Britain received further bad news on the economy as Prime Minister Boris Johnson rolled out his bid to reach a deal to leave the European Union.
The IHS Markit/CIPS U.K. construction purchasing managers index fell to 43.3 in September from 45 in August—the second-worst reading in more than a decade. Any reading below 50 indicates contraction.
Purchasing managers attributed the marked slowdown to Brexit uncertainty and the resulting hesitancy among clients, IHS said.
Johnson is sending what he says is the U.K.’s “final offer” for a Brexit deal to the European Union on Wednesday.
Russell Investments, in a new strategy note, says the U.K. will hold either an election or a second referendum to break the Brexit impasse, and that the chances of a no-deal Brexit are receding. The fund manager says U.K. equities are “moderately cheap” though there may be short-term losses ahead for large-caps due to sterling upside risks.
The U.K. FTSE 100 UKX, -1.97% skidded 1.48% to 7251.33, with markets across Europe feeling the pain from weak U.S. manufacturing data released on Tuesday.
The pound GBPUSD, -0.4307% traded at $1.2243, down from $1.2305 on Tuesday.
Tesco TSCO, +0.29% was in focus as the supermarket group reported a rise in pretax profit and also announced the departure of its chief executive.
Tesco’s “strong interims confirm major self-help helping overcome a tough U.K. backdrop,” said analysts at Jefferies, which reiterated a buy rating. “But also acknowledge that the news of Dave Lewis stepping down in 2020 to be replaced by Ken Murphy should prove unhelpful.”