ADVFN Morning London Market Report: Thursday 14 March 2019

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London open: Stocks nudge up ahead of Commons vote on Brexit delay


London stocks nudged a touch higher in early trade on Thursday as investors mulled over the chaotic parliamentary events of the previous night and looked ahead to a vote on whether to delay the Brexit process.

At 0845 GMT, the FTSE 100 was up 0.1% at 7,162.71, while the pound was down 0.2% against the dollar at 1.3317, 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, sterling was 0.2% weaker at 1.1752.

Spreadex analyst Connor Campbell said Thursday’s vote was unlikely to be a simple matter: “Theresa May has further complicated matters, claiming that, if the Commons backs a delay, they will ask for a three-month extension, but only if MPs pass the PM’s twice-rejected withdrawal agreement by March 20.

“If they don’t, May warned, then the delay could be a lot, lot longer – and force the UK to take part in the European Parliament elections in May – in a naked, desperate attempt at generating support from intransigent Brexiters. All this is before even considering whether all 27 EU countries would unanimously back an extension.”

With all eyes firmly on Brexit developments, the latest housing market report from the Royal Institution of Chartered Surveyors took a back seat. The net balance of surveyors reported that house prices have risen over the last three months fell to -28 in February from -22 the month before, versus expectations of -24.

Pantheon Macroeconomics said the survey signals that the downturn in housing market activity and the downward pressure on prices is intensifying amid the Brexit chaos.

“The house price balance fell to its lowest level since May 2011 and is consistent with house prices falling at a 2% year-over-year rate soon,” said chief UK economist Samuel Tombs.

Chinese data was also in focus, with growth in industrial output slowing 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 equity markets, travel operator Tui 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’ atJPMorgan.

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 reached agreement with Charter Court Financial Services 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 edged up as it offered Debenhams a new alternative to the £150m loan sought by the troubled department store group. 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 advanced too.

On the downside, Anglo AmericanCRHLand SecuritiesGVC HoldingsJupiter 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 raise £300m in a placing and scrap its dividend for 2018.

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.


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