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London open: Stocks steady amid more Brexit uncertainty#
London stocks were steady in early trade on Wednesday as investors mulled the prospect of more Brexit uncertainty.
At 0835 BST, the FTSE 100 was flat at 7,212.14, while the pound was up 0.1% against the dollar and the euro at 1.2884 and 1.1583, respectively, having slumped overnight.
Prime Minister Boris Johnson paused his Brexit bill on Tuesday after MPs voted in favour of his deal but rejected the PM’s attempts to rush it through the Commons in three days. Johnson is expected to call for a general election if EU leaders agree to grant the UK a Brexit extension until January.
Neil Wilson, chief market analyst at Markets.com, said the EU is likely to agree an extension, but the question is the length, which depends on the purpose.
“As we said last night after the vote, with Parliament agreeing to the WAB in principle, the EU may only back a short delay to get the deal agreed. However the Benn Act specifies three months and therefore that would tend to be the default – individual EU countries would need to argue why it should be shorter. European leaders may be uncomfortable about what could lie ahead if they enable an election.
“And the problem remains for the government that holding a General Election having failed to ‘get Brexit done’ will be oxygen for the Brexit Party and could split the pro-Brexit vote. The other risk though is that this unreliable parliament throttles the bill with amendments and then the government is forced to pull it and seek further delay and an election. One senses Boris’s political capital would have run pretty thin by that point. Safer to use the lead in the polls and the promise of this deal to hold an election before Christmas.”
In equity markets, housebuilders were under the cosh amid Brexit woes, with Persimmon, Taylor Wimpey, Berkeley Group and Barratt Developments all weaker.
Shore Capital analyst Robin Hardy said: “Uncertainty is a killer in the housing market and after the second vote yesterday, we have it now in spades.
“A likely delay past the end of the calendar year and the growing risk of an election now risks many potential buyers deferring until the start (or later) of 2020. This leaves all house builders with a potential hole in their sales, either contributing to FY2019 profits for calendar year end business this year or leaving order books potentially short for next year.”
Elsewhere, investors sifted through a raft of production reports from the likes of Antofagasta, Fresnillo, Centamin and Hochschild Mining.
Precious metals miner Fresnillo was the standout loser on the FTSE 100 as it posted a decline in third-quarter silver and gold production and said annual production would be at the lower end of its target range.
IT infrastructure and services company Softcat was in the red even as it reported a rise in full-year profit and revenue and declared a special dividend, while Quilter retreated after saying that outflows in net client cash increased in the third quarter.
On the upside, Rio Tinto ticked up after announcing a strategic review of its interest in a loss-making aluminium smelter in New Zealand.
