FTSE 100 finishes weaker as pound rises on UK Supreme Court ruling

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  FTSE 100 ends 34 points lower

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  Pound higher as prorogation of Parliament declated unlawful

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  US blue chips see early gains reversed

5.10pm: Footsie flops

The FTSE 100 index closed lower on Tuesday as the pound jumped higher following news the UK Supreme Court had ruled that prime minister Boris Johnson’s prorogation of Parliament was unlawful.

At the close, the UK blue chip index was off 34.65 points, or 0.5% at 7,291.43, albeit above the session low of 7,281.91. The mid-cap FTSE 250 index dropped 124.72 points, or 0.6% to close at 19,919.07.

On currency markets, sterling posted good gains versus both the dollar and the euro, rising to US$1.2484 and 1.1350 euro respectively.

Chris Beauchamp, chief market analyst at IG, commented: “The UK Supreme Court decision has produced yet another twist in the greatest soap opera of modern times. But even if Parliament sits from tomorrow until 14 October, it is far from clear that this changes anything. It is, indeed, far from clear that Boris Johnson is fatally weakened by today’s decision.”

He added: “Today’s news essentially rules out the chance for any change at the next EU summit, forcing Boris to either request an extension or find a way of getting a general election. The PM’s opponents think they have him on the run, and they might well do, but cornering Boris Johnson could yet backfire spectacularly.”

Beauchamp continued: “Elsewhere indices were in better form, shrugging off the tough start to the week seen on Monday, although bullish momentum appears to be sagging, as markets continue to struggle for a reason to extend their September rally. Global growth fears have been revived slightly, if the FTSE 100 leaderboard is anything to go by.”

Around London’s close, on Wall Street, the Dow Jones industrials Average had reversed early gains to shed 22.4 points, or 0.1% at 26,927, while the broader S&P 500 index lost 0.2% and the tech-laden Nasdaq Composite dropped 0.7%.

3.40pm: FTSE 100 still negative into final hour

Entering the final hour of Tuesday’s session, and despite a positive start, the FTSE 100 was firmly in negative territory in late-afternoon having slumped 40 points to 7,285.

The blue-chip index has been weighed down for most of the day by the UK’s Supreme Court judgement in mid-morning, which has boosted the pound and consequently weighed on equities as many believe a Brexit extension beyond 31 October now seems much more likely. 

Sterling was up around half a percent against the greenback at US$1.2493 and 0.36% higher against the euro at €1.1345.

The biggest winner from the large-cap stocks today was TUI, which shortly after 3.30pm was up 7.9% at 972.4p riding the wave of Thomas Cook’s demise and a reassuring trading update to investors.

At the other end of the scale, the FTSE 100’s biggest faller was steelmaker Evraz, which had sunk 5.2% to 461.9p amid a slowdown in global prices of the alloy.

2.45pm: Positive open for Wall Street

As expected, the US markets kicked off their Tuesday session in positive territory on the back of more trade talk optimism.

Shortly after the opening bell, the Dow Jones Industrial Average was up 0.36% at 27,047 while the S&P 500 rose 0.42% to 3,004 and the Nasdaq climbed 0.48% to 8.151.

Meanwhile, back in London the FTSE 100 had failed to pull out of its Supreme Court-inspired slump and was 31 points lower at 7,295 in mid-afternoon trading.

The opposite was true for the pound, which was up 0.4% at US$1.2479 against the dollar and 0.34% higher against the euro at €1.1342.

Sterling’s renewed strength, however, was also causing problems for some blue-chip dollar earners, with tobacco giant PLC () down 3.2% at 2,027p followed by rival British American Tobacco which fell 1.5% to 2,841p.

1.30pm: Higher start expected on Wall Street

While the UK markets are currently being roiled by the Supreme Court’s prorogation ruling, the US markets are poised to start on the front foot as traders on Wall Street are buoyed by renewed optimism over US-China trade talks.

Comments by US Treasury Secretary Steven Mnuchin on Monday that negotiations between the world’s two largest economies would resume in two weeks have provided some hope that the trade war can finally be ended.

However, as negotiations between the two sides have been on-and-off for the best part of the year (and longer), investors are likely to approach the news with caution.

In terms of US stocks, shares in once-proud phone maker BlackBerry Ltd (NYSE:BB) tumbled 9.5% to US$6.80 in pre-market trading in New York after weaker-than-predicted figures for its second quarter, while forecast-beating profits from CarMax Inc (), the US’s largest used car retailer, sent its shares up 3.3% to US$89.72.

In London, the FTSE 100 had continued its slump and was down 28 points at 7,301 in early afternoon.

12.20pm: FTSE 100 begins afternoon in the red as Supreme Court judgment rocks markets

The FTSE 100 was firmly in the red into lunchtime as markets continued to digest the UK Supreme Court’s ruling that Boris Johnson’s prorogation of Parliament was unlawful.

In a unanimous decision of its 11 judges, the UK’s highest legal authority said the government had acted unlawfully by suspending Parliament and that now the prorogation was void and MPs could return to the House of Commons, which could occur as soon as Wednesday morning.

The news sent the pound up 0.1& to US$1.2443 against the dollar shortly after 12pm, which piled pressure on equities and sent the blue-chip index down 11 points at 7,315.

In the wake of the court ruling, Artur Baluszynski, head of research at wealth manager Henderson Rowe, said a general election was now “more likely than ever”, but with both Labour and Conservative electorates fragmenting over Brexit divisions the UK was running the risk of turning into “an “Italy like” disaster”.

Meanwhile, Andy Scott, associate director at financial risk advisory JCRA, said the result, while dramatic, did not change the ongoing political uncertainty which was likely to “keep investors cautious over the direction of sterling”.

As the afternoon trading session began, travel giant () was at the top of the blue-chip risers list, up 4.1% at 938.4p, after a reassuring trading update and a vow that it would step in and help return passengers stranded abroad by the collapse of rival Thomas Cook.

At the other end of the scale, miner and steelmaker () was the biggest faller with the shares down 3.2% at 471.6p.

10.55am: UK Supreme Court unanimously rules prorogation of Parliament unlawful

The UK Supreme Court, the country’s highest legal authority, has unanimously ruled that Boris Johnson’s prorogation (suspension) of Parliament is unlawful.

On Tuesday morning, Lady Hale, president of the Supreme Court, said the decision by the government to suspend parliament for five weeks until mid-October had “no justification” and that the prorogation was null and void and should be quashed.

“The prorogation was void and of no effect,” Lady Hale said, adding that as a result Parliament had “not been prorogued”.

Unanimous Supreme Court rules in all three judgements that Johnson’ suspension of Parlisment is illegal, Parliament must resume

— Jon Snow (@jonsnowC4) September 24, 2019

Shortly after the judgement was delivered, the pound jumped 0.37% to US$1.2475 against the dollar and 0.31% to €1.1339 against the euro, as the chances of Johnson’s government forcing through a no-deal exit without Parliamentary scrutiny now seem to be dead in the water.

The renewed strength of sterling, however, was bad news for the equity markets as the FTSE 100 reversed course and was 14 points lower at 7,311 shortly before 11am.

10.10am:  shares hit record low as bond sale flops

Troubled high street lender PLC () saw its shares sink to a new low in mid-morning after failing to drum up enough interest for a £250mln bond sale.

The firm was forced to ditch the debt issuance late on Monday in yet another failure of investor trust following an accounting blunder in February which sent its shares tumbling.

Since then, the shares have lost around 84% of their value and are currently trading around 246.6p, a far cry from the 3,028p level this time last year.

The bank has been trying to raise enough funds to comply with MREL, a new batch of EU regulations that govern how much cash a bank needs to absorb losses and avoid going bust.

However, since its accounting snafu at the start of the year Metro has seen its borrowing costs rocket, sending it cap in hand to investors.

Another prominent mid-cap faller was FTSE 250 post carrier (), which slipped 3.4% to 212.5p after analysts at Liberum stamped the firm with a downgrade to ‘sell’ from ‘hold’.

In a note, the broker cited concerns over the company’s ongoing dispute with its workforce, saying the share price was “at odds” with the deterioration of industrial relations.

The FTSE 100, however, was still managing to stay in the green despite some lost momentum and was up 6 points at 7,331.

8.40am: FTSE 100 trades higher

While torrential rain flooded the Square Mile early on, there was an air of the calm before the storm within the plate glass walls of the City’s major trading houses.

For while the index of blue-chip shares opened 12 points to the good at 7,338.11, uncertainty was the watchword ahead of a Supreme Court hearing that could further paralyse the Boris Johnson administration.

While the UK’s highest judicial body will rule whether it was legal for the Prime Minister to prorogue parliament, it’s the legal nuance that really counts.

A ruling that Johnson misled the Queen through what’s called an “improper motive” would likely prompt calls for the PM’s resignation, causing further political chaos.

On the market, the ripples of the Thomas Cook () collapse were still being felt. TUI () built on Monday’s gains with the demise of a major competitor seen as major boon in the Darwinian world of the London exchange. The shares rose 1.5%, while budget airlines were also on the up.

Proactive news headlines

Skinny tan maker Innovaderma PLC () doubled profits and predicted more to come as Boots has added more ranges to its shelves.

PLC () expects trading for the second half of the year to be better than the first and said it will continue to look for acquisitions akin to The Daily Mash, which it purchased in March.

() has told investors that the drill rig has now arrived on site ahead of the upcoming horizontal well at the Horse Hill project, near Gatwick.

Investors in () are now counting down to the start of new drilling at the Horse Hill oil project, where a drill rig has now arrived.

() expects top-line data for its two clinical trials to be available by the year-end.

(), the Korean-focused gold development group, has received formal communication from the South Korean government confirming that the application for a ‘Permit to Develop’ the Gubong mine is to be granted.

() has won two contract extensions for its D3S nuclear detection platform worth a combined £1.6mln in the current year.

() has snapped up bulk supply chain data specialist Langdon Systems from the administrators for less than £50,000 cash.

() said it was on track to hit full-year expectations as it delivered a solid first-half performance, underpinned by its “star” international brands.

() has reported rising system sales in the first half of the year as it looked to expand its sub-franchise estate over the rest of the year.

S&U PLC () has pulled in industry heavyweight Graham Wheeler to run its car lending arm, Advantage. He will replace Guy Thompson, who wants to retire next year having helped set up the Advantage business and run it for twenty years.

Greatland Gold PLC () has confirmed the presence of broad widths of gold mineralisation at its Firetower project in Tasmania, following a diamond drilling programme.

() has selected targets for drilling at its Kalahari Suture Zone project in Botswana.

() says it has seen positive movements in Tanzania with the government actively resolving several long-standing issues with other operators in the country.

() has installed the first jack-up exploration wellhead in its inaugural POS-GRIP rental contract with Gazprom.

Silence Therapeutics PLC () has hit the first milestone in a deal with a US drugs company in just two months, triggering a US$2mln research payment.

() is looking to squeeze £75mln from institutional investors as it spies “very attractive” opportunities to develop new healthcare premises in Ireland and the UK.

Hurricane Energy Plc () has announced the spudding of the Warwick West exploration well in the Greater Warwick portion of its Rona Ridge project.

(LON:MTPH; NASDAQ:MTP) has filed what’s called a shelf registration with the US Securities & Exchange Commission that would allow it to raise up to US$50mln.

Europa Oil & Gas Plc () has told investors it is seeking clarification of the situation through the offices of the Irish Offshore Operators’ Association following a speech by Leo Varadkar to the United Nations climate summit on Monday.

6.45am: Posiitve start predicted 

The FTSE 100 is seen starting positively on Tuesday as Brexit is brought back to the fronts of investor minds.

IG Markets calls the London index around 23 points higher, making a price of 7,350 to 7,353 with just over an hour to go until the open.

Whilst political conference season is rarely short of blather, especially around Brexit, the focus will be on a formal legal forum.

The UK supreme court will later today rule on Boris Johnson’s government’s proroguing of parliament and whether it is ‘justiciable’.

“In what could potentially be an explosive precedent the court could rule that the decision to end the parliamentary session was an illegal act. Both English and Northern Irish courts dismissed the charge of illegal prorogation, while a Scottish court ruled it was illegal, meaning today’s decision could go either way,” said Michael Hewson, analyst at CMC Markets.

“The government’s argument is that the prorogation is at the discretion of the Prime Minister and that MPs have tools available to constitutionally replace the government, including a vote of no confidence, but refuses to do so for political reasons and therefore outside the discretion of the courts.”

“The court on the other hand may choose to disagree, however it may find itself limited in whatever remedies it can infer, though the government has said it will carry out any ruling the court makes.”

The outcome will be watched by political commentators and currency traders alike as it could be an influencer of the pound, Brexit and in turn UK equities.

Over in New York, last night, the Dow Jones closed in slightly positive ground rising 15 points or 0.05% at 26,949.

The S&P 500 meanwhile ended a sliver lower at 2,991 and similarly the Nasdaq finished 0.06% down at 8,112.

In Asia, Japan’s Nikkei rose by 45 points or 0.21% to 22,124 while Hong Kong’s Hang Seng was similarly up 0.3% at 26,300 and the Shanghai Composite moved up 0.54% to 2,993.

Around the markets

Pound: US$1,2430, up 0.01%

Gold: US$1,521, down 0.17%

Brent crude: US$64.42, up 0.2%

Bitcoin: US$9,755, down 1.92%

Significant announcements for Tuesday September 24:

Finals: (), 1pm PLC (), PLC (), PLC (), DX Group PLC (LON:DX), PLC (), Innovaderma PLC, (), Town Centre Securities PLC (LON:TOWN)

Interims: (), PLC (), PLC (), PLC (), (), Everyman Media PLC (), Flowertech Fluidpower PLC (), Minds and Machines Group Ltd (), Moss Bros Group (), PLC (), (), S&U PLC (), (), ()

AGMs: ()

Economic data: UK public sector borrowing, CBI industrial trends, US consumer confidence

Headlines

Thomas Cook collapse: Anger mounts over bosses’ bonuses – Sky News

More than a third of UK bank branches have closed since 2015 – The Guardian

M&S chief financial officer steps down its starts trading as a FTSE 250 company – Mail Online

New York Fed injects $66bn into short-term lending markets – Financial Times

Labour unveils £83bn state windfarms plan before key climate vote – The Guardian

AB InBev prices its Budweiser offering at HK$27, the second biggest IPO this year – CNBC

Elon Musk knew SolarCity was going broke before merger with Tesla, lawsuit alleges – LA Times