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FTSE 100 stocks closed flat on Tuesday, with miners’ gaining, but telecoms group BT (LON:BT.A) topped the losers after the business endured a £8bn hit.
Tickers ended remarkably resilient in the wake of the UK Supreme Court’s decision that the HM Government must ask Parliament to vote on triggering Article 50 which would signal the start of talks with the EU about Britain’s exit from the economic union.
The blue-chip FTSE 100 closed flat at 7150. Miners led the gainers, with Anglo American (LON:AAL) top with a 5.9% advance to 1386p, followed by Antofagasta Holdings (LON:ANTO) up 4.4% to 824p and Rio Tinto (LON:RIO) up 4% to 3615p.
But counterbalancing that, BT Group shed 21% to 303p. BT cut its profit guidance for the next two years after an investigation into accounting blunders at the telecoms giant's Italian business forced it to more than triple its expected write-downs to £530m, while the UK business has also seen a deterioration in its outlook.
An investigation alongside accountants from KPMG, which was first announced in October, has now discovered earnings in the country found to have been overstated for several years. The company has had to write off more than £7bn.
Sterling had a wobbly session over the anti-Brexit verdict of the UK courts. At first the pound jumped against the US dollar as it became clear the government would not be able to invoke its “bypass parliament” strategy. But sterling later eased after it became clear that devolved governments in Scotland, Wales and Northern Ireland would not have the power of veto. The courts in effect created a kind of stalemate judgement.
Sterling fell 0.14% against the dollar to $1.2519, but was little moved against the euro at 1.1644 euros.
The midcap FTSE 250 closed softer at 18,100 and led by PZ Cussons Plc (LON:PZC) down 10.9% to 299.8p after the consumer goods firm which produces Imperial Leather soap, reported a 38% drop in pre-tax profit for the first half of the year, due to challenging conditions in Nigeria in Australia, while it maintained that it is on track to meet full-year expectations.
But for small-cap stocks it seemed more like business as usual. The FTSE AIM 100 Index ended up 0.3% at 4168 and the FTSE AIM All-Share Index up 0.2% at 875.
Winners and losers were evenly matched across the London bourse with 31% of stocks gaining and 33% falling.
1512 GMT - FTSE 100 flat, miners prosper while BT takes an £8bn hit
Overshadowed by Supreme Court vote on Brexit and BT Group PLC’s (LON:BT.A) £8bn capitulation were the miners.
The leader board of the FTSE 100 – down 3.4 points at 7,147.77 – was dominated by the diggers.
Buoyed by stronger commodity prices, Anglo American (LON:AAL) led the way with a 6% gain, followed by copper specialist Antofagasta Holdings (LON:ANTO) and generalist Rio Tinto (LON:RIO).
Splitting Anglo and Anto was ITV PLC (LON:ITV), which jumped 4% on renewed bid speculation.
Around 20%, or £8bn, has been wiped from the value of the telecoms giant following a full look at the scale of the problems by accountants.
There was a kick in the Nordics for Dixons Carphone PLC (LON:DC.), a fellow faller (down 3% after unveiling its Christmas trading update). A decent enough statement was marred by the rather sluggish performance from the northern-most reaches of its retail empire.
On the FTSE 250 the Imperial Leather soap maker PZ Cussons (LON:PZC) slipped up (while sounding the earnings alarm) as its shares fell 9%.
Delving into the small-caps and it was another down day for listed drones specialist Strat Aero (LON:AERO). Its stock dived 46% after it said it had secured rescue funding. However it had to heavily discount its shares to bring in the £380,000 it received.
1.30pm..Footsie in positive territory
The FTSE 100 traded in positive territory after the government lost its Brexit vote appeal.
At 1.30pm, the index of blue-chip shares was up almost 20 points at 7,170.81.
Earlier, the Supreme Court ruled Theresa May can’t trigger the UK’s departure from the EU without the formal backing of MPs and peers.
In a sense, it was water off a duck’s back with the decision widely expected to end in defeat for the PM.
The only people that appeared remotely surprised were the headline and leader writers of the Daily Mail – and their vitriol, one senses, was more for effect.
“This is unlikely to delay the government’s timetable to send such a letter by the end of March, which allowed for such a verdict,” said wealth manager Charles Stanley.
“The Commons has already voted on this matter when it voted 461 to 89 in favour of beginning the exit process.
“The Supreme Court did not uphold the idea that the devolved parliaments and assemblies have any veto on this, as it is a Union matter to be handled by the UK Parliament itself.
“This was an important part of the decision which helps the government. This should not have much effect on share prices, as the government’s timetable was well known in advance.”
Away from the legal machinations surrounding our EU exit, the focus was on the slow-motion car crash at BT Group PLC (LON:BT.A), which has been hit by Italian accounting concerns.
Around 18%, or £7bn, has been wiped from the value of the telecoms giant following a full look at the scale of the problems by accountants.
There was a kick in the Nordics for Dixons Carphone PLC (LON:DC.), a fellow faller (down 3% after unveiling its Christmas trading update). A decent enough statement was marred by the rather sluggish performance from the northern-most reaches of its retail empire.
On the FTSE 250 the Imperial Leather soap maker PZ Cussons (LON:PZC) slipped up (while sounding the earnings alarm) as its shares fell 9%.
Delving into the small-caps and it was another down day for listed drones specialist Strat Aero (LON:AERO). Its stock dived 46% after it said it had secured rescue funding. However it had to heavily discount its shares to bring in the £380,000 it received.
10.30am.. FTSE 100 in positive territory
UK Supreme Court rules against government on Brexit process
FTSE 100 up 19 points at 7,170
Pound down 0.5% versus the US dollar
Miners remain in demand as metal prices rise
10.15am … Supreme ruling …
The Footsie extended its gains in mid morning trading, having wobbled slightly early on, as the pound dropped back after the Supreme Court ruled that the UK government must get parliamentary approval before beginning formal negotiations to exit the European Union.
Around 10am, the FTSE 100 index was up about 19 points at 7,170, albeit still below an opening peak of 7,190, led by international earners as sterling lost some of its recent recovery against the US dollar, falling 0.5% to US$1.2466 on the ruling.
The UK's highest judicial body voted by 8-to-3 to dismiss the government's argument that prime minister Theresa May could simply use executive powers to invoke Article 50 of the EU's Lisbon Treaty and begin two years of divorce talks.
Dennis de Jong, managing director at UFX.com, said: “The government’s defeat in today’s landmark Supreme Court ruling is no great surprise, and while it is unlikely to stop or delay Britain’s departure from the European Union, it could nevertheless have far-reaching consequences.
“The markets have broadly reacted positively to the news, taking encouragement that while Europhile MPs will not dare block the bill now required to trigger Article 50, they may insist on attaching conditions.
“There is no sign, however, that these developments will put an end to this period of immense volatility for the pound, with uncertainty continuing to surround the nature of Britain’s future relationship with the EU.”
Miners continued to top the blue chip leaders board, led by Anglo American PLC (LON:AAL) up 4.7%, or 62.0p to 1,370.5p and BHP Billiton plc (LON:BLT), ahead 3.7%, or 54p at 1,491.5p, supported by firmer metal prices
Rio Tinto PLC (LON:RIO) was also higher, up 3.2%, or 113.0p at 3587.5p after it confirmed plans to sell its Australian Coal & Allied Industries business to Chinese government-controlled Yancoal Australia for up to US$2.45bn in cash.
08.50am ... Quiet start ...
The FTSE 100 got off to a quiet start despite a flurry of corporate updates and an accounting scandal at BT PLC (LON:BT.A)
At 8.45am, the index of blue-chip shares was up just shy of six points at 7,157.12 as the market marked time ahead of a key legal ruling on Brexit.
Later the Supreme Court will tell us whether the UK can trigger Article 50 – effectively serving notice to quit the EU – without a parliamentary vote.
Looking at the fallers first, BT was marked down 16% early on after it chopped back its financial forecasts and said the scale of the accounting problem in Italy was larger than first thought.
Sticking with the debit side, easyJet (LON:EZJ) was off 7% in early trade after it said the revenue it generates per seat had fallen in the first quarter.
The miners were back in demand after short-lived sell-off, buoyed by rising commodity prices. Anglo American (LON:AAL) led the pack with a 3.2% gain.
6.45am ... Rebound predicted ...
UK equities are set to rebound this morning, despite a weak showing overnight by US stocks.
Spread betting quote indicate the FTSE 100 will open around 15 points above last night’s close of 7,151.
In the US, the Dow Jones ended the day bang on 19,800, down 27 points on the day.
The broader-based S&P 500 shed six points at 2,265 while the tech heavy Nasdaq Composite gave up a couple of points at 5,553.
Heading towards the final few deals of the day, Asian markets were mixed this morning
In Tokyo, the Nikkei 225 was down 81 points at 18,809 but in Hong Kong, the Hang Seng was 78 points to the good at 22,976.
Back home, corporate new flow is likely to be overshadowed by the landmark judgement from the UK Supreme Court on whether the government can invoke article 50 - essentially a notice to quit served to the European Union - without putting it to a parliamentary vote.
Before that, however (the judgement is expected at about 9.30), traders will be able to chew on a trading update from consumer electrical goods seller Dixons Carphone PLC (LON:DC..
Around the markets
- Sterling: US$1.2473, down 0.63 cents
- 10 year gilt’s yield: 1.46%
- Gold: US$1,214.60 an ounce, down $1
- Brent crude: US$55.55 a barrel, up 32 cents
Headlines
- Brexit risks pushing up Hinkley cost, EDF warns – The Times
- Standard Chartered boss drawn into theatre’s ‘yellowface’ row – The Times
- US investigating Yahoo over hacks – The Times
- Digital sales deal blow to GAME and other high street retailers – The Independent
- Optimism in financial services sector hits crisis era-low as Brexit concerns top worry list for banks – The Independent
- SThree warns of slowdown in UK job market amid Brexit uncertainty – Financial Times
- UK wind farm costs fall almost a third in 4 years – Financial Times
- BP starts up new $1 billion Gulf of Mexico project almost one year early – Daily Telegraph
- British factory workers paid £3 an hour making clothes for high street giants – Daily Telegraph
- Fitch warns time is running out for China’s debt-driven boom – Daily Telegraph
- Financial firms in talks with Amsterdam over relocation from London – The Guardian
- Ticket touts rebrand as investigations put them in spotlight – The Guardian
- Hedge funds bet that commodity prices are on the up – Daily Mail
- Three snared after Barratt fraud probe – Daily Mail