London open: Stocks nudge lower as Brexit deadline looms; miners buck trend
London stocks ticked a touch lower in early trade on Monday as investors continued to keep an eye on Brexit developments with the deadline for leaving the European Union just five days away.
At 0830 BST, the FTSE 100 was down 0.1% at 7,436.63, while the pound was up 0.1% against the dollar at 1.3052 and flat versus the euro at 1.1627.
London Capital Group analyst Jasper Lawler said: "The clock continues to tick towards Friday’s Brexit date, which will keep the pound under pressure. Theresa May is to continue talks with Jeremy Corbyn in an attempt to end the Brexit deadlock and find a cross party deal which can be pushed through Parliament."
May is due to meet with EU leaders on Wednesday to make her case for another short extension of Article 50 to 30 June. However, EU Council President Donald Tusk said last week that he would formally tell the EU to endorse a long extension until 31 March 2020, which could be terminated if the Withdrawal Agreement was accepted and ratified by the House of Commons.
"With the pound at $1.3050, traders are uncertain as to whether the EU will agree to Theresa May’s request. The EU’s preferred extension of around a year, plus potentially toxic EU elections in May, could prove too much for any Brexiteers in Parliament to swallow," said Lawler.
Analysts at Danske Bank said their base case was for the EU to grant the UK a year-long extension with the flexibility to leave earlier if/when the Withdrawal Agreement is passed. They assigned a 75% probability to this scenario and just 10% to the probability of a short extension.
Meanwhile, Labour has said it expects to hold further talks with May and her team as they attempt to break the Brexit deadlock ahead of Friday's deadline for leaving for the EU.
Away from Brexit, Sino-US trade relations remained in focus as Trump's economic adviser Larry Kudlow said the two sides were getting closer to a deal and that top-tier officials will meet for talks again this week. Reports on Monday suggest that China is set to cut import duties on a range of goods from textiles and sports goods to computers and digital cameras.
In equity markets, mining stocks were among the top gainers, with Fresnillo, Anglo, Rio, Glencore and BHP all higher as copper and iron prices rallied.
Despite expectations that it will be put into administration Debenhams shares rose after Sports Direct boss Mike Ashley offered to underwrite a £150m rights issue at the department store chain but only if it appoints him as chief executive. The billionaire Newcastle United boss also demanded that Debenhams' lenders agree to write-off £148m of the department store group’s debt.
Energean Oil and Gas gained as it announced the successful completion of drilling operations of the extended reach well EA-H3 at Epsilon.
Indivior advanced as it said a clinical study has shown that patients with moderate to severe opioid-use disorder may benefit from higher maintenance dose of its Sublocade monthly injection for the treatment of moderate to severe opioid use disorder.