London close: Shares track gains on Wall Street, dip in pound

London stocks jumped on Wednesday, tracking big gains on Wall Street, even as the pound appeared to hold its own despite generally downbeat reactions from analysts to the prior evening's votes in Parliament on the Prime Minister's proposed 'Plan B' for Brexit.

The FTSE 100 was up 1.58% at 6,941.63, while the pound was 0.13% lower against the US dollar at 1.30595 and 0.10% firmer versus the euro to 1.1439, having corrected lower overnight after the Cooper amendment, which would have allowed Parliament to delay Brexit, failed to pass through the House of Commons.

Oxford Economics Associate Director, Andrew Goodwin, said: "[May's] strategy is very unlikely to succeed, with little prospect of the EU relenting on the backstop.

"With the Government only able to muster a majority with a plan which has little chance of gaining agreement from the EU and MPs remaining reluctant to overturn parliamentary norms, we believe that the risk of a 'no deal' outcome remains uncomfortably high."

Citi strategists said the outcome of Tuesday's votes maximises Prime Minister Theresa May's bargaining power in Brussels, while the unity of the Conservative Party also "materially reduces" the risk of early elections and thus the likelihood of Jeremy Corbyn becoming PM.

May will now head to back to Brussels to reopen talks with European leaders and seek alternatives to the Irish backstop. However, Donald, Tusk, the EU's most senior official, has already insisted that there can be no renegotiation.

Still, there were some, like CMC Markets analyst Michael Hewson, who saw a small sliver of a chance.

"There are those who say that the EU will remain firm in their insistence that the agreement cannot be changed, but then the EU also said they would never bail out Greece and we all know what happened next," he said.

Data out earlier from the Bank of England revealed that nervous British consumers spent sharply less on credit cards in December, choosing instead to save their cash or use it to pay down debts.

The latest money and credit figures showed annual consumer credit growth slowed to 6.6% in December, down from 7.7% in November and the weakest since December 2014.

Net extra money borrowed fell to £0.7bn. Within that, credit card borrowing was "particularly weak" at £0.1bn, the Bank said, compared to an average of £0.3bn since July. The overall consumer credit monthly flow was slightly below the £0.9bn average seen since the summer and significantly below the average between January 2016 and June 2018 of £1.5bn.

The Bank said that the decline in net consumer credit reflected an increase in repayments, which had more than offset higher gross borrowing.

Away from home, investors were eyeing the latest round of trade talks between the US and China, which kick off in Washington later in the day, and a policy announcement from the Federal Reserve. No rate hike is expected so attention will turn to Fed chair Jerome Powell’s press conference.

Economist Ian Shepherdson at Pantheon Macroeconomics said: "Chair Powell will likely repeat the new mantra that the Fed can afford to be 'patient', given the headwinds facing the economy; we would not be surprised to see this idea explicitly added to the statement.

"We would not be surprised if the first paragraph of the statement, describing the state of the economy, dials down December's assertion that growth has been 'strong'. The huge gaps in the data for the fourth quarter, as a result of the shutdown, mean that no one can be very sure what happened to growth. Final domestic demand, especially consumption, appears to have been robust, but very little inventory and international trade data are available, and these components can be big drivers of growth - in both directions - in the short term."

Miners racked up solid gains as copper prices rose, with Rio, BHP, Anglo American, Glencore and Ferrexpo all on the front foot. Iron ore prices also rallied as the world's largest iron miner, Vale, announced a temporary 10% production cut and said it was decommissioning some dams following a mining disaster last week.

Goldman Sachs said that adding to an already tight market, the announcement is likely to drive iron ore prices "significantly" higher. As a result, the bank upped its 2019 iron ore price forecasts. It now has 3/6/12 month targets of $80/70/65 a tonne versus previous targets of $70/60/60.

Elsewhere, luxury fashion brand Burberry was boosted by a solid set of results from French peer LVMH, which reported another record year for sales in 2018.

London Stock Exchange edged up as it announced the acquisition of a 4.92% stake in financial market infrastructure company Euroclear for €278.5m (£241.9m).

Wizz Air reversed earlier losses to trade up even as it reported a sharp drop in profits for the three months to the end of December as the budget central and eastern Europe airline's faster sales growth was met with ever- mounting costs.

In broker note action, Meggitt was initiated at 'neutral' by MainFirst, while Rolls-Royce and Senior were started at 'outperform'.

Pennon was initiated at 'equalweight' by Barclays, along with Severn Trent and United Utilities.

Market Movers

FTSE 100 (UKX) 6,941.63 1.58%
FTSE 250 (MCX) 18,827.97 0.67%
techMARK (TASX) 3,359.13 0.72%

FTSE 100 - Risers

British American Tobacco (BATS) 2,632.00p 4.86%
Melrose Industries (MRO) 170.60p 4.12%
Smith (DS) (SMDS) 348.10p 4.10%
Hikma Pharmaceuticals (HIK) 1,590.00p 3.99%
GVC Holdings (GVC) 662.00p 3.44%
Imperial Brands (IMB) 2,489.50p 3.23%
Johnson Matthey (JMAT) 3,090.00p 3.17%
Burberry Group (BRBY) 1,811.50p 3.04%
Smurfit Kappa Group (SKG) 2,322.00p 2.83%
Glencore (GLEN) 305.25p 2.76%

FTSE 100 - Fallers

Hargreaves Lansdown (HL.) 1,640.50p -2.61%
Hiscox Limited (DI) (HSX) 1,430.00p -0.76%
Auto Trader Group (AUTO) 452.00p -0.53%
Centrica (CNA) 137.00p -0.43%
Ocado Group (OCDO) 975.00p -0.31%
BT Group (BT.A) 234.00p -0.13%
Rightmove (RMV) 471.30p -0.13%
Marks & Spencer Group (MKS) 292.10p -0.10%
Experian (EXPN) 1,928.50p -0.08%
Rentokil Initial (RTO) 334.20p 0.06%

FTSE 250 - Risers

Domino's Pizza Group (DOM) 265.00p 5.96%
TI Fluid Systems (TIFS) 191.80p 5.82%
Ferrexpo (FXPO) 231.20p 5.72%
Sophos Group (SOPH) 327.40p 5.41%
Senior (SNR) 230.20p 5.11%
Ted Baker (TED) 1,900.00p 4.57%
Mediclinic International (MDC) 317.10p 4.41%
Premier Oil (PMO) 72.85p 3.77%
Funding Circle Holdings (FCH) 332.00p 3.75%
CLS Holdings (CLI) 251.00p 3.70%

FTSE 250 - Fallers

Metro Bank (MTRO) 1,223.00p -9.07%
Just Eat (JE.) 700.00p -3.07%
Jupiter European Opportunities Trust (JEO) 729.00p -3.06%
IWG (IWG) 223.10p -2.58%
TP ICAP (TCAP) 317.50p -1.98%
Barr (A.G.) (BAG) 755.00p -1.82%
Rank Group (RNK) 149.60p -1.58%
Halfords Group (HFD) 233.80p -1.44%
Aston Martin Lagonda Global Holdings (AML) 1,216.00p -1.38%
Intermediate Capital Group (ICP) 1,006.00p -1.37%