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ADVFN Morning London Market Report: Tuesday 1 October 2019

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London open: Stocks nudge up ahead of manufacturing data

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London stocks nudged higher in early trade on Tuesday following an upbeat session on Wall Street, as investors eyed the release of key manufacturing data and any Brexit-related developments.

At 0840 BST, the FTSE 100 was up 0.1% at 7,416.10, while the pound was 0.1% higher against the dollar and the euro at 1.2299 and 1.1291, respectively.

Brexit was firmly in focus as Prime Minister Boris Johnson said he will be making “formal proposals” for a Brexit deal to the EU “soon”.

Speaking to BBC Breakfast, Johnson rejected leaked claims overnight that the government has proposed “customs clearance zones” in Northern Ireland and the Irish Republic. Johnson said he was “not going to be producing now what we are going to be tabling” to the EU and that the proposals reported in the press were “confused”.

Neil Wilson, chief market analyst at Markets.com, said: “There is headline risk for the pound as we look to Boris Johnson’s conference speech tomorrow.

“Meanwhile mooted suggestions to avoid the backstop in Ireland have been dismissed as a non-starter again. There is no way a deal can be done before the deadline. It’s revoke or no deal. GBPUSD doing precious little right now as it treads water at the 1.23 marker.”

Still to come, all eyes will be on the release of Markit’s manufacturing PMI for September at 0930 BST. The index is expected to have dipped to 47.0 from 47.4 in August.

Ipek Ozkardeskaya, senior market analyst at London Capital Group, said a weak reading could send the FTSE below the 7,400 support despite the cheapening pound.

Elsewhere, the latest Nationwide survey out earlier showed that UK house prices fell in September as Brexit uncertainty took its toll.

House prices fell 0.2% month-on-month in September compared to a flat reading in August and expectations of a 0.1% uptick. On the year, house prices rose 0.2%, down from 0.6% growth in August and below consensus expectations of a 0.5% increase.

Robert Gardner, Nationwide’s chief economist, said this marks the tenth month in a row in which annual price growth has been below 1%.

“Indicators of UK economic activity have been fairly volatile in recent quarters, but the underlying pace of growth appears to have slowed as a result of weaker global growth and an intensification of Brexit uncertainty. However, the slowdown has centred on business investment – household spending has been more resilient, supported by steady gains in employment and real earnings,” he said.

“The underlying pace of housing market activity has remained broadly stable, with the number of mortgages approved for house purchase continuing within the fairly narrow range prevailing over the past two years. Healthy labour market conditions and low borrowing costs appear to be offsetting the drag from the uncertain economic outlook.”

In equity markets, plumbing and heating products specialist Ferguson was the standout performer as it reported annual profit growth of 12% to $1.3bn despite weakened US market conditions in the second half, as it cut costs and closed some of its branches.

British Airways and Iberia parent International Consolidated Airlines Group was a high riser after an initiation at ‘buy’ at Bank of America Merrill Lynch.

Polypipe was also in the green as it announced the acquisition of stormwater tank maker Alderburgh Group for £14m in cash.

On the downside, High Street baker Greggs retreated even as it said third-quarter total sales rose 12.4%, driven by higher customer numbers. Company-managed shop like-for-like sales were up 7.4% for the 13 weeks to September 28 as Greggs maintained its full-year outlook, adding that it still expected year-on-year sales growth would reflect strengthening comparatives seen in 2018.

JD Sports Fashion edged lower after the Competition and Markets Authority said it had referred the retailer’s acquisition of Footasylum to an in-depth investigation after it failed to offer any remedies. The watchdog said it had made the decision on the basis that the deal could result in a substantial lessening of competition.

Precious metals miners PolymetalFresnillo and Centamin were all weaker as gold prices lost their shine.

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