Leading shares are edging lower with uncertainty growing as the day of the UK’s vote on Europe approaches.
With polls continuing to suggest a lead, albeit narrow, for remaining in the EU, housebuilders are gaining ground again. The sector is expected to suffer in the case of Brexit, so a vote to remain should benefit them. Taylor Wimpey is up 2.6p at 188.2p while Persimmon has put on 28p to £20.74.
But InterContinental Hotels has fallen 34p to £26.16 as Goldman Sachs moved from buy to neutral and removed the group from its pan-European buy list. The bank pointed to increased competition from the likes of Airbnb and cut its earnings forecasts for the next three years by 3% to 9%.
Overall the FTSE 100 has dipped 2.52 points to 6224.03. Mark Priest, head of market making at ETX Capital, said:
A very muted opening on the FTSE today as investors seem to be waiting for the EU referendum.
The recent poll-inspired surge looks like it has run its course and trading is going pretty sideways for now.
Any last minute shifts in polls could radically change things but while the result is too close to call investors seem unwilling to take any big decisions until after the vote.
A vote for Brexit would be a short-term shock for UK equities, while a win for Remain would likely see a wave of relief in the City and a rally for stocks.
It’s worth noting, however, that the predicted slump in sterling if Britain votes to leave could be a boon for FTSE 100 companies, which derive about 80% of their earnings from abroad. Miners in particular could benefit.
A 0.2% fall in third quarter like for like sales has seen Debenhams drop 4.05p to 70.20p, and also pushed peers lower. Marks & Spencer is down 5.2p at 3589.8p, Next has fallen 45p to £54.20 and Primark owner Associated British Foods has lost 87p to £28.14.
Meanwhile Morgan Stanley cut its recommendation on ABF, moving from overweight to equal weight and saying:
We take a fresh look at Primark and emerge with a more cautious view on valuation. We still think it a great business, but are very conscious that its like for likes have slowed markedly over the last around 18 months.
Elsewhere a profit warning from speciality chemicals group Elementis has seen its shares plunge more than 8% to 207.2p. The company said sales and margins outside North America for its chromium business would be much lower than the previous year, so full year earnings per share would be below market expectations. N+1 Singer said:
Elementis’ first half pre-close update highlights further pressures within Chromium export markets. The relative strength of the US dollar has created a challenging competitive environment in Eastern Europe in particular and, as a result, Chromium sales and margins outside of North America are expected to be materially lower than the previous year.
Despite good progress in Specialties and a steady performance from Chromium in North America, earnings per share for the year as a whole will fall below previous expectations. We reduce our pretax profit and earnings per share forecasts by 12% in all three forecast years, assuming no recovery in Chromium over the period. One strong positive in the announcement is confirmation that the net cash position at the end of the year is still expected to be ahead of the prior year (implying no change to dividend per share forecasts), which should provide support, given the implied 5% yield.
