(Alliance News) - Stock prices in London opened lower on Wednesday, as concerns about Brexit continued to weigh on sentiment despite continued hopes that a deal can be reached before the EU summit starting Thursday.
The FTSE 100 index was 4.52 points, or 0.1%, lower at 7,207.12. The FTSE 250 was down 46.04 points, or 0.2%, at 20,150.93. The AIM All-Share was up 0.79 point at 872.62.
The Cboe UK 100 index was down 0.2% at 12,223.02. The Cboe UK 250 was down 0.2% at 18,129.62. The Cboe UK Small Companies was flat at 11,063.18.
In European equities, the CAC 40 index in Paris was down 0.2%, and the DAX 30 in Frankfurt was flat.
On the London Stock Exchange, Reckitt Benckiser was the best blue-chip performer, up 1.5% after Berenberg resumed coverage on the health and household goods maker with a Buy rating.
At the other end of the FTSE 100, Barratt Developments was the worst performer, down 2.4% despite the housebuilder saying it started its new financial year positively.
Barratt delivered 3,252 new homes during the 15 weeks to October 13, 14% higher than the year before. Total forward sales at October 13 were "strong", comprising 12,963 homes worth GBP3.07 billion. That was up from 12,903 homes at the same point last year, though the value was down from GBP3.15 billion.
The company, which is holding its annual general meeting on Wednesday, is making "good" progress on medium-term targets as it looks to improve margins. Targets include 3% to 5% completions growth per year in the medium-term, as well as a minimum return on capital employed of 25%. It expects completions in the year ending June 2020 at the lower end of that range.
"As expected Barratt has focused on the solid sales with a small uptick in sales rates and a seemingly very strong level of legal completions in the first quarter which is just timing. However, the order book is flat and Barratt is pointing to only achieving, at most, a 3% increase in unit sales for the full year. The board has persuaded the market that it is going to overcome the market pressures and deliver both volume and margin growth, but we do not see that this is likely," said Shore Capital.
On Tuesday, midcap peer Bellway had warned that a slowdown in house price growth and higher building costs would hurt operating margins.
Fellow housebuilders Persimon, Taylor Wimpey and Berkeley Group were down 2.2%, 2.3% and 1.3% respectively.
In the FTSE 250, Mediclinic International was the best performer, up 2.9% after the private hospital group said it delivered a solid performance in the first half of its financial year across all of its operations.
For the six months to the end of September, the private hospital group said adjusted earnings before interest, taxes, depreciation and amortisation will increase by around 3.5% from GBP231 million the year before. This is on revenue that is to grow by 9.0% on a reported basis from GBP1.39 billion the prior year. On a constant currency basis, revenue will increase by 6.5% year-on-year.
On AIM, ASOS was up 16% despite the online fashion retailer posting a sharp decline in annual profit.
ASOS admitted it made a mistake in embarking on a "huge" logistical spending plan which has led to a slump in annual profit.
The retailer issued two profit warnings during the year, the first in December after a "significant downturn" in performance during November 2018, and then another in July after warehouse problems in Atlanta, US, and in Berlin.
Pretax profit for the 12 months to August 31 fell 68% to GBP33.1 million, despite revenue rising 13% to GBP2.73 billion. At constant currency, revenue was up 12%.
ASOS's UK retail sales climbed 15% to GBP993.4 million, with international climbing 11%, or 10% constant currency, to GBP1.66 billion.
Interactive Investor's Richard Hunter said: "Investors will be hoping that these numbers represent a line in the sand. The initial share price reaction to the results reflect a leap of faith, after management assurances that the latter part of the year was rather more positive, to the extent that it can look forward to the next period with confidence.
"There are some glimmers which support this optimism - group revenues rose 13%, international retail revenues (which represent 63% of the total) improved by 11% and the company has not burdened itself with dividend payments, which has allowed historically for profits to be ploughed back into the business. Meanwhile, in admitting that it had taken its eye off the ball on the basics, ASOS has now pledged to reaffirm its focus on product, presentation and customer engagement."
The pound was quoted at USD1.2740 Wednesday morning, flat from USD1.2739 at the London equities close Tuesday.
"Awaiting the potential publication of the draft text of a Brexit agreement, one that the UK and EU are reportedly very close to reaching, the pound had a wobble at Wednesday's start," said Spreadex analyst Connor Campbell.
UK Prime Minister Boris Johnson faces a race against the clock to secure a Brexit deal and get Tory Eurosceptics and the DUP onside to back him.
The UK PM carried out a charm offensive in Downing Street on Tuesday evening as he held a series of talks with backbenchers and the leaders of the DUP.
Meanwhile, his negotiating team worked through the night as reports increased that a deal was nearing, with a solution said to be forthcoming on the Irish border.
Addressing journalists on Tuesday, the PM's official spokesman said: "Talks remain constructive but there is more work still to do."
A deal will need to be published, along with a legal text, if the EU27 are to consider ratifying the Withdrawal Agreement at their gathering this week, meaning the pressure is on to sign off on the draft agreement.
Michel Barnier, the EU's chief negotiator, warned Johnson it was "high time to turn good intentions into legal text".
In addition, Irish Taoiseach Leo Varadkar, in a press conference in Dublin, said it remained uncertain whether a deal would be ready in time for the Brussels summit.
The Guardian reported senior sources on both sides of the Channel saying that a draft treaty could be published on Wednesday morning after the UK agreed in principle there will be a customs border in the Irish Sea.
The Japanese Nikkei 225 index closed up 1.2%. In China, the Shanghai Composite closed down 0.4%, while the Hang Seng index in Hong Kong is up 0.4%.
China on Wednesday expressed "strong indignation and firm opposition" to the US House of Representatives' passage of a bill in support of Hong Kong protesters.
The Hong Kong Human Rights and Democracy Act requires sanctions against Chinese officials "responsible for undermining fundamental freedoms" in the city.
The Hong Kong government also expressed "regret" over the bill passing in the US House.
The economic events calendar on Wednesday has UK and eurozone inflation readings at 0930 BST and 1000 BST respectively.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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