London close: Stocks barely changed, pound rallies as investors eye Brexit deal

London stocks ended a shortened session just in the black on Thursday, as sterling rallied on expectations that a Brexit deal will be announced later in the day, on what felt like an otherwise sparkle-free, mostly Tier 4 Christmas Eve.

The FTSE 100 closed up just 0.1% at 6,501.72. Meanwhile, the pound was 0.7% higher against the dollar at 1.3586 and 0.6% firmer versus the euro at 1.1138 as investors awaited an announcement on a Brexit trade deal.

A stronger pound tends to hold back the top-flight index as around 70% of its constituents derive their earnings from overseas. The domestically-focused FTSE 250 fared a lot better, however, ending up 1.2% at 20,531.00.

Four and a half years after Britain chose to leave the European Union and just days before the transition period was due to end, officials were reportedly still wrangling over fish - hence why Prime Minister Boris Johnson’s announcement hasn’t happened yet - with mackerel and herring the main sticking points, according to The Telegraph.

IG analyst Chris Beauchamp said: "As might have been expected, the big winners today in London from the impending Brexit deal are the pound and the FTSE 250. While the FTSE 100 treads water, moving around from small gains to small losses, the mid-cap index has raced ahead in today’s shortened session, as a whole host of UK-focused names stride higher.

"The UK-centric parts of the FTSE 100 have not been left out however," he noted.

"Meanwhile it looks like there is still some juice in the tank for sterling’s rally against the dollar and euro, pushed higher by latecomers who have joined the party as a no-deal finally seems to have receded from view. We are on the cusp of a major sea-change for UK assets, if a deal is done (always wise not to assume these things before the signing is done and dusted) - Brexit will diminish in its overall presence on the front pages, even if it does not go away entirely, and thus investors can hopefully start to take a different view of the UK’s economic prospects."

Paul Dales, chief UK economist at Capital Economics, said that since markets have largely been expecting a deal for some weeks, there is limited scope for more Brexit-related gains in the coming days and weeks.

"Instead, it is the prospect of an eventual decent UK and global economic recovery from the Covid-19 crisis that explains why we think the pound will rise to $1.40 in 2021 and the FTSE 100 will climb to 7,500," he said.

In equity markets, banks and housebuilders rallied on expectations of a Brexit deal announcement, with Lloyds, Barclays, Persimmon, Berkeley and Barratt all higher.

Market Movers

FTSE 100 (UKX) 6,501.72 0.09%
FTSE 250 (MCX) 20,531.00 1.15%
techMARK (TASX) 4,088.38 0.41%

FTSE 100 - Risers

Lloyds Banking Group (LLOY) 38.71p 4.27%
Melrose Industries (MRO) 179.80p 3.99%
Tesco (TSCO) 233.80p 3.36%
Legal & General Group (LGEN) 267.00p 2.77%
M&G (MNG) 206.50p 2.74%
Berkeley Group Holdings (The) (BKG) 4,754.00p 2.50%
Barratt Developments (BDEV) 691.80p 2.34%
Barclays (BARC) 155.30p 2.29%
Associated British Foods (ABF) 2,299.00p 2.13%
NATWEST GROUP PLC ORD 100P (NWG) 170.15p 1.95%

FTSE 100 - Fallers

Flutter Entertainment (FLTR) 14,930.00p -2.10%
Rightmove (RMV) 644.00p -2.04%
Anglo American (AAL) 2,419.50p -1.73%
Kingfisher (KGF) 266.00p -1.48%
Spirax-Sarco Engineering (SPX) 11,170.00p -1.41%
InterContinental Hotels Group (IHG) 4,623.00p -1.37%
Smith & Nephew (SN.) 1,521.00p -1.36%
Entain (ENT) 1,149.50p -1.20%
Glencore (GLEN) 234.10p -1.04%
Halma (HLMA) 2,402.00p -1.03%

FTSE 250 - Risers

Aston Martin Lagonda Global Holdings (AML) 1,844.00p 7.76%
Henderson Smaller Companies Inv Trust (HSL) 1,086.00p 7.74%
Mercantile Investment Trust (The) (MRC) 248.50p 6.65%
Oxford Instruments (OXIG) 2,080.00p 6.34%
Sabre Insurance Group (SBRE) 280.00p 6.26%
Provident Financial (PFG) 316.40p 6.17%
TUI AG Reg Shs (DI) (TUI) 452.20p 6.03%
Network International Holdings (NETW) 300.60p 5.85%
St. Modwen Properties (SMP) 394.00p 5.77%
Just Group (JUST) 72.95p 5.72%

FTSE 250 - Fallers

Ibstock (IBST) 199.00p -2.93%
Fidelity China Special Situations (FCSS) 362.50p -2.03%
Rank Group (RNK) 140.20p -1.96%
PureTech Health (PRTC) 366.00p -1.74%
XP Power Ltd. (DI) (XPP) 4,380.00p -1.57%
Energean (ENOG) 687.00p -1.43%
AO World (AO.) 406.50p -1.22%
Homeserve (HSV) 1,059.00p -1.12%
JPMorgan American Inv Trust (JAM) 568.00p -1.05%
John Laing Group (JLG) 326.60p -1.03%