FTSE 100 glows as sterling dims; Brexit deadlock unbroken

28 Mar, 2019

A rally in exporters boosted London's blue-chip bourse on Thursday as the pound weakened with odds stacked against Prime Minister Theresa May on getting her Brexit deal through parliament, while tobacco giants and oil majors also gained.

The FTSE 100, which earns more than two-thirds of its earnings in U.S. dollars, added 0.6 percent on its best day in a week - and the FTSE 250 was up 0.1 percent.

Both the UK indexes out-shined their European and U.S. counterparts, where fears of an economic slowdown after a cut in fourth-quarter GDP growth took precedence.

Sterling lost more than a percent as May failed to sway hardline opponents of her European Union divorce deal with an offer to quit, while none of eight indicative options to break the Brexit deadlock won majority support in parliament.

"We are now at the stage that MPs have shown that they don't want to vote to leave, but also don't want to vote to stay. It's turning into more a case of Little Britain than Great Britain," said CMC Markets analyst Michael Hewson.

International companies, which typically gain from weakness in the local currency, were the top performers, with pharmaceutical giants AstraZeneca and GlaxoSmithKline  both up around 2 percent.

Tobacco giant Imperial Brands advanced 2.3 percent and British American Tobacco climbed 2 percent as brokerage Citi hiked rating on both stocks to "Buy" saying regulatory threat will probably move away from cigarettes.

Chemicals group Johnson Matthey added 2.3 percent after securing a site in Poland to produce ultra-high energy battery materials and a 10-year supply deal with Canada's Nemaska Lithium.

Asia-exposed luxury brand Burberry edged 1.2 percent higher and miners saw their fourth straight session of gains with a 1 percent rise after a report that U.S.-China trade talks have made progress in all areas under discussion.

Oil majors Shell and BP held on to their gains despite a slip in crude prices after U.S. President Donald Trump called for the Organization of the Petroleum Exporting Countries to boost production to lower prices.

Online grocer Ocado jumped 5.3 percent to record a fresh life-time high -- its sixth in two weeks -- but housebuilders underperformed as growing uncertainties surrounding Brexit weighed.

Small-cap outsourcer Mitie slumped 7.2 percent on its worst day in six months after a warning that the company's order book was set to weaken as clients steered away from entering longer term contracts.

Debenhams lost one-fourth in value, ending the day at a share price of 2 pence, after the retailer said its bondholders agreed to change the terms of some of their bonds, a move that could rebuff a bid from Mike Ashley's Sports Direct  and wipe out shareholders.

Copyright Reuters, 2019
 

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