Hot Features
Premium
Register for Free to get streaming real-time quotes, interactive charts, live options flow, and more.
London open: Stocks drop as sterling rallies; Persimmon rebounds
London stocks tumbled in early trade on Tuesday, taking their cue from losses in Asia, with a stronger pound weighing on the top-flight index amid hopes of an extension to Article 50.
At 0830 GMT, the FTSE 100 was down 1.1% to 7,105.60, while the pound was up 0.4% against the dollar at 1.3154 and 0.5% firmer versus the euro at 1.1588.
Neil Wilson, chief market analyst at Markets.com, said sterling has rallied on developments in Westminster that have encouraged the bulls.
“First, Labour is now backing a second referendum – one U-turn. If anything, though, this just hints at the party worrying about an exodus to The Independent Group. Secondly, and more importantly, there appears to be building pressure on the prime minister to take no deal off the table – another U-turn. If no deal is abandoned, it would likely entail a delay to Brexit, and whilst assuaging concerns about crashing out without a deal in place, it would not remove all the uncertainty. A key cabinet meeting today will reveal all – we hope.”
Wilson pointed out that GBPUSD has broken clear to a four-week high above 1.3150, looking to breach the 31 January high at 1.3160 before a move to 1.32.
“If that goes then last September’s highs at 1.33 would come into view. All this is dependent on the Brexit news flow however – but momentum is currently back with the pound.”
In corporate news, Standard Chartered lost ground as it reported a 28% rise in adjusted full-year pre-tax profit to $3.86bn which missed consensus expectations of just under $4bn as income growth was at the lower end of guidance. The Asia-focused bank also updated its strategic priorities, aiming for a step-up in profits as it invests in tech but slashes costs.
Precious metals miner Fresnillo lost its shine as it posted a 34.7% drop in full-year pre-tax profit and warned that 2019 will be another challenging year.
Croda International fell as the chemicals company’s announcement of a £150m special dividend was not enough to impress investors alongside a very modest 1.2% increase in full-year pre-tax profit.
Defence contractor Babcock was under the cosh after saying Brexit would result in a one-off tax cost of £10m as it restructures its aerial emergency services businesses to comply with European operating requirements.
Going the other way, Persimmon was the standout gainer as the housebuilder said profits topped £1bn last year, a day after its shares slumped on a report that it may be stripped of its right to participate in the government’s Help to Buy scheme.
The FTSE 100 group also said it had appointed Dave Jenkinson as group chief executive on a permanent basis, after previous boss Jeff Fairburn left last year in the wake of the furore over his £75m bonus.
Peers Taylor Wimpey, Barratt Developments and Berkeley Group all racked up healthy gains.
Builders’ merchant Travis Perkins saw its shares rise as full-year profit topped expectations thanks in part to cost-cutting.
In broker note action, BT was cut to ‘hold’ at Berenberg, while Hunting, Wood Group and Petrofac were started at ‘hold’. Centrica was downgraded to ‘hold’ at Kepler Cheuvreux.
IG Group was initiated at ‘outperform’ by RBC Capital Markets and Micro Focus was cut to ‘sell’ at Investec and Sainsbury was downgraded to ‘add’ at AlphaValue.
