London close: Stocks finish lower as Brexit worries persist
By Renae Dyer
Date: Friday 21 Oct 2016
(ShareCast News) - London stocks finished lower as Prime Minister Theresa May reiterated that Brexit negotiations won't be easy.
The FTSE ended down 0.09% to 7,020.47 points and the pound declined 0.42% against the dollar to $1.2203 as May said there would "difficult moments" in the government's negotiations it the EU but maintained that a deal could be reached.
In her first EU summit as prime minister in Brussels, May said: "I recognise the scale of the challenge ahead. I am sure there will be difficult moments - it will require some give and take.
"But I firmly believe that if we approach this in a constructive spirit, as I am, then we can deliver a smooth departure and build a powerful new relationship that works both for the UK and for the countries of the EU, looking for opportunities, not problems."
She said until Britain formally leaves the EU, she expected the nation to continue to have a say in the bloc's decisions.
European Commission President Jean-Claude Juncker responded to her remarks by saying "pfft" and by shrugging his shoulders, which was seen to suggest Britain was being sidelined.
"The PM calls for increasingly closer trade ties in a post-Brexit world than pre-Brexit, yet going by recent behaviour at the EU, we may not even be on speaking terms," said Joshua Mahony, market analyst at IG.
"The volatility evident in sterling crosses over recent weeks has been largely driven by the market jitters which seem to take each piece of running commentary as a make or break moment. It is certain that the negotiations will be tough, but for the most part, recent comments are more about gaining a strong negotiating hand ahead of negotiations than truly reflecting what the final trade outcome will look like."
In other UK events, data from the Office for National Statistics showed Britain's public finances had a bigger-than-expected deficit in September of £10bn, up 14.5% from the deficit in the same month a year ago. Economists had expected a deficit of £8.5bn.
The data comes ahead of Chancellor Philip Hammond's Autumn Statement next month.
"September's public finances figures set the tone for a fairly disappointing set of fiscal forecasts likely to be revealed in the Autumn Statement next month," according to Capital Economics.
"But this won't prevent the Chancellor from scaling back the pace of austerity."
Elsewhere, markets continued to digest European Central Bank chief Mario Draghi's comments on Thursday. At a press conference after the ECB decided to keep policy unchanged, Draghi hinted that quantitative easing won't be ended abruptly but stopped short of saying whether it would be extended or wound down.
Meanwhile, oil prices rose as Russia reiterated its commitment to joining a producers' output freeze with Brent crude up 0.56% to $51.67 per barrel and West Texas Intermediate up 0.13% to $50.70 per barrel at 1656 BST. Prices were under pressure in the previous session as the dollar strengthened.
On the company front, shares of British American Tobacco rallied following news of its takeover offer for Reynolds American.
Tobacco industry peer Imperial Brands was also higher.
Intercontinental Hotel Group slumped after reporting a fall in revenues in the third quarter, affected by volatility in foreign exchange markets.
Temporary power provider Aggreko suffered heavy losses for the second day in a row after Credit Suisse downgraded the stock on Thursday, to 'underperform' from 'neutral', pointing to increasing competition risks.
Acacia Mining jumped after swinging to a pre-tax profit for the third quarter and saying full year gold production is expected to be about 5% higher than the top end of its previous guidance.
Rio Tinto shares pushed up after Macquarie maintained its 'outperform' rating and lifted its price target on the stock by 3% to 3,400p.
Burberry shares rose to their highest level in almost eight months after the Betavilla financial blog said Coach is considering merging with the company.
Market Movers
FTSE 100 (UKX) 7,020.47 -0.09%
FTSE 250 (MCX) 17,934.24 -0.06%
techMARK (TASX) 3,482.45 -0.18%
FTSE 100 - Risers
Burberry Group (BRBY) 1,495.00p 3.10%
Mediclinic International (MDC) 919.50p 2.97%
Anglo American (AAL) 1,094.00p 2.82%
Imperial Brands (IMB) 3,960.00p 2.54%
Informa (INF) 683.00p 2.25%
Royal Bank of Scotland Group (RBS) 190.30p 2.15%
Rio Tinto (RIO) 2,668.50p 1.91%
GKN (GKN) 327.40p 1.36%
Pearson (PSON) 775.50p 1.31%
Randgold Resources Ltd. (RRS) 7,155.00p 1.27%
FTSE 100 - Fallers
British American Tobacco (BATS) 4,666.00p -2.85%
Hikma Pharmaceuticals (HIK) 1,907.00p -2.80%
InterContinental Hotels Group (IHG) 3,160.00p -2.02%
easyJet (EZJ) 918.50p -1.71%
Bunzl (BNZL) 2,256.00p -1.44%
Rolls-Royce Holdings (RR.) 755.00p -1.44%
Shire Plc (SHP) 5,053.00p -1.40%
Persimmon (PSN) 1,731.00p -1.37%
Ashtead Group (AHT) 1,325.00p -1.34%
ITV (ITV) 170.90p -1.33%
FTSE 250 - Risers
Acacia Mining (ACA) 529.00p 12.75%
IP Group (IPO) 155.10p 10.47%
Petra Diamonds Ltd.(DI) (PDL) 140.70p 6.27%
Centamin (DI) (CEY) 155.80p 4.56%
Evraz (EVR) 207.50p 3.44%
Sophos Group (SOPH) 237.00p 3.31%
Vedanta Resources (VED) 682.00p 3.18%
SSP Group (SSPG) 341.70p 2.55%
Shawbrook Group (SHAW) 247.50p 2.32%
Keller Group (KLR) 659.00p 2.25%
FTSE 250 - Fallers
Aggreko (AGK) 820.50p -4.37%
Hunting (HTG) 538.00p -3.41%
JRP Group (JRP) 123.10p -3.15%
Grafton Group Units (GFTU) 494.20p -3.00%
AO World (AO.) 175.60p -2.44%
Ibstock (IBST) 163.00p -1.98%
Crest Nicholson Holdings (CRST) 417.00p -1.93%
CMC Markets (CMCX) 194.10p -1.87%
Homeserve (HSV) 610.50p -1.85%
GVC Holdings (GVC) 706.50p -1.81%
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