London stocks closed down at their lowest level in three weeks on Tuesday as another global sell-off combined with worries about Brexit and continued volatility in oil prices.
The FTSE 100 finished almost 53 points or 0.8% lower at 6,947.92, its worst level since late October, with mining, oil and gas and banking sectors all weighing. A barrel of Brent crude was 5% cheaper at $63.46, according to front-month future contracts.
Sterling, meanwhile, fell 0.3% against the dollar to 1.2813 but was up 0.3% versus the euro at 1.1252.
US stocks fell sharply on Monday, led lower by the tech sector as Apple, Amazon and Facebook slumped, and Wall Street continued the sell-off on Tuesday, though with Amazon and Facebook rallying. Apple was weighed down by reports that it had slashed production orders in recent weeks for all three iPhone models that were unveiled in September.
On home shores, the focus was on politics as it appeared that the much-vaunted threshold of 48 letters needed to trigger a vote of no confidence in Prime Minister Theresa May still had not been reached.
She received some much needed support from the Bank of England, as governor Mark Carney answered questions at a Treasury committee grilling during the morning. He gave his backing to May's Brexit deal, though mainly it seemed as it the likely alternative of a no-deal Brexit would be a “large, negative shock to the economy”.
Brexit worries continued to dog shares in banks, life insurers and several others in the financial services sector, made worse after the Tory party was given a “shot across the bows” in parliament by the DUP, which its support from the government in votes over the finance bill on Monday evening. “We had to do something to show our displeasure,” a DUP spokesman said, referring to the Northern Irish party's disappointment with May's Brexit deal and its ability to undermine May's hopes to get her EU withdrawal agreement through parliament.
Spreading further worries for the banking sector were results from mid-cap lender CYBG, the owner of Clydesdale and Yorkshire Bank, which said it has started taking contingency measures to handle uncertainties from the country's exit from the European Union and took extra provisions against an expected rise in claims for former PPI misselling.
There was better news for manufacturers as the latest survey from the Confederation of British Industry showed that factory orders unexpectedly rebounded in November after a bid drop in October. The CBI's monthly order book balance rose to +10 from -6 in October, versus expectations for a reading of -7.
In corporate news, EasyJet flew lower even as it posted a 41% jump in profits in the past 12 months and said it sees potential for greater growth by expanding its holiday business. The budget airline reported headline profit before tax for year ending 30 September of £578m as revenues grew 17% to £5.9bn.
George Salmon, equity analyst at Hargreaves Lansdown, said Brexit remains one of several concerns for the company. “While EasyJet has delivered a strong set of results, attention is likely to focus on what's happening next. The tailwind from cheap fuel is fading fast, and revenue per seat is set to dip. That puts the emphasis on EasyJet to increase operating efficiency over the costs it can control, but the group hasn't got a great recent record here and looking ahead underlying costs are expected to flatline rather than descend.”
Entertainment One was in the red as the Peppa Pig parent's interim results met expectations, with underlying profits up 10% but wiped out at the bottom line by impairment charges as it continues to shift from distribution to production of its own content for the likes of Netflix and broadcasters around the world.
Halma bucked the trend, however, sitting pretty at the top of the FTSE 100 as the fire alarm and security technology company posted record first-half results, with revenue and profit up amid good performances across its business sectors.
Contract caterer Compass followed close behind after it reported a rise in full-year operating profit and revenue thanks to “excellent” growth in North America and strong net new business in the UK.
Shares in medical technology company BTG rocketed to the top of the FTSE 250 as it agreed to be bought by US-based Boston Scientific for £3.3bn.
Spectris surged after posting an 8% jump in like-for-like sales growth for the four months to the end of October, online trading platform Plus500 gained as it said 2018 results should be ahead of market expectations and Telecom Plus rallied on the back of record first-half numbers.
In broker note action, Bodycote was initiated at 'outperform', IMI was started at 'sector perform', Melrose Industries was boosted to 'top pick' and Rotork was upgraded to 'outperform' in an RBC Capital Markets note on UK engineering. RBC also downgraded Smiths and Spirax Sarco to 'underperform', added Melrose and Vesuvius to its 'best ideas' list and started RHI Magnesita at 'outperform'.
FTSE 100 (UKX) 6,947.92 -0.76%
FTSE 250 (MCX) 18,366.36 -0.94%
techMARK (TASX) 3,411.31 1.01%
FTSE 100 – Risers
Compass Group (CPG) 1,673.00p 5.39%
Just Eat (JE.) 550.40p 3.11%
Halma (HLMA) 1,350.00p 2.97%
3i Group (III) 832.60p 2.84%
National Grid (NG.) 846.80p 2.53%
Centrica (CNA) 145.60p 2.39%
United Utilities Group (UU.) 762.60p 2.39%
Fresnillo (FRES) 914.20p 2.24%
Severn Trent (SVT) 1,888.50p 1.83%
Intertek Group (ITRK) 4,597.00p 1.79%
FTSE 100 – Fallers
Evraz (EVR) 515.20p -6.05%
easyJet (EZJ) 1,110.50p -5.49%
Ashtead Group (AHT) 1,708.50p -4.98%
GVC Holdings (GVC) 746.50p -4.29%
DCC (DCC) 5,555.00p -4.14%
Informa (INF) 704.20p -3.82%
Scottish Mortgage Inv Trust (SMT) 458.35p -3.51%
Wood Group (John) (WG.) 620.00p -3.49%
Johnson Matthey (JMAT) 2,777.00p -3.48%
NMC Health (NMC) 3,420.00p -3.46%
FTSE 250 – Risers
BTG (BTG) 824.50p 34.07%
Spectris (SXS) 2,365.00p 12.46%
Plus500 Ltd (DI) (PLUS) 1,430.00p 11.28%
Telecom Plus (TEP) 1,324.00p 10.15%
IG Group Holdings (IGG) 636.00p 5.98%
Centamin (DI) (CEY) 107.25p 3.57%
Beazley (BEZ) 550.50p 3.57%
PZ Cussons (PZC) 234.60p 3.35%
Provident Financial (PFG) 562.00p 3.12%
Mediclinic International (MDC) 344.00p 3.07%
FTSE 250 – Fallers
Indivior (INDV) 109.95p -46.73%
CYBG (CYBG) 206.40p -16.91%
Electrocomponents (ECM) 567.00p -7.29%
Aveva Group (AVV) 2,522.00p -6.04%
Spire Healthcare Group (SPI) 117.40p -5.17%
Premier Oil (PMO) 76.65p -5.14%
Tullow Oil (TLW) 179.80p -5.07%
UDG Healthcare Public Limited Company (UDG) 572.50p -4.98%
Ascential (ASCL) 376.60p -4.90%
Entertainment One Limited (ETO) 365.60p -4.89%