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London midday: FTSE pares losses as travel stocks, housebuilders gain on Brexit delay

By Michele Maatouk

Date: Thursday 11 Apr 2019

London midday: FTSE pares losses as travel stocks, housebuilders gain on Brexit delay

(Sharecast News) - London stocks had pared losses by midday on Thursday, with travel shares and housebuilders lending support as investors mulled the consequences of a Brexit extension to the end of October.
The FTSE 100 was flat at 7,422.76, while the pound was up 0.1% against the dollar at 1.3094 and steady versus the euro at 1.1609.

Prime Minister Theresa May had requested an extension until 30th June, but the EU agreed late on Wednesday to extend Article 50 until 31st October, with a review on progress in June.

Neil Wilson, chief market analyst at Markets.com, pointed out that the pound briefly rallied against the US dollar but cable was unable to maintain any bid above 1.31.

"The problem for traders and investors is that the extension to October 31 does not bring us any closer to a resolution. The cliff-edge has simply been pushed back. We are in a period of peak uncertainty for UK politics and that won't help investors pile back into UK assets. We must anticipate Theresa May continuing to try to ram her deal home at whatever cost.

"If there is not enough time in this extension for a referendum or General Election, then it would seem altogether pointless. This delay does nothing to remove uncertainty, only prolong it, unless it allows enough space for ref2 and or GE."

Meanwhile, analysts at Capital Economics said that while the extension removes any risk of a no-deal Brexit, it probably delays the chances of a decent rebound in GDP growth until sometime in 2020.

Trade relations between the US and China were also in focus again as US Treasury Secretary Steven Mnuchin said the two nations have agreed on an enforcement mechanism for their potential trade deal.

"We've pretty much agreed on an enforcement mechanism," Mnuchin said in an interview with CNBC. "We've agreed that both sides will establish enforcement offices that will deal with the ongoing matters. This is something both sides are taking very seriously."

On home turf, the latest figures from the Royal Institution of Chartered Surveyors showed that house prices rose in March for the first time since July, with the monthly house price balance increasing to -24 last month from -27 in February.

Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "The RICS survey continues to signal that both house prices and activity levels fell, albeit at a slightly less severe rate in March than in February. Despite its rise, the headline house price balance remains consistent on past form with a 2% year-over-year drop in house prices. In addition, the rise in the new buyer enquiries balance to -27, from -40 in February, still leaves it weaker than at any other point between May 2011 and December 2018."

In equity markets, EasyJet, IAG and Tui were all higher following the extension to Article 50, which takes us over the critical summer months for such companies. Housebuilders also got a boost from the extension and the RICS data, with Persimmon and Berkeley both higher.

Luxury brand Burberry was on the rise after solid first-quarter numbers from French peer LVMH, while WH Smith rose as it posted an 8% jump in interim revenue thanks to a strong performance from its travel division.

DIY group Grafton gained as it announced the acquisition of Polvo of the Netherlands from the privately-owned Pallieter Group for €131m.

Flexible office space provider IWG was the best performer on the FTSE 250 as Peel Hunt upgraded the stock to 'buy' from 'hold', saying the company's new franchising strategy could see the share price more than double if it works out.

On the downside, ex-dividends took just under eight points off the FTSE 100, with Standard Life Aberdeen, Aviva, ITV, Mondi, Ultra Electronics, BBA Aviation, Unite Group, Barratt Developments, Charter Court Financial, Croda, Equiniti, International Personal Finance, Merlin Entertainment, Paddy Power Betfair, Rentokil, Rotork and Savills all in the frame.

Fashion brand Ted Baker retreated as it appointed Lindsay Page as its new chief executive officer and said it had identified "several areas for improvement" following its investigation into allegations about former CEO Ray Kelvin.

Precious metals miner Fresnillo lost its shine as its first-quarter production was slightly lower than forecasts, while Severn Trent and United Utilities lost ground after agreeing water bill reductions with regulator Ofwat.

In broker note action, Marks & Spencer was down after a downgrade at Credit Suisse, Glencore was knocked lower by a downgrade to 'neutral' at Goldman Sachs. Hiscox was cut to 'hold' at Berenberg and Lancashire was upgraded to 'buy'.

Ocado was hit by a downgrade to 'reduce' at HSBC, while Rio Tinto was cut to 'underperform' at Exane and Whitbread was downgraded to 'equalweight' at Morgan Stanley.



Market Movers

FTSE 100 (UKX) 7,422.76 0.01%
FTSE 250 (MCX) 19,572.18 0.45%
techMARK (TASX) 3,543.87 0.12%

FTSE 100 - Risers

easyJet (EZJ) 1,119.50p 6.01%
TUI AG Reg Shs (DI) (TUI) 755.00p 5.42%
International Consolidated Airlines Group SA (CDI) (IAG) 538.80p 4.62%
Tesco (TSCO) 248.70p 2.64%
Persimmon (PSN) 2,220.00p 1.98%
Berkeley Group Holdings (The) (BKG) 3,766.00p 1.95%
Melrose Industries (MRO) 187.60p 1.82%
Spirax-Sarco Engineering (SPX) 7,845.00p 1.75%
Kingfisher (KGF) 253.15p 1.50%
Next (NXT) 5,700.40p 1.47%

FTSE 100 - Fallers

Standard Life Aberdeen (SLA) 261.40p -5.26%
Fresnillo (FRES) 815.40p -5.25%
ITV (ITV) 128.90p -4.80%
Aviva (AV.) 413.90p -3.72%
Ocado Group (OCDO) 1,395.00p -2.79%
Glencore (GLEN) 323.45p -2.44%
Smurfit Kappa Group (SKG) 2,262.00p -2.42%
Mondi (MNDI) 1,769.00p -2.32%
Antofagasta (ANTO) 997.60p -2.29%
Marks & Spencer Group (MKS) 277.78p -1.53%

FTSE 250 - Risers

IWG (IWG) 276.10p 5.18%
Dixons Carphone (DC.) 143.75p 3.90%
Rank Group (RNK) 158.31p 3.34%
Safestore Holdings (SAFE) 641.50p 3.30%
Card Factory (CARD) 179.10p 3.23%
Lancashire Holdings Limited (LRE) 672.50p 3.14%
Grafton Group Units (GFTU) 843.50p 3.12%
Beazley (BEZ) 539.00p 3.06%
Pagegroup (PAGE) 535.00p 2.88%
Rathbone Brothers (RAT) 2,340.00p 2.86%

FTSE 250 - Fallers

Sirius Minerals (SXX) 22.94p -5.60%
Metro Bank (MTRO) 790.06p -3.06%
Ultra Electronics Holdings (ULE) 1,559.00p -2.87%
Hilton Food Group (HFG) 928.79p -2.64%
Hochschild Mining (HOC) 197.18p -2.58%
Polymetal International (POLY) 818.72p -2.02%
International Public Partnerships Ltd. (INPP) 157.38p -2.00%
Ferrexpo (FXPO) 291.30p -1.92%
Plus500 Ltd (DI) (PLUS) 701.40p -1.79%
Equiniti Group (EQN) 210.80p -1.77%

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