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London open: Stocks edge lower as Johnson set for renewed general election push
London stocks edged lower in early trade on Tuesday as Prime Minister Boris Johnson was set to renew his attempts to secure a general election on 12 December.
At 0830 GMT, the FTSE 100 was 0.2% lower at 7,319.54, while the pound was down 0.1% against the dollar at 1.2851 and flat versus the euro at 1.1591.
The Commons backed the government’s election motion by 299 to 70 on Monday, leaving it short of the two-thirds majority needed for it to pass. The motion was backed by all Conservative MPs, but most Labour MPs and Scottish National Party and Democratic Unionist Party MPs abstained. All but one Liberal Democrat voted against the motion.
Johnson will now attempt for a fourth time to call an early general election. He is set to publish a bill proposing a poll on 12 December that would require only a simple majority to get through.
Neil Wilson, chief market analyst at Markets.com, said: “The SNP and Lib Dems said they would support a move for December 9th, which would not allow time for the withdrawal agreement to get pushed through parliament.
“You have to think in all likelihood it’s going to be Dec 9th, given that SNP and Lib Dems won’t want the bill to get through. However, they may back a vote on Dec 12th as long as there is no risk of the deal being pushed through before MPs break up. Then there are questions over amending an election bill to include 16-17 year olds and/or EU citizens. What Labour wants or plans remains a mystery. But the complete breakdown in constitutional norms is rather shocking.”
Wilson said sterling will naturally remain sensitive to headline risks, but at present GBPUSD seems “pretty well anchored to 1.2850”.
On the Sino-US trade front, meanwhile, expectations were building after US President Donald Trump said on Monday that he hoped a deal would be agreed next month.
“China’s Xi Jinping plus President Trump are due to attend the Asia-Pacific Economic Cooperation meeting in Chile next month. Phase one of the trade deal is tipped to be signed then,” said CMC Markets analyst David Madden.
Investors were also digesting the latest survey from Nationwide, which showed that house price growth remained subdued in October as Brexit uncertainty continued to take its toll.
House prices were up 0.2% on the month, which was an improvement on the 0.2% decline seen in September and ahead of expectations of no growth. On the year, house prices rose 0.4%, beating expectations and the previous month’s growth of 0.2%.
Nationwide’s chief economist , Robert Gardner, said: “Average prices rose by around £800 over the last 12 months, a significant slowing compared with recent years – for example, in the same period to October 2016, prices increased by £9,100.
“Indicators of UK economic activity have been fairly volatile in recent quarters, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensifying of Brexit uncertainty. To date, the slowdown has centred on business investment, while household spending has been more resilient.”
Guy Harrington, chief executive officer of property lender Glenhawk, said: “It’s one headwind after another. Our politicians are doing the housing market no favours; Brexit uncertainty has now been compounded by general election uncertainty, creating a near perfect storm of unsupportive conditions for growth.
“Despite an improving earnings and high employment environment, the market remains characterised by sluggish prices, with only what, at this stage, looks like a highly unlikely resolution to the political situation set to shift this sentiment.”
In equity markets, BP was in the red after the oil giant posted a 41% decline in third-quarter profits due to lower upstream earnings, weaker oil prices and weather impacts. Replacement cost profit, which is BP’s definition of net income, came in at $2.3bn from $3.8bn the year before and $2.8bn in the second quarter. Still, it was above analysts’ expectations of $1.7bn.
Energy services company Hunting lost ground as it warned that full-year core profit would be at the lower end of market expectations “given current trading momentum”.
Online food delivery service Just Eat was on the back foot after shares of US peer Grubhub slumped on the back of disappointing third-quarter sales and weaker-than-expected fourth-quarter guidance.
Royal Mail was knocked lower by a downgrade to ‘underweight’ at JPMorgan.
On the upside, online contracts-for-difference trading provider Plus500 rallied after it reported a 10% jump in third-quarter revenue as customer numbers grew.
