London close: Builders, airlines weigh on FTSE after grim Brexit reports

(Sharecast News) - London stocks on Wednesday edged lower for the second day in a row, with housebuilders and airlines leading the decline as investors digested estimates that the UK will be much worse off under any Brexit scenario.The FTSE 100 edged down for the second day in a row, falling just 12 points or 0.2% at 7,004.52 as the government's assessment of the impact of different Brexit outcomes revealed that Theresa May's Brexit deal could cut Britain's GDP by up to 3.9% over the next 15 years, while leaving without a deal would curtail GDP by 9.3% over the same period.The economic analysis paper from the Treasury found that government borrowing could be forced up by up to £119bn by 2035 if the UK quits the EU without a deal and up to £26.6bn under a plan similar to May's.Earlier, Chancellor Philip Hammond acknowledged that all forms of Brexit will make the UK economy worse off, but insisted that May's plan is the best available.Sterling took the news in its stride, trading up 0.4% against the dollar at 1.2801. Analysts said the move against the dollar was mostly down to the US currency losing its safe-haven appeal amid renewed hopes that China and the US will reach a truce on trade, and later was hit by some dovish comments from Federal Reserve chief Jerome Powell. The pound was flat versus the euro at 1.1290.Just as the market closed, the Bank of England published its own Brexit analysis, alongside its biannual Financial Stability Report and the results of its 2018 bank stress tests.First the good news: no UK bank will be required to raise extra capital following the stress test. On its Brexit analysis, the BoE stated that a close economic relationship with the EU as seen in May's deal or another like it could boost GDP growth by 1.75% over the next five years. The bad news was all about the worst-case scenario of a "disorderly" exit from the EU, with the BoE warning that a no-deal Brexit could result in GDP dropping 8%, with house prices tumbling by almost a third and commercial property almost half, as unemployment climbs from around the current 4% to 7.5% and inflation more than doubles to 6.5%. In such a worst-case Brexit scenario, the pound could crash to below parity with the dollar, the Bank warned, even with the Bank raising rates to an average of 4% over three years.While the report could be derided as another "Project Fear" exercise, Lukman Otunuga, research analyst at FXTM, the support for May's deal "may offer Theresa May some ammunition when she sells her Brexit deal to parliament."Banks had been mostly firmer ahead of the stress test results, with but Barclays led a drop into the red late in the session, followed by RBS and HSBC, with Lloyds flat.CMC Markets analyst Michael Hewson said: "Banking stocks in the UK have had a disappointing year, weighed down by concerns about a no deal Brexit which would suggest that a lot of the bad news is already baked into the price, with Lloyds Banking Group and Royal Bank of Scotland both down over 15% year to date."Miners were on the rise as copper prices rebounded, with Antofagasta, Glencore, Anglo American and BHP Group all higher.Just Eat was boosted as Liberum upped its price target on the buy-rated stock to 1,250p from 850p, while there was also a report that talks between rivals Deliveroo and Uber Eats had come to a halt.EasyJet and IAG paced the broader decline, however, amid first signs that Brexit is hitting sales. Virgin Atlantic and budget carrier Jet2 both said demand is being depressed by the weaker pound, while Ryanair has warned of tough times for the sector as the prospect of a no-deal Brexit buffets the currency. Easyjet was also downgraded to 'hold' by Kepler Cheuvreux.Housebuilders were also on the back foot due to worries about Brexit, with Taylor Wimpey, Persimmon, Barratt Developments, Bovis Homes and Galliford Try all weaker.IT services company Softcat rallied after saying that first quarter customer demand had remained strong across all segments, helping to deliver year-on-year growth in revenue, gross profit and operating profit without specifying numbers.On the Beach was the standout gainer on the FTSE 250 after the online travel agent delivered final results ahead of market expectations, as it reined in marketing spending after the summer heatwave put Brits and Scandinavians off overseas holidays.Experian fared well, up a touch even as it emerged that its agreed takeover of start-up credit scoring rival Clearscore could be blocked by UK competition authorities. An investigation by the Competition and Markets Authority has found that the deal is "likely to result in less intense competition" and potentially harming digital developments in the personal finance market.Marks & Spencer was downgraded to 'sector perform' at RBC Capital Markets, while Thomas Cook was under the cosh again after a downgrade to 'equalweight' at Morgan Stanley following another profit warning on Tuesday. Market MoversFTSE 100 (UKX) 7,007.60 -0.13%FTSE 250 (MCX) 18,644.50 -0.09%techMARK (TASX) 3,475.45 0.69%FTSE 100 - RisersAntofagasta (ANTO) 806.40p 3.57%Ocado Group (OCDO) 835.00p 2.33%Admiral Group (ADM) 2,093.00p 1.85%Ferguson (FERG) 4,900.00p 1.72%Just Eat (JE.) 587.80p 1.70%Burberry Group (BRBY) 1,848.00p 1.59%Glencore (GLEN) 287.00p 1.56%Rightmove (RMV) 445.15p 1.47%GlaxoSmithKline (GSK) 1,585.80p 1.39%Anglo American (AAL) 1,559.80p 1.35%FTSE 100 - FallersPersimmon (PSN) 2,015.00p -4.64%Taylor Wimpey (TW.) 141.72p -3.99%International Consolidated Airlines Group SA (CDI) (IAG) 632.40p -3.74%easyJet (EZJ) 1,175.54p -3.57%Berkeley Group Holdings (The) (BKG) 3,356.00p -3.15%Barratt Developments (BDEV) 481.00p -2.83%Smith (DS) (SMDS) 331.70p -2.76%NMC Health (NMC) 3,470.00p -2.58%Ashtead Group (AHT) 1,728.00p -2.48%BAE Systems (BA.) 490.70p -2.45%FTSE 250 - RisersUDG Healthcare Public Limited Company (UDG) 625.75p 4.99%Computacenter (CCC) 1,098.16p 3.99%Spectris (SXS) 2,460.00p 3.84%Aveva Group (AVV) 2,456.00p 3.80%TalkTalk Telecom Group (TALK) 131.30p 3.79%Indivior (INDV) 99.26p 3.65%Stobart Group Ltd. (STOB) 207.00p 3.50%Metro Bank (MTRO) 2,230.00p 3.34%QinetiQ Group (QQ.) 293.20p 3.28%Vivo Energy (VVO) 109.00p 3.26%FTSE 250 - FallersVictrex plc (VCT) 2,388.00p -5.76%Keller Group (KLR) 605.00p -5.02%Ferrexpo (FXPO) 179.30p -4.93%Bovis Homes Group (BVS) 888.80p -4.22%Thomas Cook Group (TCG) 36.08p -3.94%Senior (SNR) 247.20p -3.66%Cranswick (CWK) 2,770.00p -3.62%Charter Court Financial Services Group (CCFS) 243.20p -3.34%Brewin Dolphin Holdings (BRW) 322.00p -3.19%Kier Group (KIE) 757.00p -3.13%