Level 2

London open: Stocks slip amid Brexit concerns; Just Group bucks trend

By Michele Maatouk

Date: Monday 10 Dec 2018

London open: Stocks slip amid Brexit concerns; Just Group bucks trend

(Sharecast News) - London stocks edged lower in early trade on Monday, taking their cue from losses in Asia, amid worries about Brexit.
At 0840 GMT, the FTSE 100 was down 0.3% to 6,759.92, while the pound was flat against the dollar at 1.2721 and 0.4% weaker versus the euro at 1.1139 as the European Court of Justice ruled that the British government can unilaterally reverse its decision to leave the European Union.

In an emergency judgement delivered the day before the UK parliament is due to vote on a Brexit deal agreed with the EU, the Court of Justice said: "The United Kingdom is free to revoke unilaterally the notification of its intention to withdraw from the EU."

The news came as Downing Street denied weekend reports that Theresa May was looking to delay parliament's vote on the Brexit deal and instead head to Brussels to see if she could secure better terms from the EU.

May is widely expected to lose the parliamentary vote, with Labour, the Lib Dems, the DUP, the SNP and several Conservative MPs against it.

Brexit Secretary Stephen Barclay dismissed the weekend reports and said the vote was going ahead as planned, "because it's a good deal and it's the only deal".

He also cautioned against new negotiations. "The French, the Spanish and others will turn round, if we seek to reopen the negotiation, and ask for more," he said.

Oanda analyst Craig Erlam said: "The PM has shown incredible staying power over the past 18 months having survived numerous hairy moments that could have toppled her but this could be a step too far unless she can convince MPs that she can deliver what they want.

"There are so many avenues that this process could go down if the vote fails on Tuesday and that uncertainty could drag on sterling which is currently clinging on for dear life around 1.27 against the dollar. I still feel that traders are reluctant to let go just yet on the stubborn belief that a positive outcome lies ahead, the only problem being that there could be some severe turbulence between now and then. If the vote fails on Tuesday, as is widely expected at this point, it could take 1.27 with it and the downside could be quite significant.

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 and 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: "Footfall continued to decline as consumers stayed away from the high street in November. 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.

"It has been a difficult year for many retailers and the outlook remains challenging as Brexit uncertainty grows. Retailers will be following the upcoming parliamentary vote closely and hoping Parliament can secure a transition period to allow businesses time to adapt to life outside the EU. Without this transition, consumers face higher prices and less choice on their shopping trips."

Still to come on the macro calendar, UK industrial and manufacturing production figures are at 0930 GMT along with the trade balance and gross domestic product for October.

In corporate news, 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.

Aerospace engineer Meggitt was weaker as it signed a five-year $15m (£11.79m) deal with aircraft maintenance, repair and modification company Turkish Technic.

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 75% 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.

On the upside, Informa was the standout gainer on the top-flight index after an upgrade to 'overweight' at JPMorgan, while Smith & Nephew and Spire Healthcare gained on the back of upgrades to 'overweight' at Morgan Stanley.

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.

Elsewhere, RSA Insurance was boosted by an upgrade to 'buy' at Jefferies. Serco was upgraded to 'sector perform' at RBC Capital Markets and TP ICAP was started as 'top pick'.

Market Movers

FTSE 100 (UKX) 6,759.92 -0.27%
FTSE 250 (MCX) 17,763.48 -0.45%
techMARK (TASX) 3,341.66 -0.04%

FTSE 100 - Risers

Informa (INF) 664.00p 1.87%
AstraZeneca (AZN) 6,007.00p 1.35%
Randgold Resources Ltd. (RRS) 6,728.00p 1.14%
Pearson (PSON) 922.60p 1.14%
NMC Health (NMC) 3,200.00p 1.14%
Ashtead Group (AHT) 1,640.50p 0.95%
Smith & Nephew (SN.) 1,489.00p 0.95%
GlaxoSmithKline (GSK) 1,447.00p 0.67%
Imperial Brands (IMB) 2,353.00p 0.66%
RSA Insurance Group (RSA) 508.80p 0.63%

FTSE 100 - Fallers

Centrica (CNA) 134.25p -3.83%
SSE (SSE) 1,056.00p -3.03%
Barratt Developments (BDEV) 454.30p -1.86%
Royal Mail (RMG) 298.40p -1.78%
Standard Chartered (STAN) 583.00p -1.72%
Melrose Industries (MRO) 151.90p -1.68%
Johnson Matthey (JMAT) 2,637.00p -1.68%
Burberry Group (BRBY) 1,702.50p -1.62%
Anglo American (AAL) 1,584.20p -1.47%
Smith (DS) (SMDS) 304.60p -1.46%

FTSE 250 - Risers

Just Group (JUST) 102.30p 24.60%
Spire Healthcare Group (SPI) 113.10p 6.90%
Charter Court Financial Services Group (CCFS) 239.00p 2.75%
IntegraFin Holding (IHP) 287.50p 2.68%
Bakkavor Group (BAKK) 144.38p 2.25%
TP ICAP (TCAP) 303.10p 2.02%
Vietnam Enterprise Investments (DI) (VEIL) 467.65p 1.44%
Pennon Group (PNN) 714.00p 1.42%
PZ Cussons (PZC) 223.60p 1.08%
JPMorgan Indian Investment Trust (JII) 649.84p 1.06%

FTSE 250 - Fallers

Thomas Cook Group (TCG) 29.18p -5.57%
Domino's Pizza Group (DOM) 244.40p -5.09%
Premier Oil (PMO) 72.43p -4.50%
Crest Nicholson Holdings (CRST) 323.80p -4.09%
CYBG (CYBG) 182.90p -3.53%
Cairn Energy (CNE) 162.60p -3.04%
Metro Bank (MTRO) 1,930.00p -2.53%
Stobart Group Ltd. (STOB) 149.58p -2.49%
Bovis Homes Group (BVS) 856.60p -2.48%
Ferrexpo (FXPO) 183.80p -2.31%


Email this article to a friend

or share it with one of these popular networks:

Top of Page