London pre-open: Stocks seen higher as pound drops on Brexit woes
By Michele Maatouk
Date: Monday 12 Nov 2018
(Sharecast News) - London stocks looked set for a firm open on Monday as the pound weakened on the back of worries about Brexit.
The FTSE 100 was called to open 51 points higher at 7,156.
In currency markets, the pound was down 0.8% against the dollar at 1.2869 and 0.3% lower versus the euro at 1.1416 amid growing concerns about Brexit. A weaker pound tends to boost the top-flight index as around 70% of its constituents derive most of their earnings from abroad.
London Capital Group analyst Jasper Lawler said: "Sterling will remain under pressure particularly as November 21st moves into sight; the date which the Brexit Secretary touted not so long ago as a possible agreement date, which is now looking extremely unlikely. The UK Transport minister's resignation on Friday is unlikely to the be the last from the cabinet as pressure mounts on Theresa May. We expect the pound to be in for a rough ride, especially if Theresa May attempts to force her Brexit plan through as the there is growing opposition within her own government.
"There is a good chance that she may not come out the other side. The chances of a Brexit deal are diminishing rather than increasing as we approach the finishing line. There is no high impacting UK data to be released today, domestic political risk combined with Brexit fears will weigh heavily on the pound."
Lawler added that without concrete progress in Brexit negotiations sterling could quickly target $1.28.
In corporate news, Diageo said it was selling 19 brands, including Seagrams, to US firm Sazerac for $550m (£427m).
The net proceeds of around £340m, after tax and transaction costs, will be returned to shareholders through a share repurchase
Responding to an attack from a mystery research firm, defence contractor Babcock International insisted its relationship with the Ministry of Defence was "as strong as ever".
There were calls for a boardroom shake-up over the weekend after a report from research firm Boatman Capital said the FTSE 250 company had "systematically misled investors by burying bad news about its performance".
AstraZeneca, alongside its partner Merck & Co, announced that the US Food and Drug Administration accepted a supplemental New Drug Application (sNDA) for priority review, for the use of Lynparza (olaparib) tablets as a maintenance treatment in patients with newly-diagnosed, BRCA-mutated advanced ovarian cancer, who were in complete or partial response following first-line standard platinum-based chemotherapy.
In a separate announcement, AstraZeneca also confirmed positive full results from the DECLARE-TIMI 58 cardiovascular outcomes trial for Farxiga (dapagliflozin), which showed that Farxiga significantly reduced the risk of hospitalisation for heart failure or cardiovascular death composite compared to placebo by 17%.
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