London midday: Stocks push higher as sterling drops ahead of Brexit delay vote

London stocks extended gains by midday on Thursday, helped along by a weaker pound as investors continued to mull over the chaotic parliamentary events of the previous night and looked ahead to a vote on whether to delay the Brexit deadline.

The FTSE 100 was up 0.7% at 7,208.56 as sterling fell 0.8% against the dollar to 1.3237, having surged to a nine-month high on Wednesday after MPs voted to reject a no-deal Brexit on an amended government motion by 321 votes to 278. Against the euro, the pound was down 0.5% weaker at 1.1716.

Ahead of an early-evening vote on whether the UK should seek a temporary extension to Article 50, Theresa May signalled that there will be a third vote on her twice-defeated Brexit deal.

May had initially said that any extension, which the European Union has yet to agree, would only be short. But on Wednesday night she warned MPs that a longer extension would be needed if her deal was not backed, and that could require the UK to take part in elections for the European Parliament in May.

"I do not think that would be the right outcome. But the House needs to face up to the consequences of the decisions it has taken," she said.

EU Council president Donald Tusk said in a tweet earlier that he was open to the possibility of a "long extension" to Article 50 "if the UK finds it necessary to rethink its Brexit strategy and build consensus around it".

David Cheetham, chief market analyst at XTB, said: "On the face of it the parliamentary vote last night takes no deal off the table, and later on the house of commons will likely vote in favour of an extension of Article 50. The problem that remains for the UK is that while parliament have signalled what they don’t want, with votes against both May’s deal and no-deal, they still haven’t indicated a clear majority for what they do want - apart from more time to decide.

"There’s some speculation that MPs will shortly hold a series of indicative votes to offer their opinion on a range of Brexit alternatives, but there’s a fair chance that rather than this seeing parliament unite behind one clear plan, it will simply further highlight how ruptured lawmakers are. The pound will likely remain highly sensitive to headline risk in the foreseeable future, but with the range of outcomes now seemingly ranging from May’s deal to increasingly softer versions of Brexit, a lot of the worst downside risks are being priced out the currency and this may pave the way for further gains."

Away from Brexit, Sino-US relations were in focus again following a report that a meeting between US President Donald Trump and Chinese President Xi Jinping to sign an agreement to end their trade war will not take place this month and is likely to be delayed until April at the earliest.

Bloomberg cited people familiar with the mater as saying that despite claims of progress in talks by both sides, a hoped-for summit at Trump’s Mar-a-Lago resort will now take place at the end of April if it happens at all. One source said China is pressing for a formal state visit rather than a lower-key appearance just to sign a trade deal, while another said Xi Jinping’s staff have scrapped planning for a potential flight to the US following a trip to Europe later this month.

On the UK data front, the latest housing market survey from the Royal Institution of Chartered Surveyors took a back seat. It showed the net balance of surveyors reporting that house prices have risen over the last three months fell to -28 in February from -22 the month before, versus expectations of -24.

Chinese data was also in focus. Growth in the country's industrial output slowed to a 17-year low in the first two months of the year. Industrial production growth slowed to 5.3% year-on-year from 6.2% in December, missing expectations of 5.6%.

However, fixed asset investment growth picked up to 6.1% year-on-year in February from 5.9% in December, in line with consensus. Retail sales data was also in line with growth of 8.2% in February from 9% in December.

In London equity markets, travel operator Tui gained was the standout gainer on the top-flight index after an upgrade to 'overweight' at Morgan Stanley. On the FTSE 250, Ultra Electronics was boosted by an upgrade to 'buy' at Berenberg and Quilter rose thanks to an upgrade to 'overweight' at JPMorgan.

Cineworld shares put in a blockbuster performance after the company reported a 125% surge in full-year pre-tax profit and a 259% increase in revenue following the acquisition of US-based cinema chain Regal Entertainment last year.

OneSavings Bank was on the front foot after it and Charter Court Financial Services reached agreement on the terms of a recommended all-share merger, under the same terms as suggested at the start of the week. The deal will be effected by means of a scheme of arrangement with each Charter Court shareholder receiving 0.8253 new OSB shares.

Sports Direct nudged up as it offered Debenhams a new alternative to the £150m loan that the troubled department store group is seeking. Sports Direct said it would offer Debenhams a £150m unsecured 12-month term loan, in return for a further 5% of its shares or interest of 3% on the loan. Debenhams shares also advanced.

On the downside, Anglo American, CRH, Land Securities, GVC Holdings, Jupiter Fund Management and Galliford Try were all weaker as their stock went ex-dividend.

Elsewhere, retirement products specialist Just Group tanked after announcing plans to scrap its dividend for 2018 and raise £300m in a placing.

Real estate advisor Savills saw its shares drop as it posted a small rise in underlying pre-tax profit for 2018 as revenue rose, but sounded a cautious note on the outlook.

Outsourcer Capita was in the red as it said adjusted pre-tax profit fell 26% in 2018 to £282.1m. Still, this was ahead of the company's guidance of between £250m and £270m.

Market Movers

FTSE 100 (UKX) 7,208.56 0.69%
FTSE 250 (MCX) 19,332.18 0.79%
techMARK (TASX) 3,517.50 0.48%

FTSE 100 - Risers

TUI AG Reg Shs (DI) (TUI) 812.20p 5.48%
easyJet (EZJ) 1,216.00p 3.40%
ITV (ITV) 135.80p 3.35%
Prudential (PRU) 1,593.00p 2.94%
Next (NXT) 5,256.00p 2.94%
Marks & Spencer Group (MKS) 274.80p 2.65%
Standard Life Aberdeen (SLA) 257.30p 2.59%
Kingfisher (KGF) 239.80p 2.57%
Paddy Power Betfair (PPB) 5,735.00p 2.50%
Smith (DS) (SMDS) 347.30p 2.48%

FTSE 100 - Fallers

Anglo American (AAL) 1,951.20p -3.24%
Intertek Group (ITRK) 4,613.00p -1.22%
CRH (CRH) 2,342.00p -1.14%
BHP Group (BHP) 1,737.60p -1.04%
GVC Holdings (GVC) 536.50p -1.01%
Centrica (CNA) 121.05p -0.98%
Hikma Pharmaceuticals (HIK) 1,569.50p -0.95%
Antofagasta (ANTO) 925.40p -0.92%
Halma (HLMA) 1,633.00p -0.91%
Glencore (GLEN) 305.45p -0.60%

FTSE 250 - Risers

Cineworld Group (CINE) 308.60p 6.78%
Royal Mail (RMG) 260.15p 5.37%
Capita (CPI) 125.50p 4.80%
SIG (SHI) 147.71p 4.61%
Energean Oil & Gas (ENOG) 769.40p 3.99%
Ultra Electronics Holdings (ULE) 1,592.00p 3.85%
Dixons Carphone (DC.) 138.05p 3.84%
Premier Oil (PMO) 85.84p 3.55%
Metro Bank (MTRO) 850.00p 3.28%
IG Group Holdings (IGG) 580.00p 3.02%

FTSE 250 - Fallers

Just Group (JUST) 85.75p -12.05%
Jupiter Fund Management (JUP) 350.00p -4.16%
Savills (SVS) 886.50p -4.01%
Sophos Group (SOPH) 319.40p -3.74%
Amigo Holdings (AMGO) 198.20p -1.95%
Ferrexpo (FXPO) 264.80p -1.93%
Spirent Communications (SPT) 146.20p -1.75%
Apax Global Alpha Limited (APAX) 142.00p -1.73%
Domino's Pizza Group (DOM) 222.80p -1.72%
Templeton Emerging Markets Inv Trust (TEM) 732.00p -1.48%