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London open: Stocks nudge lower but WPP rallies on Q3 update
London stocks nudged lower in early trade on Friday as investors awaited the EU’s decision on a Brexit extension.
At 0830 BST, the FTSE 100 was down 0.1% at 7,324.81, while the pound was flat versus the dollar and the euro at 1.2852 and 1.1569, respectively, having slipped overnight on news that Prime Minister Boris Johnson is looking to hold an election on 12 December.
Johnson is planning to ask the House of Commons on Monday to vote to hold a general election in December. He will require a two-thirds majority in order for it to pass. In the event of a successful vote, the government will continue to try and pass the current Withdrawal Agreement until parliament is dissolved on 6 November.
If it is unsuccessful, the debate on the WA will be frozen and Westminster will be turned into a “zombie parliament”.
“Effectively here the government has tied any further discussion on its deal to a general election being held,” Rabobank said.
“The basic stance of Labour on this topic appears to be that, before voting for a general election, it wants to assure that the prospect of no deal has been taken off the table. In practice this means that it needs the EU to have agreed an extension to the Brexit deadline that takes us beyond the date of the general election (i.e. 12th December). It also thinks that only having the ability to debate Brexit legislation to 6th November is not sufficient.
“Adding further difficulty to the situation is that it appears that the EU would like to wait for the outcome of Monday’s vote before deciding on the length of the extension to be granted. This makes it look like Labour will be unable to vote in favour of holding a general election on Monday and therefore the PM will freeze debate on the WA. This will put the ball back into the court of the EU, with the current Brexit deadline of the 31st October getting worryingly close (although ultimately we view it as very unlikely that an extension to 31st January will not be granted).”
In corporate news, advertising giant WPP was sitting pretty at the top of the FTSE 100 after saying it had returned to net sales growth in the third quarter, but reiterating its expectations for like-for-like revenues to fall this year.
Barclays was in the green as it said pre-tax profit in the first nine months of the year rose to £3.3bn from £3.1bn the year before, even as it took a £1.4bn hit from payment protection insurance claims.
AstraZeneca racked up strong gains after an upgrade to ‘buy’ from ‘hold’ at Liberum, while Airtel Africa advanced as it reported an 8.4% increase in first-half revenues.
On the downside, Synthomer shares tumbled after it warned that full-year underlying pre-tax profit would be around 10% below 2018’s figure and current consensus expectations.
Ascential was on the back foot after it announced that the Money 20/20 China event had been deferred and would not take place this year.
Glencore was a little weaker as the miner reported a drop in third-quarter copper production but backed its annual production guidance.
Hastings Group was under the cosh after it warned that its full-year loss ratio, before the impact of the Ogden rate change, could move from the top of the target range to slightly above if elevated claims inflation continues.
