London Markets

Feb. 26, 2019, 9:26 a.m. EST

London’s indexes falls as pound rallies on fresh Brexit hopes

By Emily Horton

AFP/Getty Images

London’s main stock market fell on Tuesday, as the pound surged on fresh hopes for a Brexit delay, weighing on heavyweight exporters.

Among individual shares, Persimmons PLC climbed on well-received earnings.

How are markets performing?

The FTSE 100 (FTSE:UK:UKX) fell by 0.8% to 7,128.04 as reports of possible delays to the March 29 Brexit deadline and a second referendum pushed the British pound to its highest level since October.

What’s driving the markets?

“Strong sterling is generally bad for the FTSE 100 because a large number of the index constituents earn in overseas currencies but have their shares priced in pounds” Russ Mould, investment director at AJ Bell said.

The pound (XTUP:GBPUSD)  shot to $1.3215, from $1.3097 late Monday, after reports Prime Minister Theresa May will rule out a no-deal Brexit in response to a threatened revolt by 15 ministers. Her cabinet is expected to discuss the extension of the March 29 Brexit deadline on Tuesday, and May is expected to announce the conclusion in front of Parliament around 12.30 p.m. Eastern (7.30 p.m. London).

On Monday, the pound got a lift after the leader of the U.K. opposition Jeremy Corbyn said he would support a second Brexit referendum.

May told Parliament that lawmakers could vote on her Brexit deal on March 12, during a speech in the House of Commons on Tuesday. Should her deal be rejected, MPs get to vote on whether they would support a no-deal Brexit. If not, Parliament would get to vote on an extension of article 50 on May 14.

Brexit Brief: U.K. politicians given option to delay EU split

Elsewhere, investor optimism backtracked slightly, in-line with global equities, as they wait for more clarity on the president Donald Trump’s Chinese goods tariff deadline push back. On Sunday, Trump tweeted “substantial progress” had been made during the latest round of negotiations.

What stocks are active?

Leading the decliners, Fresnillo PLC (LON:UK:FRES) tumbled 7% after the U.K.listed miner posted a profit fall for 2018. The miner also warned of a challenging year ahead, as the company continues to “work through operational issues and lower grades at certain mines during the year,” Chief Executive Octavio Alvidrez said.

Near the top of the gainer’s list, Persimmon PLC (LON:UK:PSN)  rose over 4% after the house builder reported a strong profit rise for 2018. Taylor Wimpey PLC also gained over 2% and Barratt Developments (LON:UK:BDEV)  share price rose by 1%.

Meanwhile, U.K. building-materials retailer Travis Perkins PLC (LON:UK:TPK) added 10% after the company reportedly said it expects to post flat overall adjusted operating profits for 2019, compared with the previous year.

“The stars appear to be aligning for Travis Perkins. The builders’ merchant is simplifying its structure, reinvesting cash in the best parts of the business, trading is picking up in its consumer-facing brand Wickes, and operating profit improved in the second half of the year after a difficult first half.” Russ Mould, investment director at AJ Bell said.

In banking, Standard Chartered PLC (LON:UK:STAN) lost almost 2% on the news its profits fell short of analysts expectation.

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