London midday: Stocks and sterling rally on Brexit deal but analysts sceptical

London stocks had extended gains by midday on Thursday as the pound rose after the UK and the European Union reached a deal on Brexit.

At 1125 BST, the FTSE 100 was 0.7% firmer at 7,217.06, while the pound was up 0.6% against the dollar at 1.2905 and 0.3% higher versus the euro at 1.124 as European Commissioner Jean-Claude Juncker said a Brexit agreement had been struck.

"Where there is a will, there is a deal - we have one! It’s a fair and balanced agreement for the EU and the UK and it is testament to our commitment to find solutions. I recommend that European Council endorses this deal," he said via social media.

Sterling came within touching distance of $1.30, hitting a fresh five-month high of $1.2990. However, the currency pared gains somewhat as Northern Ireland's Democratic Unionist Party insisted its position had not changed, having earlier released a statement saying that it could not support the deal with the current customs terms. The DUP also said there was a "lack of clarity on VAT".

Prime Minister Boris Johnson, who still needs to get the deal through the UK and European parliaments, said on Twitter that he had agreed "a great new deal that takes back control".

Analysts were sceptical, however. Craig Erlam, senior market analyst at Oanda, said: "Anyone hoping that the process will be straightforward now is kidding themselves. With Labour whipping for a second referendum on the deal and the Lib Dems unlikely to support anything, there is still a good chance we're heading for an extension and election, in order to get this over the line. Nothing in Brexit is ever simple.

"It's going to be a wild weekend which will make the market open next week all the more unpredictable. If the deal gets through Parliament, the pound could perform extremely well at the start of next week, despite having already rebounded more than 8% from the lows a month ago."

Han Tan, market analyst at FXTM, said sterling is sure to unwind recent gains if the deal fails to get the OK from parliament on Saturday. "However, a request for yet another Brexit extension, if granted, may mitigate sterling’s fall at around the 1.22 mark against the US dollar," he said.

In equity markets, banks rallied on Brexit optimism, with Barclays and Lloyds both higher, while property group British Land and housebuilders Persimmon and Taylor Wimpey also gained.

Rentokil Initial advanced as it posted its highest level of quarterly organic growth for more than a decade and said it was on course to meet full-year expectations.

Consumer goods giant Unilever rose even as its third-quarter sales came in weaker than expected, while Domino's Pizza was in the green as it said it will be exiting international markets following a "disappointing" third quarter.

Premier Oil gushed higher after saying it had encountered gas at its Tolmount East well in the UK Southern North Sea.

WH Smith surged as it announced the acquisition of US travel retailer Marshall Retail Group for $400m and posted a 7% jump in full-year headline pre-tax profit.

On the downside, building materials group Grafton tumbled as it warned that full-year profit would be below market expectations.

Price comparison website Moneysupermarket slumped as it reported a rise third-quarter revenue thanks to a solid performance form its home services segment, but said the money business underperformed.

Market Movers

FTSE 100 (UKX) 7,217.06 0.69%
FTSE 250 (MCX) 20,344.36 0.77%
techMARK (TASX) 3,836.15 0.40%

FTSE 100 - Risers

British Land Company (BLND) 644.60p 3.97%
Prudential (PRU) 1,508.00p 3.32%
Barclays (BARC) 169.52p 3.20%
Persimmon (PSN) 2,404.00p 2.91%
International Consolidated Airlines Group SA (CDI) (IAG) 525.39p 2.74%
Lloyds Banking Group (LLOY) 62.61p 2.59%
Associated British Foods (ABF) 2,265.00p 2.49%
TUI AG Reg Shs (DI) (TUI) 1,057.50p 2.37%
Land Securities Group (LAND) 971.80p 2.27%
Phoenix Group Holdings (PHNX) 727.20p 2.21%

FTSE 100 - Fallers

BAE Systems (BA.) 538.80p -2.99%
Smiths Group (SMIN) 1,584.00p -1.71%
Smurfit Kappa Group (SKG) 2,498.00p -1.42%
United Utilities Group (UU.) 877.40p -1.42%
Carnival (CCL) 3,047.00p -1.30%
Diageo (DGE) 3,125.50p -1.19%
Severn Trent (SVT) 2,271.00p -1.13%
Hargreaves Lansdown (HL.) 1,783.50p -0.92%
Smith (DS) (SMDS) 349.00p -0.77%
London Stock Exchange Group (LSE) 6,958.00p -0.74%

FTSE 250 - Risers

WH Smith (SMWH) 2,270.00p 8.72%
Mediclinic International (MDC) 389.24p 5.06%
Kainos Group (KNOS) 497.00p 4.85%
Hill & Smith Holdings (HILS) 1,326.00p 4.66%
Oxford Instruments (OXIG) 1,330.00p 4.56%
Aston Martin Lagonda Global Holdings (AML) 502.20p 4.43%
Domino's Pizza Group (DOM) 277.40p 4.36%
Premier Oil (PMO) 83.98p 4.27%
Telecom Plus (TEP) 1,232.00p 4.23%
Vesuvius (VSVS) 361.00p 4.09%

FTSE 250 - Fallers

Moneysupermarket.com Group (MONY) 350.90p -9.33%
Grafton Group Units (GFTU) 799.00p -8.06%
Rathbone Brothers (RAT) 2,190.31p -7.97%
Howden Joinery Group (HWDN) 557.60p -3.76%
Vivo Energy (VVO) 120.40p -3.37%
Syncona Limited NPV (SYNC) 238.00p -2.06%
Polypipe Group (PLP) 440.80p -1.91%
Bank of Georgia Group (BGEO) 1,363.00p -1.80%
Wood Group (John) (WG.) 348.50p -1.69%
Travis Perkins (TPK) 1,438.00p -1.20%