 6.18%
Spire Healthcare Group (SPI) 133.75p 4.98%
Indivior (INDV) 211.30p 4.60%
Sanne Group (SNN) 613.00p 4.43%
Synthomer (SYNT) 457.40p 3.58%
RPC Group (RPC) 820.20p 2.86%
Wizz Air Holdings (WIZZ) 2,690.00p 2.79%
Hikma Pharmaceuticals (HIK) 1,927.00p 2.50%
Babcock International Group (BAB) 594.00p 2.34%
FTSE 250 - Fallers
Amigo Holdings (AMGO) 234.50p -4.29%
William Hill (WMH) 206.10p -3.51%
TBC Bank Group (TBCG) 1,632.00p -2.86%
Just Group (JUST) 89.35p -2.77%
Playtech (PTEC) 461.60p -2.62%
Card Factory (CARD) 185.70p -2.42%
CYBG (CYBG) 259.40p -2.11%
Kaz Minerals (KAZ) 536.60p -2.08%
Go-Ahead Group (GOG) 1,563.00p -2.07%
Dixons Carphone (DC.) 169.15p -2.06%