• FTSE down 40 points

  • Sterling back to level on the day

  • Labour to back Downing Street proposal for December election

  • Wall Street predicted to open lower after yesterday's highs

Wall Street is expected to open slightly lower, with investors on standby for tomorrows Fed announcement.

The Dow Jones futures market is poised to open 41 points below yesterdays close, at US$27,012.

The Fed is expected to announce its third interest rate cut this year hoping to cushion business against volatility.

Chris Beauchamp, IGs chief market analyst called the overall tone is "still positive", with investors looking to get onboard the “rally train” ahead of any upswing from the Fed decision.

Beauchamp noted though that equities are likely to slide from today and tomorrow, and that with indicators like put/call ratios “already close to greed rather than fear readings”, a bout of volatility to the downside “cannot be ruled out”.

Meanwhile, the FTSE 100 recovered some ground, now down only 40 points at 7,291.77.

12.40pm: FTSE in the red as Labour backs pre-Xmas election

As Britains first December general election since 1923 looms, UK stocks seen as facing political risks are moving lower, led by water companies United Utilities Group PLC (LON:UU.), Severn Trent PLC (LON:SVT) and Pennon Group PLC (LON:PNN).

This is because of Labours plans to renationalise the UKs key utility companies if it gains power, with British Gas owner Centrica PLC (LON:CAN), SSE PLC (LON:SSE) and National Grid PLC (LON:NG.) also dropping further into the red as Tuesdays session wears on.

The Twittersphere is alive with election buzz already and polling updates, including on what the exact date of the election will be and of course if anyone will win a majority.

No 10 sticking to Dec 12 date BUT not ruling out compromise of Dec 11.

Any earlier date means it would be “very difficult” to get election bill through Parliament on time.

Also need time for NI Budget Bill so schools & hosps can continue to function.

— Pippa Crerar (@PippaCrerar) October 29, 2019

The state of the polls: @FinancialTimes tracker has Tories 11pts ahead of Labour

— Sebastian Payne (@SebastianEPayne) October 29, 2019

The Footsie is erasing some of its earlier losses now, down 43 points or 0.6% at 7,288, with the pound treading water.

11.55am: Stocks fall further as Labour backs pre-Xmas election

The FTSE 100 has lurched lower as the pound climbs "curiously" on the back of the Labour Partys decision to back a December general election.

The UK benchmark index is down 55 points or 0.75% to 7,276.58, while sterling has recovered from earlier losses against the dollar to 1.2865.

Labour leader Jeremy Corbyn is now willing to fight an election before Christmas as no-deal is temporarily “off the table” after the EU yesterday granted a Brexit extension until 31 January.

Boris Johnson plans to put forward a House of Commons vote later today for a 12 December election, but Downing Street is reported to be willing to accept an amendment for an election on 11 December.

The date of 9 December has also been mooted.

“Little is straightforward here, as is seemingly always the case with Brexit,” said market analyst David Cheetham at XTB.

He said sterlings initial rise was “quite curious” as general elections are often seen as bringing heightened uncertainty and therefore negative in the near-term for affected markets.

“But in this case there is a hope that it will bring an end to the present quandary we find ourselves in.

“The pound will likely stay fairly well supported unless a no-deal outcome becomes more than marginally possible once more and there is also the hope that a softer version of Brexit than the latest WAB could receive greater support.”

Cheetham also noted there was potential for “wrecking ball” amendments to the vote, including for lowering the election voting age to 16.

#GBPUSD holds off lows after news Labour to back #BorisJohnson's election vote. Downing St reportedly offers 11th Dec. Lib-Dem, SNP, prefer Mon 9th Dec, though exactly when is becoming less important. ^KO

— Ken Odeluga (@TheSquareMile) October 29, 2019

10.50am: FTSE dragged down by BP dividend disappointment

Londons blue chip benchmark is heading lower in sync with index heavyweight BP after its mixed set of quarterly results.

The British oil supermajor swung to a third-quarter loss as profits were hit by falling oil prices and hurricane season, but strong trading for the Downstream division and the contribution from its stake in Russias Rosneft meant the numbers beat analyst expectations.

On a call with analysts later in the morning, the company's finance chief said BP was unlikely to raise its 2019 dividend.

This saw the shares battered lower, with the stock now down 3% to 495.2p.

READ: BP swings to loss in third quarter

Analysts were mostly sanguine, however, even though debt gearing remains well above the usual range at around 35.6%.

Nicholas Hyett at Hargreaves Lansdown said: “BP is relying on more disposals to help get debt under control by the middle of 2020. With market conditions what they are that might be less than ideal, but its probably a necessary evil.”

But analysts at RBC saw the positives as BP decided to remove its scrip dividend option: “Based on our recent conversations, we think some investors have been calling for a dividend per share increase in the near term, however given where the balance sheet stands, this is a prudent step in our view.”

Over at UBS, the number crunchers welcomed the ending of the scrip option, saying it was “simplifying the shareholder distribution message, signalling normalisation of the company's financial position and setting up for possible full share buy-backs in due course”.

The FTSE 100 is now down 32 points (0.4%) to 7,298.84.

The problem with BP balance sheet and cash flow is that it's still spending more money in capex, Gulf of Mexico payments, and dividends that it's earning from its operations and sales | #OOTT $BP

— Javier Blas (@JavierBlas) October 29, 2019

9.40am: Banks and housebuilders weigh on Footsie

The FTSE 100 is being dragged down by domestic-focused stocks in early trade on Tuesday, with banks, housebuilders, retailers and utilities among the main losers.

Brexit and election caution is what's behind this lurch lower, as parliament is set to begin debating the prospect of a December election just after lunch.

As well as the big weight from BP, Centrica PLC (LON:CNA) and United Utilites Group PLC (LON:UU.) are fallers from the utilities sector; Lloyds Banking Group PLC (LON:LLOY), Royal Bank of Scotland Group PLC (LON:RBS) and Barclays PLC (LON:BARC) in the banks; Wm Morrison Supermarkets PLC (LON:MRW) and Kingfisher plc (LON:KGF) in the retailers; and Taylor Wimpey PLC (LON:TW.) and Barratt Developments PLC (LON:BDEV) are down the bottom of the table in early trading.

Not helping was news that house prices continued to see subdued growth in October, according to data from building society Nationwide.

Londons blue chip index is 29 points or 0.4% lower at 7,303.62, while the pound is down 0.4% at 1.2815.

The reason sterling is not sliding even further despite all the uncertainty is, says Craig Erlam at Oanda, "regardless of what happens, no deal remains very unlikely and traders aren't particularly concerned about the political nonsense which takes place in the interim".

What Boris Johnson does if he fails to win today's vote on a one-line bill to schedule an election on 12 December is anyone's guess, Erlam added.

"The very reason why an election is in doubt is exactly the reason it is needed, numbers. Unfortunately, the opposition aren't particularly keen and Johnson has worked very hard over the last two months to convince MPs that they can't trust him, to the point that they now don't. It's not impossible to get this done but he may be forced to make concessions."

8.35am: FTSE limps lower as BP investors left unimpressed

So, Brexit is the gift that keeps on giving. After the Commons rejected a call for a December 12 election, Prime Minister Boris Johnson will try again Tuesday – this time with the backing of the Lib Dems and the Scottish National Party.

With only a simple majority required (Mondays motion to overturn fixed-term parliament rules required two-thirds of MPs to back it), Johnson appears to have a better shot at a pre-Christmas poll. He hopes it will provide him a better mandate (backed by a fatter majority) for his EU exit deal.

Against this backdrop, the FTSE 100 opened 19 points lower at 7,312.70.

While BPs (LON:BP.) third-quarter results were slightly above consensus, the market remained wary following a sharp slide in earnings as it was hit by weaker global demand and contracting chemicals industry margins. The shares receded 0.6%.

“Todays numbers werent expected to come in close to the levels seen in Q2 given the decline in oil prices seen since then; however they still show a company that is nimbler and more efficient than it was a decade ago,” said Michael Hewson, analyst at CMC Markets.

Stepping down a division to the FTSE 250, Royal Mail (LON:RMG) was off 4.5% amid worries it may be hit by industrial action in the run-up to its busiest period.

6.45am: FTSE 100 set for limp start

The FTSE 100 is expected to continue dragging its feet at Tuesdays open, as markets wait and see whether Boris Johnson has any more success in his push for a December election.

London stocks were being called four points lower on the IG spread betting platform, having finished very modestly higher at 7,331.28 the day before.

On Wall Street overnight, S&P 500 recorded a new all-time high just above 3,044 in early trading, before treading water for the rest of the session to finish at 3,039.4, a gain of almost 17 points or 0.6%.

The Dow Jones added 0.5% to close at 27,090.7, while the tech-laden Nasdaq jumped 1% to 8,325.98.

Sterling regained some ground against the dollar to $1.2859 after the EU granted the UK a Brexit “flextension” until 31 January, leading to reports that the government will sadly have to melt down the commemorative 50p coins that were due to celebrate the planned 31 October exit date.

In an evening vote, Boris Johnson was again defeated in parliament as he failed to win a vote that required two-thirds support of MPs for his proposal for a 12 December general election.

Brexit will remain the main theme on Tuesday, as the PM returns to the political ring with a slightly different approach, Downing Street revealed.

This will be for a vote on a one-line bill seeking to amend the Fixed-Term Parliaments Act to hold an election on 12 December, which will only need a simple majority in order to provide a rare Commons victory for Johnson.

“Although Parliament tonight voted against holding a general election, it seems likely that MPs will soon change their minds and in the next day or two will vote for an election that will decide the fate of Brexit,” said Paul Dales of Capital Economics.

For the economy and the financial markets, neither election result looks particularly appealing, Dales said.

“If the Conservative Party won, business profits would be supported by Tory policies. But the Conservatives would pursue a hardish Brexit in the form of Boris Johnson's deal, there would be some chance of a no-deal Brexit on 31st January and also a chance of something similar to a no-deal in December 2020.”

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