FTSE 100 closes down 25 points
Sterling higher as MPs begin debating December 12 election
BP is top Footsie laggard
5.10pm: London stocks close down
FTSE 100 index closed in the red on Tuesday as traders grew wary of the potential for a UK general election before the year's out.
The UK index of leading shares finished 25.02 points at 7,306.26. The FTSE 250 fell 41.83 points to close at 20,168.33.
Members of Parliament are debating a bill, which could lead to a national vote on December 12 this year. It comes as Labour, the main opposition party, says it will back the poll, as it says the 'no deal ' Brexit risk has been removed after the EU allowed the three month extension.
Sterling gained 0.16% against the US dollar.
"Hoping that an election will create some Christmas clarity – however misguided that belief might be – the pound just about swung positive after the news," noted financial analyst Connor Campbell at spread better Spreadex.
David Madden, at CMC Markets, added: "Today the chatter of an election is heating up. Elections can be risky as Mrs May found out in 2017. The Conservatives are polling well ahead of the Labour Party but traders have learned not to rely on opinion polls given the events of the past three years, hence why equities are down."
Top laggard on Footsie was oil behemoth BP (LON:BP.), which sank 3.8% to 492.55p after the group posted a 41% fall in third-quarter underlying replacement cost profit, used as a proxy for net profit, and a key metric to assess profitability of oil companies.
4.12pm: FTSE 100 lower
London stocks are continuing to very gradually crawl away from their worst losses of the day, led by miners, financials and overseas earners.
The Footsie is down 36 points or 0.5% at 7,295.49.
Top of the leaderboard is 3i Group plc (LON:III), with Standard Life Aberdeen Plc (LON:SLA) high up the list, International Consolidated Airlines Group SA (LON:IAG) and Melrose Industries PLC (LON:MRO) not far behind.
The pound has touched $1.3, up 0.2% on the day, as it struggles to make sense of the conflicting noises from parliament.
A Downing Street spokesman confirmed the government would pull the general election bill if amendments are passed to allow EU nationals and 16 and 17 year olds to vote in the election, saying it would be "administratively impossible".
Westminster watchers suggested that such amendments are unlikely to even be given a vote.
Think people getting overly excited about amendments to this bill: There is no way that Lindsay Hoyle is going to select amendments changing the franchise. They visibly are not in the scope of the bill.
— Stephen Bush (@stephenkb) October 29, 2019
Among the fallers today is Royal Mail Group PLC (LON:RMG), where the shares were returned to sender and downgraded to 'underweight' by JPMorgan Cazenove, where analysts cut their price target to 192p from 252p.
Over in the States, President Trump has been trying to put more pressure on the Federal Reserve to lower interest rates, though policymakers are expected to deliver one anyway.
“Over in Europe and Japan they have NEGATIVE RATES. They get paid to borrow money. Dont we have to follow our competitors?” @Varneyco Yes we do. The Fed doesnt have a clue! We have unlimited potential, only held back by the Federal Reserve. But we are winning anyway!
— Donald J. Trump (@realDonaldTrump) October 29, 2019
The Dow Jones and S&P 500 have now slipped very slightly into the red, both less than 0.1% lower however. The Nasdaq Composite has edged lower, now down 35 points or 0.4%.
US data on consumer confidence from the Conference Board earlier came in below expectations, with the index rising to 125.9 from 125.1. Economists had been looking for 128.0.
House price data was mixed, with pending home sales beating expectations but the Case-Shiller index coming in short.
2.40pm: UK stocks in the red, S&P 500 hits new record
Sterling is crawling higher in afternoon trading as MPs start debating the governments proposal to call an election on 12 December, or maybe the day before, or maybe three.
Before Boris Johnson stood up to speak, there was some greasing of the wheel as well as some political spanners being thrown in the works.
The Commons first approved the timetable for the general election bill to pass through all stages of the House today, a speeded-up process that will be needed in order to schedule an election before Christmas.
The pound seemed to like this, climbing into positive territory, up 0.2% to $1.2892.
An early amendment to the bill was passed that will allow MPs to try and amend the election bill as well as the government, though there were reports from lobby journalists on Twitter that the government could pull the bill if it decides it doesn't like the way the sands are shifting.
????️ At the despatch box, the Leader of the House of Commons set out a Business of the House motion for the Early Parliamentary General Election Bill. ????@Jacob_Rees_Mogg | @HouseofCommons pic.twitter.com/2W7Dze9yjG
— Leader of the House of Commons (@CommonsLeader) October 29, 2019
Meanwhile, over in New York, stock indices were mixed after the opening bell.
The Dow Jones was up 0.2% to 27,146.8 and the S&P 500 continued to nudge new all-time highs, creeping up another 0.2% and notching up another record at 3,047.87 along the way.
1.10pm: US stocks predicted to drop
Wall Street is expected to open slightly lower, with investors on standby for tomorrows Federal Reserve announcement.
The Dow Jones futures market is poised to open 41 points below yesterdays close, at US$27,012.
The Fed is expected to announce its third interest rate cut this year hoping to cushion business against economic volatility.
Chris Beauchamp, IGs chief market analyst called the overall tone is "still positive", with investors looking to get onboard the “rally train” ahead of any upswing from the Fed decision.
Beauchamp noted though that equities are likely to slide from today and tomorrow, and that with indicators like put/call ratios “already close to greed rather than fear readings”, a bout of volatility to the downside “cannot be ruled out”.
Meanwhile, the FTSE 100 recovered some ground, now down only 40 points at 7,291.77.
12.40pm: FTSE in the red as Labour backs pre-Xmas election
As Britains first December general election since 1923 looms, UK stocks seen as facing political risks are moving lower, led by water companies United Utilities Group PLC (LON:UU.), Severn Trent PLC (LON:SVT) and Pennon Group PLC (LON:PNN).
This is because of Labours plans to renationalise the UKs key utility companies if it gains power, with British Gas owner Centrica PLC (LON:CAN), SSE PLC (LON:SSE) and National Grid PLC (LON:NG.) also dropping further into the red as Tuesdays session wears on.
The Twittersphere is alive with election buzz already and polling updates, including on what the exact date of the election will be and of course if anyone will win a majority.
No 10 sticking to Dec 12 date BUT not ruling out compromise of Dec 11.
Any earlier date means it would be “very difficult” to get election bill through Parliament on time.
Also need time for NI Budget Bill so schools & hosps can continue to function.
— Pippa Crerar (@PippaCrerar) October 29, 2019
— Sebastian Payne (@SebastianEPayne) October 29, 2019
The Footsie is erasing some of its earlier losses now, down 43 points or 0.6% at 7,288, with the pound treading water.
11.55am: Stocks fall further as Labour backs pre-Xmas election
The FTSE 100 has lurched lower as the pound climbs "curiously" on the back of the Labour Partys decision to back a December general election.
The UK benchmark index is down 55 points or 0.75% to 7,276.58, while sterling has recovered from earlier losses against the dollar to 1.2865.
Labour leader Jeremy Corbyn is now willing to fight an election before Christmas as no-deal is temporarily “off the table” after the EU yesterday granted a Brexit extension until 31 January.
Boris Johnson plans to put forward a House of Commons vote later today for a 12 December election, but Downing Street is reported to be willing to accept an amendment for an election on 11 December.
The date of 9 December has also been mooted.
“Little is straightforward here, as is seemingly always the case with Brexit,” said market analyst David Cheetham at XTB.
He said sterlings initial rise was “quite curious” as general elections are often seen as bringing heightened uncertainty and therefore negative in the near-term for affected markets.
“But in this case there is a hope that it will bring an end to the present quandary we find ourselves in.
“The pound will likely stay fairly well supported unless a no-deal outcome becomes more than marginally possible once more and there is also the hope that a softer version of Brexit than the latest WAB could receive greater support.”
Cheetham also noted there was potential for “wrecking ball” amendments to the vote, including for lowering the election voting age to 16.
#GBPUSD holds off lows after news Labour to back #BorisJohnson's election vote. Downing St reportedly offers 11th Dec. Lib-Dem, SNP, prefer Mon 9th Dec, though exactly when is becoming less important. ^KO pic.twitter.com/rsjGlePl9U
— Ken Odeluga (@TheSquareMile) October 29, 2019
10.50am: FTSE dragged down by BP dividend disappointment
Londons blue chip benchmark is heading lower in sync with index heavyweight BP after its mixed set of quarterly results.
The British oil supermajor swung to a third-quarter loss as profits were hit by falling oil prices and hurricane season, but strong trading for the Downstream division and the contribution from its stake in Russias Rosneft meant the numbers beat analyst expectations.
On a call with analysts later in the morning, the company's finance chief said BP was unlikely to raise its 2019 dividend.
This saw the shares battered lower, with the stock now down 3% to 495.2p.
Analysts were mostly sanguine, however, even though debt gearing remains well above the usual range at around 35.6%.
Nicholas Hyett at Hargreaves Lansdown said: “BP is relying on more disposals to help get debt under control by the middle of 2020. With market conditions what they are that might be less than ideal, but its probably a necessary evil.”
But analysts at RBC saw the positives as BP decided to remove its scrip dividend option: “Based on our recent conversations, we think some investors have been calling for a dividend per share increase in the near term, however given where the balance sheet stands, this is a prudent step in our view.”
Over at UBS, the number crunchers welcomed the ending of the scrip option, saying it was “simplifying the shareholder distribution message, signalling normalisation of the company's financial position and setting up for possible full share buy-backs in due course”.
The FTSE 100 is now down 32 points (0.4%) to 7,298.84.
The problem with BP balance sheet and cash flow is that it's still spending more money in capex, Gulf of Mexico payments, and dividends that it's earning from its operations and sales | #OOTT $BP pic.twitter.com/Z99UhQEUs6
— Javier Blas (@JavierBlas) October 29, 2019
9.40am: Banks and housebuilders weigh on Footsie
The FTSE 100 is being dragged down by domestic-focused stocks in early trade on Tuesday, with banks, housebuilders, retailers and utilities among the main losers.
Brexit and election caution is what's behind this lurch lower, as parliament is set to begin debating the prospect of a December election just after lunch.
As well as the big weight from BP, Centrica PLC (LON:CNA) and United Utilites Group PLC (LON:UU.) are fallers from the utilities sector; Lloyds Banking Group PLC (LON:LLOY), Royal Bank of Scotland Group PLC (LON:RBS) and Barclays PLC (LON:BARC) in the banks; Wm Morrison Supermarkets PLC (LON:MRW) and Kingfisher plc (LON:KGF) in the retailers; and Taylor Wimpey PLC (LON:TW.) and Barratt Developments PLC (LON:BDEV) are down the bottom of the table in early trading.
Not helping was news that house prices continued to see subdued growth in October, according to data from building society Nationwide.
Londons blue chip index is 29 points or 0.4% lower at 7,303.62, while the pound is down 0.4% at 1.2815.
The reason sterling is not sliding even further despite all the uncertainty is, says Craig Erlam at Oanda, "regardless of what happens, no deal remains very unlikely and traders aren't particularly concerned about the political nonsense which takes place in the interim".
What Boris Johnson does if he fails to win today's vote on a one-line bill to schedule an election on 12 December is anyone's guess, Erlam added.
"The very reason why an election is in doubt is exactly the reason it is needed, numbers. Unfortunately, the opposition aren't particularly keen and Johnson has worked very hard over the last two months to convince MPs that they can't trust him, to the point that they now don't. It's not impossible to get this done but he may be forced to make concessions."
8.35am: FTSE limps lower as BP investors left unimpressed
So, Brexit is the gift that keeps on giving. After the Commons rejected a call for a December 12 election, Prime Minister Boris Johnson will try again Tuesday – this time with the backing of the Lib Dems and the Scottish National Party.
With only a simple majority required (Mondays motion to overturn fixed-term parliament rules required two-thirds of MPs to back it), Johnson appears to have a better shot at a pre-Christmas poll. He hopes it will provide him a better mandate (backed by a fatter majority) for his EU exit deal.
Against this backdrop, the FTSE 100 opened 19 points lower at 7,312.70.
While BPs (LON:BP.) third-quarter results were slightly above consensus, the market remained wary following a sharp slide in earnings as it was hit by weaker global demand and contracting chemicals industry margins. The shares receded 0.6%.
“Todays numbers werent expected to come in close to the levels seen in Q2 given the decline in oil prices seen since then; however they still show a company that is nimbler and more efficient than it was a decade ago,” said Michael Hewson, analyst at CMC Markets.
Stepping down a division to the FTSE 250, Royal Mail (Read More – Source