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Brexit tussle bogs down UK midcaps

Published 23/10/2019, 17:35
© Reuters. Traders are seen at work at Northern Trust offices in London
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By Muvija M and Shashwat Awasthi

(Reuters) - Shares in domestically-focussed UK companies slid on Wednesday while those on the blue-chip FTSE 100 inched higher as votes in parliament kept investors guessing on the final timing and shape of Britain's withdrawal from the European Union.

With worries over turbulence in Hong Kong and global growth feeding losses for stock markets globally, the FTSE 250 index of midcap firms (FTMC) dipped 0.4% by 0745 GMT.

Helped by a dip for the pound in response to Prime Minister Boris Johnson's failure to get MPs to back his accelerated Brexit timetable overnight, the exporter-heavy FTSE 100 (FTSE) edged 0.2% higher.

Precious metals miner Fresnillo (L:FRES) dropped nearly 2% after it forecast annual silver and gold production at the lower end of an already reduced target range, and reported a fall in quarterly output.

While lawmakers voted for a second hearing on the departure agreement, rejection of Johnson's timetable raises the likelihood of another delay in Britain's withdrawal as well as the prospect of a snap election before Christmas.

"The latest twist in the Brexit saga also means that investors may have to contend with more political risk by way of a UK election," said Han Tan, Market Analyst at FXTM.

Raymond James analyst Chris Bailey called the Brexit situation "a mess" overall and said the core scenario of an extension or an election was becoming more likely.

The uncertainty around Brexit and its consequences continues to show up in the performance of UK firms. Housebuilders (FTNMX3720), considered among the most vulnerable, lost nearly 1%, with Barratt (L:BDEV), Persimmon (L:PSN) and Berkeley (L:BKGH) the biggest losers on the blue chip index.

That was offset by gains for companies who earn largely in foreign currencies including British American Tobacco (L:BATS) and pharmaceutical giant GlaxoSmithKline (L:GSK).

© Reuters. Traders are seen at work at Northern Trust offices in London

Miner Centamin (L:CEY) also shone on the FTSE 250 with a 3% gain after third-quarter production report.

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