7th Oct 2019 08:41
(Alliance News) - Stock prices in London opened lower on Monday, with SIG weighing on the mid-cap FTSE 250 index after issuing a profit warning.
The FTSE 100 index was down 16.64 points, or 0.2% at 7,138.74. The FTSE 250 was down 16.15 points, or 0.1%, at 19,464.22. The AIM All-Share was up 0.1% at 864.66.
The Cboe UK 100 index was down 0.1% at 12,107.02. The Cboe UK 250 was down 0.1% at 17,358.62. The Cboe UK Small Companies was flat at 10,845.18.
In European equities, the CAC 40 index in Paris was down 0.3% and the DAX 30 in Frankfurt was down 0.4%.
In the FTSE 100, Carnival was the worst blue-chip performer, down 3.2% after HSBC downgraded the cruise line operator to Hold from Buy.
In the FTSE 250, WH Smth was up 1.0% after HSBC started coverage on the books and stationary retailer with a Buy rating.
At the other end of the FTSE 250, SIG was comfortably the worst performer, down 25% after the building products supplier warned on its annual profit due to an acceleration in the deterioration of trading conditions.
Last week, the latest IHS Markit/CIPS purchasing mangers' index reading showed UK construction remained in contraction in September. The headline PMI posted 43.3 in September, down from 45.0 in August. The reading, further below the neutral mark of 50, signals the building sector suffered an even more severe downturn in September than in the month before.
SIG said the weakening of trading has accelerated over recent weeks and political and macro-economic uncertainty has continued to increase. As a result, the company is now anticipating significantly lower underlying profitability than previous expectations for 2019 in both the specialist distribution and roofing merchanting businesses.
In 2018, SIG reported group underlying pretax profit of GBP72.7 million and revenue of GBP2.68 billion.
Building product peers Travis Perkins and Grafton Group were down 4.7% and 3.0% respectively.
The pound was quoted at USD1.2308 early Monday, flat against USD1.2302 at the London equities close Friday.
UK Prime Minister Boris Johnson will attempt to save his Brexit plan this week after his French counterpart warned that the EU would decide within days whether an agreement would be possible.
The PM told France President Emmanuel Macron that Brussels should not be lured into the "mistaken belief" that Britain could extend its membership of the bloc beyond October 31.
But in a telephone call on Sunday, the French president reportedly informed Johnson that the EU will decide at the end of the week whether a deal is possible.
An Elysee official told the BBC: "The president told [Johnson] that the negotiations should continue swiftly with Michel Barnier's team in coming days, in order to evaluate at the end of the week whether a deal is possible that respects EU principles."
Analysts at Daiwa Capital Markets said: "Brexit will inevitably remain centre-stage this week as talks continue between the UK and EU at different levels of seniority to determine whether there is scope for a deal to be reached at the forthcoming EU summit on 17-18 October. However, at this stage the EU is clearly unable to accept Johnson's proposals, not least due to the veto on Northern Irish regulatory alignment with the EU provided to the Northern Irish Assembly, as well as the requirement for the re-establishment of customs checks on good shipments between Northern Ireland and the Irish Republic.
"So, the UK government will need to shift its position and present acceptable new legal text by the end of the week to keep open the possibility of an agreement at the summit. If not, although a further summit later in the month would not be ruled out, the focus on 17-18 October would shift to preparing for either a no-deal scenario or a further Article 50 extension."
Focus also this week is on the resumption of trade talks between China and the US in Washingto.
However, while there has been an expectation the two sides are coming together in some areas owing to their economies stuttering, reports said Beijing had cut back on the number of areas it is willing to discuss at the top-level trade talks with the US.
Bloomberg News reported that top negotiator Vice Premier Liu He had said he would not put on the table reforms to Chinese industrial policy or government subsidies.
The Japanese Nikkei 225 index closed down 0.2% on Monday. Financial markets in Shanghai and Hong Kong are closed on Monday for public holidays and will reopen on Tuesday.
By Arvind Bhunjun; [email protected]
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