London midday: Stocks pare gains as investors mull prospect of hung parliament

Wed 11 Dec 2019

LONDON (SHARECAST) - (Sharecast News) - London stocks had pared earlier gains to trade flat by midday on Wednesday as the latest election poll raised the prospect of a hung parliament.
The FTSE 100 was unchanged at 7,211.11, while the pound steadied after hitting a six-day low against the greenback as a YouGov poll suggested that the Conservative majority had fallen to 28 seats from 68 seats a couple of weeks ago and 80 at the start of campaigning. Sterling was flat versus the dollar at 1.3155 and 0.1% firmer against the euro at 1.1872.

Chris Beauchamp, chief market analyst at IG, said: "Another herculean effort of polling analysis points towards a Conservative majority, although smaller than last time, and with such a wide range of outcomes highlighted by the MRP there is still all to play for. But for a market that was confidently predicting a comfortable Conservative majority, the news was a shock.

"However, a more sanguine view prevails this morning, since a 28-seat majority is perfectly workable, providing they all fall into line when requested - at least this time that seems more likely, since the 'awkward squad' have already been purged."

Meanwhile, trade relations between the US and China remained in focus as the US is due to slap tariffs on $150bn of Chinese imports on Sunday, although there have been reports this will be deferred.

"The fact the two sides are negotiating is a positive sign, as it's when both sides are locked in a stand-off without communication, then traders get nervous," said CMC Markets analyst David Madden.

Investors were also eyeing the latest policy announcement from the Federal Reserve, due after the European close.

Beauchamp said the key for Fed chair Jerome Powell "will be trying to avoid any further flak from the White House, but with job numbers growing, and wages rising (albeit not too quickly), the Fed finds itself in a much more pleasant position than a year ago".

"Recession fears have been banished in the US, and the Fed's quick policy turnaround earlier this year played a significant part, hence the continued strength of the US dollar."

In equity markets, JD Sports slumped after its largest shareholder, Pentland, sold around 24 million shares in the company at 740p in a placing.

Stocks with exposure to the UK, such Barratt Developments, Auto Trader, Segro, Land Securities, Taylor Wimpey, Persimmon, Derwent and Hammerson were all weaker amid the potential for a hung parliament.

On the upside, miners gained amid hopes that US tariffs on Chinese imports would be delayed, with Rio Tinto and Anglo American higher.

Equipment rental firm Ashtead was up, recovering from heavy losses in the previous session after it posted a drop in interim profit at its UK business and warned of "challenging" conditions.

Stagecoach rallied as its interim revenues came in ahead of expectations and after it announced that Ray O'Toole would succeed company founder Brian Souter as chairman from January 1.

SSP was in the green after an upgrade to 'overweight' at Morgan Stanley, while Wood Group was higher on the back of an upgrade to 'buy' at Citi.

Market Movers

FTSE 100 (UKX) 7,211.11 -0.04%
FTSE 250 (MCX) 20,508.74 -1.31%
techMARK (TASX) 3,996.10 -0.38%

FTSE 100 - Risers

Fresnillo (FRES) 571.20p 3.03%
Ashtead Group (AHT) 2,256.00p 1.62%
Rio Tinto (RIO) 4,325.50p 1.62%
Carnival (CCL) 3,248.00p 1.47%
Anglo American (AAL) 2,104.50p 1.37%
Polymetal International (POLY) 1,185.00p 1.24%
Smurfit Kappa Group (SKG) 2,698.00p 1.12%
Standard Chartered (STAN) 690.20p 1.08%
HSBC Holdings (HSBA) 564.50p 1.00%
AstraZeneca (AZN) 7,315.00p 0.95%

FTSE 100 - Fallers

JD Sports Fashion (JD.) 716.20p -10.85%
Barratt Developments (BDEV) 644.00p -3.07%
Auto Trader Group (AUTO) 538.00p -2.89%
Hargreaves Lansdown (HL.) 1,811.50p -2.74%
Land Securities Group (LAND) 923.00p -2.53%
Taylor Wimpey (TW.) 172.10p -2.30%
SEGRO (SGRO) 848.20p -2.26%
Next (NXT) 6,726.00p -2.12%
RSA Insurance Group (RSA) 535.00p -1.87%
Persimmon (PSN) 2,459.00p -1.80%

FTSE 250 - Risers

Tullow Oil (TLW) 48.53p 6.33%
Wood Group (John) (WG.) 336.20p 2.50%
SSP Group (SSPG) 652.00p 2.35%
Stagecoach Group (SGC) 127.80p 1.75%
Lancashire Holdings Limited (LRE) 719.00p 0.91%
Kaz Minerals (KAZ) 503.60p 0.88%
Royal Mail (RMG) 228.90p 0.66%
Essentra (ESNT) 426.40p 0.42%
HICL Infrastructure (HICL) 157.80p 0.38%
Fidelity China Special Situations (FCSS) 214.50p 0.23%

FTSE 250 - Fallers

Riverstone Energy Limited (RSE) 396.50p -7.36%
Watches of Switzerland Group (WOSG) 303.00p -5.31%
Bakkavor Group (BAKK) 135.40p -4.92%
NewRiver REIT (NRR) 190.20p -4.71%
Derwent London (DLN) 3,642.00p -4.66%
Workspace Group (WKP) 1,110.00p -4.48%
Unite Group (UTG) 1,182.00p -4.14%
LondonMetric Property (LMP) 224.20p -3.78%
Rathbone Brothers (RAT) 2,040.00p -3.77%
Hammerson (HMSO) 288.80p -3.73%
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