London open: Stocks nudge up as Brexit trade deadline looms

London stocks were just a touch firmer in early trade on Friday while the pound edged lower, as the Brexit trade deadline looms.

At 0840 GMT, the FTSE 100 was up 0.2% at 6,564.44, while sterling was down 0.3% against the dollar at 1.3540 and 0.2% lower versus the euro at 1.1047.

Richard Hunter, head of markets at Interactive Investor, said: "Sluggish progress on Brexit negotiations is tightening the screw on sterling as the potential for stalemate looms increasingly large.

"The FTSE100 has not been able to build on the momentum of a strong showing since the beginning of November and remains down by 13% in the year to date. The overarching concerns around Brexit and the pandemic continue to cast a shadow on sentiment, while the very nature of the index itself has also stunted progress, with an exposure to the likes of the oil and banking sectors in particular proving a headwind during the course of the year."

Late on Thursday, Prime Minister Boris Johnson said after a call with EU Commission president Ursula von der Leyen that talks to reach a post-Brexit trade deal were in a "serious situation". He said "time was short" and warned that a no deal scenario was "very likely" unless the EU position changed "substantially".

Earlier on Friday, meanwhile, EU Brexit negotiator Michel Barnier told the European parliament in Brussels that it was "the moment of truth".

According to Reuters, he said: "We have very little time remaining, just a few hours to work through these negotiations in a useful fashion if we want this agreement to enter into force on the first of January.

"There is a chance of getting an agreement but the path to such an agreement is very narrow."

Sino-US relations were also in focus following a report that the US was set to add dozens of Chinese companies, including the country’s top chipmaker SMIC, to a trade blacklist on Friday. According to Reuters, the US is expected to add around 80 additional companies and affiliates to the so-called entity list, nearly all of them Chinese.

On the macroeconomic front, the latest figures from the Office for National Statistics showed retail sales fell in November as lockdown restrictions took their toll, but they remain above pre-pandemic levels.

Sales dropped 3.8% on the month as non-essential shops were closed due to the Covid-19 crisis, compared to a 1.3% increase in October. Still, this was better than expectations for a 4.2% decline and overall sales remain above their pre-pandemic levels.

On the year, retail sales rose 2.4% versus a 5.8% jump the month before, in line with consensus expectations, with feedback from businesses suggesting that consumers had brought forward Christmas spending.

Clothing store sales fell 19% on the month and fuel sales slid 16.6%, while food store sales were 3.1% higher.

ONS Deputy National Statistician for Economic Statistics Jonathan Athow said: "After a run of strong growth, retail sales fell back in November as restrictions meant many stores had to close their doors again. Clothing and fuel were particularly hit by the winter lockdown, with their sales falling sharply. Despite the monthly fall, overall sales remain above their pre-pandemic levels.

"Household goods and food shops were the only areas to see their monthly sales increase, with feedback from stores suggesting consumers brought forward their Christmas spending, particularly on festive home products and DIY. Food sales, especially click and collect, were boosted as people were not able to eat out."

Thomas Pugh, UK economist at Capital Economics, said the relatively small drop in retail sales in November suggests the second Covid-19 lockdown didn’t change households’ spending behaviour by anywhere near as much as the first.

Pugh noted that while the 3.8% decline wiped out most of the growth so far this year, sales were still 2.7% above their pre-crisis level.

"And the drop was only a fraction of the 18.1% month-on-month fall in April," he said. "This is partly because sales of petrol held up much better, only falling by 16.6% m/m compared to -51.8% m/m in April, as schools, factories and construction sites stayed open."

In equity markets, Hikma Pharmaceuticals rallied after the company said it had received approval from the US Food and Drug Administration and launched its generic version of GlaxoSmithKline’s asthma treatment, Advair Diskus.

Shares of Vectura, which worked with Hikma to develop the proprietary dry powder inhaler and formulation technology, were also sharply higher.

Elsewhere, Halma gained after saying it had sold its Fiberguide Industries unit to electronic, electrical and fibre optic connection systems firm Molex for $38m (£28.1m) on a cash and debt free basis.

Market Movers

FTSE 100 (UKX) 6,564.44 0.20%
FTSE 250 (MCX) 20,263.93 -0.16%
techMARK (TASX) 4,105.43 0.42%

FTSE 100 - Risers

Hikma Pharmaceuticals (HIK) 2,556.00p 3.61%
Bunzl (BNZL) 2,435.00p 2.10%
Homeserve (HSV) 1,123.00p 2.00%
Smith & Nephew (SN.) 1,560.00p 1.79%
Smith (DS) (SMDS) 384.40p 1.75%
Rio Tinto (RIO) 5,696.00p 1.62%
Rentokil Initial (RTO) 520.20p 1.40%
Just Eat Takeaway.Com N.V. (CDI) (JET) 7,918.00p 1.38%
Halma (HLMA) 2,474.00p 1.35%
Evraz (EVR) 476.40p 1.30%

FTSE 100 - Fallers

Flutter Entertainment (FLTR) 15,065.00p -2.74%
NATWEST GROUP PLC ORD 100P (NWG) 159.00p -2.30%
Lloyds Banking Group (LLOY) 35.39p -2.28%
Johnson Matthey (JMAT) 2,511.00p -2.07%
Rolls-Royce Holdings (RR.) 110.50p -1.73%
British Land Company (BLND) 492.10p -1.70%
Land Securities Group (LAND) 698.90p -1.52%
Next (NXT) 6,820.00p -1.47%
Associated British Foods (ABF) 2,262.00p -1.39%
International Consolidated Airlines Group SA (CDI) (IAG) 157.60p -1.31%

FTSE 250 - Risers

Vectura Group (VEC) 125.80p 9.20%
QinetiQ Group (QQ.) 314.40p 4.59%
Scottish Inv Trust (SCIN) 738.00p 3.36%
Oxford Instruments (OXIG) 2,105.00p 2.43%
John Laing Group (JLG) 335.20p 2.32%
Games Workshop Group (GAW) 10,850.00p 2.17%
Centamin (DI) (CEY) 124.35p 1.93%
Ultra Electronics Holdings (ULE) 2,114.00p 1.83%
Vivo Energy (VVO) 84.00p 1.69%
Pets at Home Group (PETS) 404.40p 1.61%

FTSE 250 - Fallers

Cairn Energy (CNE) 162.50p -5.85%
Avon Rubber (AVON) 3,135.00p -4.86%
Network International Holdings (NETW) 283.60p -3.86%
Petrofac Ltd. (PFC) 156.60p -3.72%
Sanne Group (SNN) 579.00p -3.02%
Herald Investment Trust (HRI) 1,984.00p -2.75%
CLS Holdings (CLI) 219.00p -2.67%
Liontrust Asset Management (LIO) 1,280.00p -2.66%
Wetherspoon (J.D.) (JDW) 1,091.00p -2.33%
Virgin Money UK (VMUK) 134.05p -2.30%