FTSE 100 slides with focus on emergency Brexit talks, Morrisons slips


London’s FTSE 100 slipped on Thursday as focus turned to emergency Brexit talks over Prime Minister Boris Johnson’s plan to undercut parts of the divorce treaty, while Morrisons tumbled after reporting a drop in half-year profit.

The supermarket group fell 4.3% even as it said it expected profit growth for the full year, taking the FTSE 100 down 0.7%. BP Plc and Royal Dutch Shell Plc also weighed on the index following a slide in oil prices.

“Markets are moving with heavy caution and we also see investors pulling back on some export-heavy names until they see concrete developments on the Brexit front,” said Ronald Kaloyan, head of European equity strategy at SocGen.

The FTSE 100 has been lifted this week by a weaker pound as Brexit fears returned to the forefront with negotiations all but stalling over fisheries and state aid. A recent Reuters poll found chances of the two sides failing to reach a trade deal have jumped to 40%.

Sources said on Thursday the European Union could take legal action if emergency talks do not reassure Brussels sufficiently that a proposed new British law will not break previously agreed commitments.

The mid-cap FTSE 250, considered a barometer of Brexit sentiment, was flat with a slide in banks offsetting a 4.5% jump in retailer Dixons Carphone Plc following an upbeat earnings report.

The domestically-focussed index has underperformed the FTSE 100 this month as surging COVID-19 cases have sparked a new round of lockdowns in England, threatening a nascent business recovery and hitting shares of restaurant and pub firms.

Homebuilders were among the smallest decliners on the day after data showed house prices hit a four-yeah high in August, although the survey also sent a warning signal that the recovery could run out of steam.

British Airways-owner IAG slipped 2.6% as it launched a heavily discounted rights issue to raise 2.74 billion euros (2.46 billion pounds).