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London open: Stocks steady ahead of Brexit votes
London stocks were steady in early trade on Tuesday amid signs of progress in trade talks between the US and Asia, with investors cautious as Boris Johnson’s Brexit deal was set to face its first parliamentary hurdle.
At 0830 BST, the FTSE 100 was flat at 7,166.52, while the pound was down 0.1% against the dollar and the euro at 1.2942 and 1.1615, respectively.
Neil Wilson, chief market analyst at Markets.com, said: “Boris Johnson will seek to push through his Brexit deal with a vote on the withdrawal bill, second reading, today. The numbers are tight, but No10 thinks it has just enough support to get it through. It would be a huge breakthrough as it would mark the first time MPs approving any Brexit deal.
“If the PM fails the key vote on the Withdrawal Agreement Bill, sterling could get spun back to $1.25 in short order. If it passes, a breach of $1.32 and thence a push to $1.34 seem likely.”
Wilson said the deal premium which has already added around 7% to sterling would collapse quickly if the deal gets scuppered.
“That said, the market is right now quite confident that no-deal is not such a risk now as it was – this appears to be overconfident until the necessary votes are passed.”
Away from Brexit, the focus was on Sino-US trade relations after US President Donald Trump said China had signalled that talks were on course for a deal in November. During a Cabinet meeting at the White House on Monday, Trump said that China had started buying US agricultural products that he had pushed for as part of a deal.
In UK equity markets, wealth manager St James’s Place was in the green as it reported a 3.2% increase in third-quarter funds under management to a record £112.8bn.
Anglo American was higher even as it said copper output this year would be at the lower end of expectations due to a chronic drought in Chile that also threatened 2020 production.
Premier Inn owner Whitbread rose even as it posted a decline in half-year profits amid weaker trading conditions and high industry inflation.
On the downside, distribution and services group Bunzl retreated despite saying that third quarter revenue grew by 4% and reaffirming full-year expectations against mixed global macroeconomic conditions.
Consumer goods giant Reckitt Benckiser was sharply lower as it cut its full-year sales growth forecast following a “disappointing” third quarter and warned that profit margins will fall amid slowing demand for some of its products in the US and China.
