London close: Stocks end flat as May seeks EU assurances; retailers slump
London stocks ended Thursday’s session broadly steady as initial relief over Theresa May's confidence vote victory gave way to concerns about how she's going to get her Brexit deal through parliament.
The FTSE 100 closed flat at 6,877.50 as the pound was unchanged against the dollar at 1.2633 and 0.2% firmer versus the euro at 1.1126 after surging late on Wednesday as May survived her leadership challenge, albeit the 117 dissenting Conservative MPs was more than expected.
May, who confirmed on Thursday that she will quit before the 2022 election, was in Brussels again seeking further reassurances from the EU that the Irish backstop - which will prevent the return of a hard border with Ireland - will not last indefinitely, as she scrambles to get support for her Brexit deal ahead of the Commons vote in January.
Neil Wilson, chief market analyst at Markets.com, summed up the mood eloquently: "Theresa May, blah, sterling, blah, Brexit, blah blah. Nothing has changed after a truly Pyrrhic victory for the PM. She cannot get her deal through parliament, and cannot govern essentially. The question is how long she teases it out.
"The longer she does the greater the chance of no deal. The base case must still be that the EU will not reopen the deal and all it can really offer are some warm words around implementation."
Meanwhile, Kallum Pickering, senior economist at Berenberg, said: "While the EU will probably offer guarantees and promises that it will not use the backstop as a tool to permanently trap the UK in the EU customs union, we do not see much chance that she can extract sufficiently large concessions - such as removing the backstop altogether - that would satisfy the Brexiteers in the Conservative Party and the Northern Irish DUP that promise to vote down her deal."
Investors also digested the latest housing sector survey from the Royal Institution of Chartered Surveyors, which showed that the UK property market was at its weakest level in more than six years in November as worries about Brexit meant that buyers and sellers opted to sit tight.
The RICS house price balance slumped to -11 last month from -10 in October, marking its lowest reading since September 2012. Meanwhile, the number of people looking for a new home fell again in November, with the net balance down to -21 from -15 in October, its lowest level since September 2017, mostly on the back of Brexit-related uncertainty.
The outlook was equally downbeat, with sales expectations for the coming three months slumping to -23 in November from -6 the month before. This was the most substantial decline in this series since the EU referendum.
Samuel Tombs, chief UK economist at Pantheon Macroeconomics, said: "Until households can be sure that the economic status quo won’t change next year, we expect house prices to struggle. But even further ahead, house prices are set to rise less quickly than households’ incomes, as the MPC likely will pick up the pace of interest rate hikes next year."
Miners racked up healthy gains as copper prices rallied amid signs of easing trade tensions between the US and China, with Anglo American and BHP higher.
Holiday group Tui pushed up as it reported a 10.9% increase in full-year earnings and said it expects similar growth next year.
Ocado rose as the online grocery specialist reported 12% revenue growth from its UK retail operations in the final three months of 2018, in line with guidance for the full year.
Logistics company Bunzl advanced as it said full-year group revenue is expected to increase by between 8% and 9% at constant exchange rates and announced the acquisition of Copenhagen-based foodservice distributor CM Supply.
Security services firm G4S surged after saying it was reviewing its options to separate its cash solutions division, while Serco gained as the outsourcer backed its recently-upgraded expectations for 2018. It also benefited from an upgrade to 'hold' from 'sell' at Liberum.
On the downside, retailers were under the cosh, with Next and Marks & Spencer both on the back foot following a profit warning from Bonmarche and uninspiring results from Sports Direct, which tumbled as it posted a 27% drop in underlying interim profit weighed by losses at recently-acquired House of Fraser.
Spire Healthcare was also a big loser as JPMorgan cut its price target on the stock to 146p from 256p, while Imperial Leather maker PZ Cussons fell after saying it expects consumer to remain under pressure in all of its markets as its Nigerian operations were hit by a weaker economy and currency.
Ultra Electronics slumped on the back of a Barclays downgrade to 'underweight', even as it said in an update that full-year results should be in line with expectations and that it continues to experience strong order inflow.
3i Group, Associated British Foods, Assura, BCA Marketplace, Halfords and Grainger were among the companies whose stock went ex-dividend.
Market Movers
FTSE 100 (UKX) 6,877.50 -0.04%
FTSE 250 (MCX) 17,838.04 -0.84%
techMARK (TASX) 3,362.46 -0.42%
FTSE 100 - Risers
Standard Life Aberdeen (SLA) 244.35p 4.85%
TUI AG Reg Shs (DI) (TUI) 1,190.00p 4.48%
Shire Plc (SHP) 4,657.50p 2.59%
Fresnillo (FRES) 842.40p 2.56%
easyJet (EZJ) 1,100.00p 2.28%
Anglo American (AAL) 1,712.00p 1.94%
BHP Group (BHP) 1,631.40p 1.43%
Sainsbury (J) (SBRY) 278.90p 1.42%
Bunzl (BNZL) 2,439.00p 1.37%
Just Eat (JE.) 580.00p 1.36%
FTSE 100 - Fallers
Mondi (MNDI) 1,634.00p -3.83%
Marks & Spencer Group (MKS) 266.20p -3.73%
Next (NXT) 4,414.00p -3.41%
Barratt Developments (BDEV) 454.60p -2.88%
Royal Mail (RMG) 302.10p -2.80%
3i Group (III) 783.20p -2.73%
NMC Health (NMC) 3,090.00p -2.40%
Kingfisher (KGF) 227.58p -2.16%
DCC (DCC) 6,000.00p -1.96%
RSA Insurance Group (RSA) 505.80p -1.67%
FTSE 250 - Risers
Superdry (SDRY) 397.20p 11.82%
Serco Group (SRP) 98.00p 9.62%
G4S (GFS) 196.30p 7.06%
Centamin (DI) (CEY) 106.80p 4.04%
Entertainment One Limited (ETO) 370.00p 3.29%
Saga (SAGA) 102.90p 2.80%
RHI Magnesita N.V. (DI) (RHIM) 3,550.00p 2.72%
AA (AA.) 81.66p 2.67%
Thomas Cook Group (TCG) 30.18p 2.51%
Playtech (PTEC) 418.40p 2.32%
FTSE 250 - Fallers
Sports Direct International (SPD) 235.60p -14.73%
IP Group (IPO) 109.80p -9.85%
Spire Healthcare Group (SPI) 104.00p -9.72%
PZ Cussons (PZC) 209.40p -6.77%
Ultra Electronics Holdings (ULE) 1,297.00p -6.08%
Dunelm Group (DNLM) 542.00p -5.90%
Essentra (ESNT) 338.80p -5.20%
Stobart Group Ltd. (STOB) 157.80p -4.94%
Metro Bank (MTRO) 1,838.00p -4.52%
Elementis (ELM) 171.80p -4.50%