FTSE 100 movers: Ashtead slumps but housebuilders buck trend
London's FTSE 100 was down 1% at 6,949.89 in afternoon trade on Wednesday amid Brexit uncertainty
Housebuilders Berkeley Group, Persimmon, Barratt Developments and Taylor Wimpey all gained as Theresa May's hat-trick of defeats in Parliament cut the odds of a no-deal Brexit and boosted the prospect of a second referendum.
Traders also pointed to a note by JPMorgan, which upped its odds on the possibility of Britain remaining in the EU to 40% from 20%. JPM also said it now sees the chances of a no-deal Brexit at 10% from 20% and an orderly Brexit at 50% versus 60%.
Barclays said in a strategy note that while investors are broadly positioned for the withdrawal agreement to be rejected, there is see scope for material share price moves in the housebuilding sector, particularly in the event the deal is passed (a clear positive response), or if it receives an emphatic rejection by Parliament (a clear negative response).
"Broadly speaking, if we compare the long-term prospective price-to-earnings ratios of the housebuilders with their current multiples, we conclude that the market is pricing in a 26-35% cut in earnings per share," it said.
Shire was a high riser after both sets of shareholders approved Takeda Pharmaceutical's £46bn acquisition of the London-listed group.
On the downside, equipment rental firm Ashtead suffered the heaviest falls, tracking losses on Wall Street overnight as investors quailed over the flattening of the US treasury yield curve. Yield curve inversion has been a harbinger of recession since the second world war.
"The group derives the majority of its revenue in the US, and the fears traders have in relation to the state of the US economy are likely to be a factor in the decline," said CMC Markets analyst David Madden.
Wood Group was in the red after the world's largest oilfield services provider, Schlumberger, warned on Tuesday that its fourth-quarter North America revenues were likely to drop.
The company was also in focus after it was awarded a $43m contract by an unnamed large-cap midstream company to construct 80 miles of steel pipeline in west Texas.
Education publisher Pearson was under the cosh as Liberum reiterated its 'sell' rating on the stock, highlighting a disappointing set of results from Barnes and Noble Education in the US on Tuesday.
"As one of the largest US higher education college bookstore chains, its numbers give a good read across to Pearson's US higher education business, which we believe is at least 35% of profits and which is our main structural concern on Pearson," Liberum said.
Hargreaves Lansdown was hit by a downgrade to 'underweight' at Morgan Stanley.
FTSE 100 - Risers
Berkeley Group Holdings (The) (BKG) 3,450.00p 6.81%
Persimmon (PSN) 1,966.00p 5.47%
Barratt Developments (BDEV) 474.80p 5.32%
Royal Mail (RMG) 318.20p 4.02%
Taylor Wimpey (TW.) 136.50p 3.84%
Shire Plc (SHP) 4,694.50p 3.18%
Royal Bank of Scotland Group (RBS) 222.80p 2.77%
easyJet (EZJ) 1,122.55p 2.52%
Severn Trent (SVT) 1,864.00p 2.45%
British Land Company (BLND) 574.00p 2.35%
FTSE 100 - Fallers
Ashtead Group (AHT) 1,675.50p -5.66%
Melrose Industries (MRO) 167.65p -4.31%
Wood Group (John) (WG.) 628.80p -3.71%
Pearson (PSON) 925.80p -3.64%
NMC Health (NMC) 3,248.00p -3.51%
Hargreaves Lansdown (HL.) 1,911.00p -3.44%
Reckitt Benckiser Group (RB.) 6,409.00p -3.20%
Glencore (GLEN) 287.80p -3.10%
Smiths Group (SMIN) 1,386.00p -3.01%
St James's Place (STJ) 999.40p -2.78%