London midday: Stocks edge up, pound jumps amid Brexit deal hopes
London stocks were still moderately firmer by midday on Monday, underperforming their European peers as sterling rallied on hopes that a Brexit deal will be agreed.
The FTSE 100 was 0.4% firmer at 6,574.17, while the pound was up 1.5% against the dollar at 1.3421 and 1.2% higher versus the euro at 1.1042 after the UK and the EU agreed over the weekend to extend Brexit trade talks into this week, and as the EU’s chief Brexit negotiator, Michel Barnier, said a post-Brexit trade and security deal could be agreed as early as this week.
A stronger pound tends to dent the top-flight index, as around 70% of its constituents derive most of their earnings from overseas. The domestically-focused FTSE 250 was up 1.8% at 19,969.12.
IG said: "From a traders’ perspective, the prospect of a potential breakthrough does provide some floor for the pound for the time being. The FTSE 250 outperformance seen in early trade is largely a reversal of the declines seen in the lead up to this crucial round of negotiations. With banks in particular doing well, it is evident that we will see assets with high UK-exposure all move in tandem as markets gauge exactly what kind of Brexit we will see come 1 January."
In equity markets, housebuilders and banks were top gainers amid Brexit hopes, with Taylor Wimpey, Persimmon, Barratt Developments, NatWest, Barclays and Lloyds all higher.
The housebuilders were also boosted after Rightmove predicted that house prices will rise 4% in 2021 as values continue to increase modestly after the end of the stamp duty holiday that has fuelled a mini-boom. Prices rose 6.6% in 2020 after Chancellor Rishi Sunak scrapped stamp duty on the first £500,000 of a property purchase, Rightmove said. Momentum tailed off in December when prices fell 0.6%, the property portal said.
Neil Wilson, chief market analyst at Markets.com, said of banks and housebuilders: "These stocks are a leveraged bet on the UK economy, which in the near-term at least is going to be at the mercy of a Brexit trade deal and the vaccination programme. Markets have also pushed back expectations for interest rate cuts by the Bank of England, which meets later this week."
Elsewhere, Mike Ashley’s Frasers Group surged following reports it’s edging closer to a deal to rescue part of struggling department store chain Debenhams.
Plastic piping systems manufacturer Polypipe gained as it said annual profit would beat expectations after revenue rose 8% in November.
On the downside, pharmaceutical company AstraZeneca was under the cosh after saying it was buying US drug developer Alexion in a cash and shares deal worth $39bn.
Market Movers
FTSE 100 (UKX) 6,574.17 0.42%
FTSE 250 (MCX) 19,969.12 1.77%
techMARK (TASX) 4,084.63 0.33%
FTSE 100 - Risers
NATWEST GROUP PLC ORD 100P (NWG) 162.05p 7.78%
Barclays (BARC) 144.64p 6.31%
Lloyds Banking Group (LLOY) 36.18p 6.18%
Taylor Wimpey (TW.) 159.75p 6.11%
Persimmon (PSN) 2,603.00p 5.68%
JD Sports Fashion (JD.) 794.00p 5.61%
Rolls-Royce Holdings (RR.) 123.25p 5.34%
Barratt Developments (BDEV) 613.60p 5.18%
Berkeley Group Holdings (The) (BKG) 4,404.00p 4.83%
Legal & General Group (LGEN) 256.10p 4.83%
FTSE 100 - Fallers
AstraZeneca (AZN) 7,632.00p -6.47%
Polymetal International (POLY) 1,626.00p -4.58%
Fresnillo (FRES) 1,087.50p -3.42%
Aveva Group (AVV) 3,102.00p -2.91%
Relx plc (REL) 1,784.00p -2.00%
Experian (EXPN) 2,724.00p -1.41%
Reckitt Benckiser Group (RB.) 6,546.00p -1.33%
Rentokil Initial (RTO) 490.50p -1.05%
GlaxoSmithKline (GSK) 1,400.40p -0.91%
Hikma Pharmaceuticals (HIK) 2,498.00p -0.87%
FTSE 250 - Risers
Frasers Group (FRAS) 472.40p 9.55%
Polypipe Group (PLP) 500.00p 9.41%
Crest Nicholson Holdings (CRST) 307.00p 8.94%
Just Group (JUST) 63.95p 8.39%
Dixons Carphone (DC.) 109.90p 8.06%
Virgin Money UK (VMUK) 135.25p 7.43%
ITV (ITV) 104.30p 7.04%
Vistry Group (VTY) 858.00p 6.92%
Marks & Spencer Group (MKS) 138.60p 6.90%
Morgan Sindall Group (MGNS) 1,472.00p 6.67%
FTSE 250 - Fallers
Centrica (CNA) 41.69p -4.07%
Centamin (DI) (CEY) 117.90p -3.64%
Plus500 Ltd (DI) (PLUS) 1,420.00p -2.97%
Genesis Emerging Markets Fund Ltd Ptg NPV (GSS) 871.00p -1.25%
Hipgnosis Songs Fund Limited NPV (SONG) 121.00p -1.22%
Hochschild Mining (HOC) 191.90p -1.18%
Impax Environmental Markets (IEM) 422.00p -1.17%
BB Healthcare Trust (Red) (BBH) 175.50p -1.13%
Tate & Lyle (TATE) 653.00p -1.09%
Fidelity China Special Situations (FCSS) 375.50p -1.05%