Sterling-sensitive FTSE 100 shares fell on Thursday after the government lost a court case on how to trigger the process for leaving the European Union and the Bank of England shifted away from cutting interest rates further.
Sterling was lifted, arms and legs, by both events and that led international and diverse stocks on the blue-chip ticker to close down 0.8% at 6,790.
The top two decliners in the index were miners. Randgold Resources (LON:RRS) fell by 6.3% to 7115p while Fresnillo (LON:FRES) shed 4.3% to 1704p.
Conversely, the mid-cap FTSE 250, rose 0.7% to 17,581. Mid-cap stocks are more UK-centric and benefit less from owning any overseas assets or units. So when sterling rose on Thursday it had no negative impact on the index.
But what was notable was that the spread between the two key indices hit its widest since April 2009, before mid-caps pared gains heading into the close.
The FTSE 100 fell after England's High Court ruled the UK government required parliament's approval to trigger Article 50 of the Lisbon Treaty from where a two-year countdown to exit from the European Union follows. As soon as it is triggered trade has to be renegotiated.
The court ruling could delay the government’s self-imposed deadline of triggering Article 50 in March 2017.
Among stocks in the FTSE 250 doing well this session, the top riser was Shawbrook Group plc (LON:SHAW) up 14.6% to 242.2p after news that Shawbrook's chief financial officer, Dylan Minto, snapped up shares in the challenger bank on Thursday after it posted a strong set of third quarter results.
But the mid-cap magic didn’t trickle through to yet smaller stocks. The FTSE AIM 100 Index ended down 1.2% at 3859 and the FTSE AIM All-Share Index down 0.9% at 809.
London’s gainers totalled 26% of the market and losers 36%.
Late session
4pm....
Super Thursday overshadowed
Pound hits US$1.25
Gold and oil fall
It was supposed to be Super Thursday for the Bank of England, which coupled its monthly interest rate announcement with the quarterly inflation report.
Yet Governor Mark Carney’s update was somewhat overshadowed by proceedings around a mile up the road on The Strand.
We’re referring to the High Court, where Theresa May’s plans to exit the EU were dealt a blow.
The government can actually appeal the decision, or as looks increasingly likely, expedite the situation by putting the Brexit mechanics to a Commons vote.
Anyway the uncertainty that ensued put a dampener on the index of blue-chip shares, which fell 30 points to 6,814.64.
However it provided a boost to the pound, which edged over US$1.25 at one point.
On the commodity markets, Brent crude was changing hand for US$46.67 a barrel, down 19 cents.
It hit a five-week low after the latest data pointed to something of an oil glut in the US.
Gold meanwhile was down 0.8% just two dollars under US$1,300 an ounce as investors locked in gains ahead Friday’s American jobs data.
1.45pm....
Footsie down, pound up
May dismayed
Carney's thunder stolen
Banks bounce back
And Randgold fails to shine
The FTSE 100 fell and the pound strengthened as market attempted to assimilate the import of a High Court ruling along with the latest thinking of the Bank of England.
At 1.45pm, the index of blue-chip shares was off 30 points at 6,815.12, while sterling rose more than 1% to US$1.242.
Driving the sentiment was a setback for Theresa May and her administration as it was ruled that parliament must have its say on triggering Britain’s exit from the EU.
That stole the thunder of Bank governor Mark Carney, who has effectively scrapped plans to cut interest rates in the near future.
He also upgraded his forecasts for growth and inflation in his quarterly report.
“It’s no surprise to find economic forecasts wobbling all over the place right now, they are always prone to error and particularly fallible at the moment due to the enormity of the Brexit process, and the big currency movements we have witnessed since the referendum,” said Laith Khalaf of investment firm Hargreaves Lansdown.
Royal Bank of Scotland PLC (LON:RBS) was the top riser, followed by Barclays PLC (LON:BARC) and Lloyds PLC (LON:LLOY) as the BoE’s inflation report painted a far more encouraging economic picture for Britain’s main lenders.
Randgold’s (LON:RRS) quarterlies/profit warning put the hex on the miners and drove the gold digger to the top of the loser’s board as the shares fell 7%.
Midday...
FTSE 100 eases
UK gov't suffers defeat in High Court Brexit ruling
Traders await BoE decision
FTSE 250 surges 1.27%
The FTSE 100 continued its slide as it headed towards the afternoon following the earlier High Court ruling about Article 50.
The blue chip index was down almost 35 points to 6,812, while the FTSE 250 – which contains more UK-focused firms – added to this morning’s gains to stand at 17,721.
In the small caps, the morning’s big winner was Zoo Digital Group PLC (LON:ZOO), which gained more than 20% after it posted a strong set of interim results.
Similarly, Randgold Resources Limited also posted what seemed to be a decent set of quarterly results, although investors didn’t react so favourably.
Shares were down more than 7% in morning trading, as analysts toyed with the idea that a Clinton win – which is expected by almost everyone apart from the polls – would lead to lower gold prices.
In other news, Mark Carney is expected to confirm that interest rates will be held at 0.25% in an announcement at noon.
FTSE 100 plunges on High Court Ruling - 11am
FTSE 100 plunged over 29 points, while FTSE 250 surged 1.27% as it emerged the UK government's Brexit plans have been thrown further into disarray.
A High Court ruling says MPs in Parliament should vote to trigger Article 50 to begin the process of withdrawal and the government cannot simply do it alone. The result sent the pound higher and the FTSE 100 lower.
Lawyers for the Theresa May administration had argued that so called prerogative powers were a legitimate way to give effect “to the will of the people”, who voted 52% to 48% in favour to leave on June 23.
The government said it will appeal in a hearing next month.
FTSE 100 is down 29 at 6,815, while FTSE 250, an index more aligned to UK domestic firms went up to 17,686.
Many UK firms have been concerned at an uncertain future in the light of an EU exit, particularly on leaving the single market. Some say however it will mean a big opportunity.
Miners are still big laggards on FTSE 100, while Dixons Carphone (LON:DC.) is top riser, up over 4%.
FTSE 100 stays in black - 10am
After around two hours of trading, FTSE 100 is staying in the black - up around 26 points at 6,871.
Ahead is the Bank of England's thinking on policy, which does not appear to be rattling the market, as it will almost certainly stand pat on rates - like the US Fed did yesterday.
Leading the risers is drugs group Shire Plc (LON:SHP) after bouncing back after tumbling since November 1 when a third quarter update disappointed.
Ahead of its capital markets day on November 10, Citi analyst Peter Verdult rates shares a 'buy' saying the risk/ reward metrics for the stock are compelling.
Supermarkets are also doing well with Morrison's (LON:MRW) up 1.49% to 224.60p as its third quarter sales rose - boosted by a strong Halloween.
Chasing away any demons, Morrisons said its Halloween sales were up 20% compared to last year.
Tate & Lyle (LON:TATE) sweetened up 6% as it raised profit guidance for the full year. Shares added 6.42% to stand at 828.5p.
On the losing front, potash mine developer Sirius Minerals pls (LON:SXX) lost over 15% as it revealed project financing plans for US$1.2bn, unveiled yesterday, were ostensibly now complete.
FTSE 100 becalmed - 8.30am
The FTSE 100 found itself becalmed ahead of the Bank of England meeting at which interest rates will almost certainly be kept on hold.
At 8.30am, shares in the UK’s leading blue-chip companies sat at 6,845.69, up just 0.27 points.
Leading the hit parade was Shire Plc (LON:SHP) after a two-day losing streak which culminated in it sounding the earnings alarm.
Not far behind was Sainsbury PLC (LON:SBRY), which obviously received a decent boot from Morrisons PLC (LON:MRW), which updated on trading. The Bradford-based grocer’s performance beat market expectations.
The miners were in the dog house early on, led lower by gold digger Randgold Resources PLC (LON:RRS).
Among the mid-caps the insurer esure Group PLC (LON:ESUR) was down 27% after it completed the spin-out of its hugely successful comparison site Gocompare.com PLC (LONLGOCO). The latter is valued at £400mln.
Lies, damn lies and politics - 6.30am
Politics continue to dominate market sentiment and the FTSE 100 is called to open lower on Thursday.
Yesterday, global equities fell as traders got jittery about a Donald Trump victory next week, seemingly pushing otherwise noteworthy economic factors aside. Janet Yellen, Fed chair, decided to keep US rates on hold - as had been widely expected.
FTSE closed down 1.04%, or around 71 points, at 6,845, and is today expected to start the account a further 11 points lower.
In the US, the S&P 500 fell 0.65% as the index has had its longest losing streak in five years, while the Dow Jones fell 0.43% and the Nasdaq shed 0.93%.
The rub-off went onto Asia overnight, which saw the US dollar lose ground against the Japanese Yen, and where stock markets were choppy. The Nikkei 225 is down a big 1.76% but the Shanghai Composite Index in China added 0.9%.
In UK economics today, attention will be focused on the Bank of England's monetary policy committee which meets later and is expected to keep interest rates steady at 0.25% after an earlier slight cut.
News of governor Mark Carney's tenure now going to 2019 may also be mentioned in line with how he views strategy in the remaining term.
In corporate news, Morrisons's (LON:MRW) will undoubtedly receive much media attention, casting as it does a look at the supermarket sector generally.
Scribes at HSBC reckon the firm will post a fourth consecutive rise in like-for-like sales - forecasting a 1.5% for the September period.
But that's lower than the 2% growth the supermarket reached in the preceding second quarter.
HSBC notes that the grocer has strengthened the balance sheet, which will help to protect it as price competition and costs start to rise. However, he said the company still remains in a weak strategic position amid sector peers.
City Headlines
Pensions regulator begins action on Sir Philip Green over BHS - The Telegraph
Fed holds off hiking rates for now as election looms - The Telegraph
High Court to decide if government has the right to trigger Article 50 - The Guardian
Facebook profits soar as it continues to swallow online advertising market - The Guardian