London close: FTSE 100 nudges higher as pound hit by Brexit woes
By Oliver Haill
Date: Tuesday 12 Mar 2019
(Sharecast News) - London's financial markets were all caught up in the latest twists and turns of the Brexit saga on Tuesday, with stocks reversing earlier losses as sterling tumbled along with hopes for Theresa May to avoid another damaging defeat in parliament.
By the close, the FTSE 100 had gained 0.3% to 7,151.15 as the pound slumped 0.9% against the euro to 1.1584 and 0.5% versus the dollar to 1.3085, having surged overnight as May said she had secured singificant changes to the Brexit deal which meant the Irish backstop could not become permanent.
Following last-minute talks with European Commission president Jean-Claude Juncker in Strasbourg on Monday night, May agreed a "joint legally binding instrument" on the withdrawal agreement which could be used by the UK if the EU tried to keep the country tied to the backstop indefinitely.
There was also a joint statement about the future relationship between the UK and the EU, which commits to replacing the backstop by December 2020.
Sterling rose to within a breath of $1.33 and peaked at €1.18 overnight on the news, but gains had evaporated by late morning as attorney general Geoffrey Cox concluded that the new assurances obtained by May reduce but do not remove the risk of the UK being stuck in the backstop.
Furthermore, although around a couple of dozen Conservative MPs said they would switch from opposing to supporting May's deal, the hard-Brexit supporting European Research Group of Tories said their own legal analysis led them to remain against the deal, with Northern Ireland's DUP also saying they will vote against the government.
May's deal was therefore on course to lose by a large margin on Tuesday evening when MPs vote at around 1900 GMT.
Analysts at Daiwa Capital Markets said a defeat by a margin in excess of 100 votes would raise significant question marks about the future of the Brexit process, as well as the political future of the PM herself.
"If as seems unlikely, she escapes with a modest defeat - by a margin fewer than 50 votes perhaps - May might possibly seek a further round of negotiations at the forthcoming EU Summit on 21-22 March, although that would run counter to Juncker's insistences last night.
"But the landslide defeat - in excess of 100 votes - that we expect would leave her strategy in tatters. It would certainly increase pressure for her resignation as PM, although there remains no precise mechanism for the Conservative Party to remove her before the back end of the year. It would also increase the probability of an early General Election. And MPs will also be allowed tomorrow to vote to reject a no-deal Brexit, and vote again on Thursday to demand that May requests from the EU at the Summit on 21-22 March an extension of the Article 50 deadline beyond 29 March. The larger the defeat this evening, the longer the delay to the deadline that might be considered reasonable."
With the focus firmly on Brexit, the latest reading on UK economic growth from the ONS came and went pretty much unnoticed.
Gross domestic product rose 0.5% month-on-month in January, beating forecasts and marking a return to positive territory following December's 0.4% decline as the underlying strength of the services sector helped offset weakness in construction and production.
In equity markets, housebuilders and banks continued to make gains even as Brexit optimism faded, with Persimmon, RBS, Lloyds, CBYG, Barratt Developments, Berkeley and Taylor Wimpey, all higher. Lloyds was also boosted by an upgrade to 'neutral' at Goldman Sachs.
Sirius Minerals racked up strong gains after saying it has received a conditional proposal from a major global financial institution in respect of the "stage 2" financing that would fund its Yorkshire polyhalite mine through to production.
Well-received numbers for Quilter in its maiden full-year results following the spin-out from Old Mutual last June, saw gains for the wider sector. Quilter rose 8%, while shares in Brewin Dolphin, Jupiter and Schroders were all higher.
Domino's Pizza advanced as it reported a drop in annual profit following a mixed year but said it expects a better performance in 2019.
Computacenter rose after it posted a jump in full-year profit as revenue exceeded £4bn for the first time, with strong growth in the UK and Germany.
Shipping services group Clarkson was a high riser as JPMorgan upped its recommendation on the stock after full-year results a day earlier had created an "entry point".
On the downside, Equiniti was under the cost despite a set of in-line final results. Broker Liberum noting disappointment over the three-month delay to the operational separation of EQ US from Wells Fargo.
Security services firm G4S pared most of its early losses as it reported flat underlying profits for 2018 but a positive outlook for 2019.
Cairn Energy was weaker as the oil and gas exploration and development company said it swung to a net loss in 2018.
Market Movers
FTSE 100 (UKX) 7,151.15 0.29%
FTSE 250 (MCX) 19,143.96 0.27%
FTSE 100 - Risers
Schroders (SDR) 2,679.00p 2.68%
Evraz (EVR) 610.40p 2.55%
Taylor Wimpey (TW.) 181.95p 2.22%
easyJet (EZJ) 1,187.00p 2.20%
St James's Place (STJ) 1,020.50p 2.11%
Wood Group (John) (WG.) 562.60p 2.07%
Persimmon (PSN) 2,231.00p 2.01%
ITV (ITV) 132.35p 1.61%
Berkeley Group Holdings (The) (BKG) 3,909.00p 1.43%
Legal & General Group (LGEN) 274.30p 1.40%
FTSE 100 - Fallers
GVC Holdings (GVC) 567.50p -3.49%
Rentokil Initial (RTO) 346.00p -2.12%
Intertek Group (ITRK) 4,690.00p -1.57%
Antofagasta (ANTO) 928.00p -1.28%
Hikma Pharmaceuticals (HIK) 1,661.00p -0.98%
TUI AG Reg Shs (DI) (TUI) 757.20p -0.92%
International Consolidated Airlines Group SA (CDI) (IAG) 533.40p -0.82%
Paddy Power Betfair (PPB) 5,655.00p -0.79%
Ashtead Group (AHT) 1,907.00p -0.75%
Hiscox Limited (DI) (HSX) 1,577.00p -0.57%
FTSE 250 - Risers
Quilter (QLT) 142.74p 8.09%
Sirius Minerals (SXX) 19.36p 7.86%
Computacenter (CCC) 1,168.00p 4.85%
Pagegroup (PAGE) 473.80p 3.40%
TP ICAP (TCAP) 297.90p 3.15%
Dixons Carphone (DC.) 132.65p 3.03%
TalkTalk Telecom Group (TALK) 103.00p 3.00%
Capita (CPI) 121.40p 2.88%
Bank of Georgia Group (BGEO) 1,683.00p 2.76%
888 Holdings (888) 166.70p 2.52%
FTSE 250 - Fallers
Equiniti Group (EQN) 186.20p -8.28%
Cairn Energy (CNE) 167.70p -4.01%
Charter Court Financial Services Group (CCFS) 328.20p -3.64%
OneSavings Bank (OSB) 397.80p -3.07%
William Hill (WMH) 151.70p -2.97%
Aston Martin Lagonda Global Holdings (AML) 1,129.60p -2.74%
Inmarsat (ISAT) 442.00p -2.51%
Royal Mail (RMG) 249.00p -2.47%
Woodford Patient Capital Trust (WPCT) 79.90p -2.44%
Amigo Holdings (AMGO) 203.35p -2.42%
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