London midday: Stocks stay down, sterling drops below $1.28 as cross-party Brexit talks collapse

Fri 17 May 2019

LONDON (SHARECAST) - (Sharecast News) - London stocks were still in the red by midday on Friday, even as sterling fell after Brexit talks between the government and the Labour party collapsed, increasing the risk of the UK leaving the EU without a deal.
The FTSE 100 was off 0.3% at 7,334.82. Meanwhile, the pound was down 0.3% against the dollar at 1.2758 - falling below $1.28 for the first time since February - and 0.3% lower versus the euro at 1.1422 as Labour leader Jeremy Corbyn said cross-party talks "have gone as far as they can". He said the discussions, which have gone on for six weeks, can no longer continue due to the government's "increasing weakness and instability".

Corbyn highlighted growing concern in both the shadow cabinet and parliamentary Labour party about the government's ability to deliver on any compromise agreement.

"As you have been setting out your decision to stand down and cabinet ministers are competing to succeed you, the position of the government has become ever more unstable and its authority eroded," he said. "Not infrequently, proposals by your negotiating team have been publicly contradicted by statements from other members of the cabinet."

The Labour leader also reiterated the fact that his party will continue to oppose the government's deal, as it does not safeguards jobs, living standards or the manufacturing industry.

Sterling had already been knocked lower on Thursday as May agreed to set out the date of her departure in the first week of June after she makes one final attempt at getting her Brexit deal through parliament. Meanwhile, former Foreign Secretary and leading Brexiteer Boris Johnson confirmed he would run for the Tory Party leadership once May stood down.

Oanda analyst Craig Erlam said: "Once again precious weeks have been lost and it appears we're no closer to agreeing on the country's exit from the European Union. This uncertainty combined with the prospect of a more hardline Brexiteer - one of which has already thrown his hat into the ring - is unsettling sterling traders."

In equity markets, Just Eat was the biggest loser on the FTSE 100 after it emerged that Amazon will make a big investment in rival Deliveroo. No exact figures were given, but Deliveroo said Amazon will be the largest investor in its $575m funding round.

Russ Mould, investment director at AJ Bell, said: "Given its financial firepower it is little wonder that Amazon effectively parking its tanks on Just Eat's lawn is spooking investors. The marketplace was already getting increasingly competitive with Uber Eats another firm chasing consumers' appetite for takeaway food.

"It is worth remembering that Just Eat remains the market leader in the UK, however this development ramps up the pressure on management as they reshape the business to increasingly offer delivery services alongside an online takeaway platform."

Laith Khalaf, senior analyst at Hargreaves Lansdown, said the slump in the share price means Just Eat could get knocked out of the FTSE 100 in the next reshuffle.

Outside the FTSE 350, shares in Thomas Cook crashed again a day after it warned on profits, as Citi downgraded it to 'sell' from 'neutral' and argued that the stock is basically worthless, slashing the price target to zero from 28p.

On the upside, EasyJet flew higher as it left its 2019 profit expectations unchanged but warned of tougher trading conditions as it said losses before tax widened to 272m in the first half from 68m the year before. British Airways and Iberia parent International Consolidated Airlines Group was also a high riser.

IG market analyst Joshua Mahony said: "With TUI and Thomas Cook posting substantial losses of late, we have seen expectations of a profit warning drive EasyJet lower before today's earnings.

"Ultimately, with the company seeing a 13% rise in passengers and profits expected to remain in line with prior expectations, this is a case of a company outperforming a very low bar set by the market. With the airline taking steps to avoid the impact of future strikes and airports better prepared for other drone incident, traders are growing confident that these recent losses are a one-off rather than a new norm."

Metro Bank shares surged as the challenger bank said it raised 375m in less than three hours after launching a discounted 500p a share placing late on Thursday. This was 25m more than it had set out to raise.

Market Movers

FTSE 100 (UKX) 7,334.82 -0.25%
FTSE 250 (MCX) 19,463.53 -0.34%
techMARK (TASX) 3,532.22 -0.34%

FTSE 100 - Risers

easyJet (EZJ) 999.66p 2.74%
Micro Focus International (MCRO) 1,898.80p 1.27%
BP (BP.) 556.50p 1.24%
Burberry Group (BRBY) 1,829.00p 1.16%
TUI AG Reg Shs (DI) (TUI) 808.20p 1.15%
National Grid (NG.) 823.70p 1.13%
Bunzl (BNZL) 2,081.50p 1.04%
Royal Dutch Shell 'A' (RDSA) 2,547.00p 1.01%
Severn Trent (SVT) 1,922.50p 0.89%
Rio Tinto (RIO) 4,649.50p 0.88%

FTSE 100 - Fallers

Just Eat (JE.) 628.60p -7.26%
Hikma Pharmaceuticals (HIK) 1,730.50p -3.00%
Smith (DS) (SMDS) 323.50p -2.38%
Glencore (GLEN) 273.85p -2.25%
NMC Health (NMC) 2,497.00p -2.19%
Standard Chartered (STAN) 678.80p -2.02%
Melrose Industries (MRO) 177.35p -2.02%
Informa (INF) 770.40p -1.98%
Smurfit Kappa Group (SKG) 2,182.00p -1.71%
BT Group (BT.A) 201.40p -1.71%

FTSE 250 - Risers

Metro Bank (MTRO) 629.50p 17.33%
Provident Financial (PFG) 480.00p 4.33%
Clarkson (CKN) 2,285.00p 3.86%
888 Holdings (888) 132.70p 2.63%
GVC Holdings (GVC) 619.60p 2.51%
Ted Baker (TED) 1,534.48p 2.03%
Euromoney Institutional Investor (ERM) 1,382.00p 1.62%
IntegraFin Holding (IHP) 411.30p 1.29%
Brewin Dolphin Holdings (BRW) 308.90p 1.28%
Telecom Plus (TEP) 1,468.00p 1.24%

FTSE 250 - Fallers

Indivior (INDV) 48.80p -8.03%
Sirius Minerals (SXX) 16.00p -4.25%
Funding Circle Holdings (FCH) 252.00p -3.08%
Greggs (GRG) 1,998.00p -2.92%
Investec (INVP) 492.40p -2.80%
Kier Group (KIE) 325.85p -2.50%
Saga (SAGA) 52.30p -2.43%
Just Group (JUST) 58.55p -2.34%
Babcock International Group (BAB) 512.50p -2.16%
Hammerson (HMSO) 288.00p -2.14%
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