(Alliance News) - The FTSE 100 reversed some early losses on Wednesday after the pound dropped on news the UK government is planning to suspend parliament, a move which could prevent MPs from blocking a no-deal Brexit.
The FTSE 100 was up 17.78 points, or 0.3%, at 7,107.36. The FTSE 250 was down 140.30 points, or 0.7%, at 19,195.58 and the AIM All-Share was down 0.2% at 868.86.
The Cboe UK 100 index was up 0.4% at 12,052.03. The Cboe UK 250 was down 0.7% at 17,102.74 and the Cboe UK Small Companies was flat at 10,891.94.
"The pound is in freefall this morning after plans emerged to prorogue parliament and prevent MPs from passing legislation to prevent no deal," said Craig Erlam, senior market analyst at Oanda.
"This isn't the first we've heard of these dirty tactics but it was maybe hoped that such un-democratic measures would not be needed or used," he continued. "Some may have thought them inevitable but perhaps not at this point in the process."
"Either way, it certainly caught markets off-guard and came at a time when the pound had been recouping some of its losses. The FTSE, as ever, is the unintended beneficiary of the plunge in the currency, given that the vast majority of its earnings are generated outside of the UK," Erlam said.
Sterling was quoted at USD1.2196 at midday, down from USD1.2290 late Tuesday.
Prime Minister Boris Johnson is said to be planning to temporarily shut down Parliament from September 11 ahead of a Queen's Speech on October 14.
The House of Commons is currently expected to resume sitting after its summer break on September 3 and Labour's Jeremy Corbyn and other opposition leaders have agreed to seek legislative changes to prevent a no-deal Brexit.
In a letter to MPs outlining his government's plans, Johnson said he was bringing forward a "bold and ambitious domestic legislative agenda" which MPs would be able to vote on in October.
He said: "This morning I spoke to Her Majesty The Queen to request an end to the current parliamentary session in the second sitting week in September, before commencing the second session of this Parliament with a Queen's speech on Monday October 14."
"Parliament will have the opportunity to debate the government's overall programme, and approach to Brexit, in the run up to EU Council, and then vote on this on 21 and 22 October, once we know the outcome of the Council," he wrote.
House of Commons Speaker John Bercow on Twitter called the move to suspend parliament, if confirmed, a "constitutional outrage".
In mainland Europe, the CAC 40 in Paris and the DAX 30 in Frankfurt were 0.7% and 0.8% lower, respectively, in afternoon trade.
In the US, Wall Street is pointed towards some modest gains on Wednesday, with the Dow Jones, S&P 500 and Nasdaq all called up 0.2%.
Shares in Hewlett Packard Enterprise were trading 5.8% pre-market in New York after raising its annual guidance.
For the full year to October 31, HPE raised diluted net non-GAAP earnings per share forecasts to between USD1.72 and USD1.76 after accounting for around USD1.07 per share in one-off costs. This was up from the USD1.62 and USD1.72 range predicted at its second-quarter results.
This came as HPE swung to USD830 million pretax profit in the nine months to July 31 from a USD308 million pretax loss the year prior. This was despite revenue falling 4.3% to USD21.92 billion from USD22.91 billion the year before.
In London, the FTSE 100 rose on the back on the lower pound and also a share price rise for oil major BP.
BP late Tuesday announced the sale of its Alaskan operations to Hilcorp Alaska, an affiliate of Houston-headquartered Hilcorp Energy Co, for USD5.6 billion.
BP began working in Alaska in 1959, and its net production from the state in 2019 is expected to average almost 74,000 barrels a day. Hilcorp, meanwhile, has been operating in Alaska since 2012 and is the largest private oil and gas operator in the state.
Of the USD5.6 billion consideration, USD4.0 billion is payable "near-term" and USD1.6 billion through an earnout thereafter.
At the other end of the index were housebuilders, with Persimmon down 2.6%, Berkeley Group down 2.5% and Barratt Developments slipping 2.4%. The stocks, heavily exposed to the UK housing market, fell on fears of a no-deal Brexit and any subsequent disruption to the domestic economy.
In the FTSE 250, Greggs was up 3.4% after UBS raised the baker to Buy from Neutral.
WH Smith was down 1.9% despite saying its annual results should be in line with forecasts.
In the financial year ending on Saturday, the FTSE-250-listed retailer said its High Street business, which sells books, magazines and stationery, performed according to forecasts. The unit is expected to have made GBP9.0 million in cost savings in financial 2019, and the company had said in April that GBP5.0 million of these cuts would occur in the second half.
The WH Smith Travel unit, which caters to commuters and travelers, "performed strongly with good sales across all channels" and gross margin in line with forecasts, the company said.
Elsewhere on the Main Market, shares in travel agent Thomas Cook fell 15%, meaning the stock has dived 93% since this time a year ago.
The firm has agreed a GBP450 million injection of cash from its largest shareholder Fosun Tourism Group. Thomas Cook confirmed the "significant" new capital investment and proposed reorganisation, which will keep the venerable holiday firm in business but will leave shareholders with little.
Thomas Cook said its current intention is to maintain the company's London listing but the proposed recapitalisation could result in Thomas Cook cancelling its listing. Thomas Cook currently only has a market capitalisation of GBP91.4 million.
"Chinese group Fosun and Thomas Cook's lenders are going to get the lion's share of the equity, meaning very little – if anything – is left on the table for the other shareholders," said Russ Mould, investment director at AJ Bell.
"That would explain why the shares have fallen another 14% on the latest news," Mould continued. "Investors are simply trying to cash out and crystalise any value left in their investment before the refinancing, for fear there could be nothing left if they wait."
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