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London open: Stocks rise as MPs vote to delay Brexit
London stocks rose in early trade on Friday as investors took heart from the latest Brexit developments in Parliament.
At 0840 GMT, the FTSE 100 was up 0.5% to 7,220.80, with only ten members of the benchmark in the red. The pound was flat versus the dollar at 1.3238 and 0.3% weaker against the euro at 1.1684 after MPs voted on Thursday by 413 to 202 in favour of seeking an extension to the Article 50 deadline.
Any delay to the Brexit process will now need to be agreed by the other 27 EU members, with talks about possible conditions for an extension to be held before next week’s EU summit.
May will also bring back her deal for a third ‘meaningful vote’ before next Wednesday. If her deal is approved before the summit in Brussels, she could ask the EU to delay Brexit until 30 June. However, if it’s rejected again, an extension of around two years is thought to be required.
Spreadex analyst Connor Campbell said the outcome of the vote was largely expected, hence little movement from sterling. “The pound is still going to be sensitive to any signs of which way the Brexit winds will be as we head towards the next key date of March 20,” he added.
Goldman Sachs pointed out that the prospect of a longer delay and a softer Brexit raises the cost for Eurosceptics of continuing to withhold their support for May’s deal. “A longer Brexit delay would also raise the possibility of a reversal of the Brexit decision, including via a second referendum,” economists at the bank said.
GS said it continues to see a 60% chance that a close variant of the Prime Minister’s Brexit deal is eventually ratified. “Outside our central scenario, we still think there is a considerable chance that Brexit is reversed, via a second referendum (subjective odds of 35%), but we think the probability of Brexit without a deal remains low (5%).”
In corporate news, housebuilder Berkeley rallied as it said the trading environment over the four months to end-February had remained “consistent with that experienced over the last two years”. The FTSE 100 group said that it expected to have around £860m of net cash at its April year as it currently “assessing a number of opportunities”.
Shares in the rest of the building sector followed suit, led by Galliford Try, Persimmon andTaylor Wimpey.
Restaurant Group surged. Although it posted an 8% drop in full-year pre-tax profit to £53.2m, this was around £1.7m better than analysts had expected. Meanwhile, net debt was around £40m better than expected at £291m, and total sales at the company – which bought Wagamama last year – ticked up 1%.
EI Group, the pub chain formerly known as Enterprise Inns, gained as it completed the sale of its commercial property portfolio, the proceeds of which will be used to pay down debt and return up to £35m to shareholders via a share buyback programme.
Fellow pub group JD Wetherspoon was also higher, even as it said profits fell 18.9% in the first half of its trading year as a big jump in labour costs outweighed an increase in sales for the pro-Brexit pub chain.
On the downside, Bakkavor and Greencore retreated on the back of downgrades byBerenberg, while Britvic fizzed lower after a downgrade to ‘neutral’ at Citi.
