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London open: Stocks nudge lower as sterling breaches $1.24
London stocks nudged lower in early trade on Friday as the pound rallied, with investors still digesting the latest policy announcement from the European Central Bank.
At 0840 BST, the FTSE 100 was down 0.1% at 7,336.08, while the pound was up 0.7% against the dollar at 1.2415, breaching the $1.24 level for the first time since July – and 0.3% firmer versus the euro at 1.1180. Sterling was holding on to gains even as the DUP dismissed an earlier report suggesting that it had softened its stance on a Northern Ireland-only backstop.
The Times had reported that the DUP was prepared to abide by some European rules after Brexit, saying the party had agreed to “shift its red lines” as part of a deal to replace the backstop.
Spreadex analyst Connor Campbell said: “The market’s post-ECB stimulus pop couldn’t carry over into a second session. Instead the European indices started the session uniformly muted.
“It’s hard to know whether this lack of substantial growth is related to the backlash Mario Draghi has faced over his plans, or, arguably more likely, the fact that such stimulus was already priced in.”
As far as sterling is concerned, he suggested that Commons Speaker John Bercow’s promise to “creatively” stop a no-deal Brexit if Prime Minister Boris Johnson decides to ignore the law could also be lending some support.
In corporate news, JD Wetherspoon boss Tim Martin hit out at “elite Remainers”, accusing them of ignoring “the bigger picture” and the benefits of Brexit, as the pub chain posted a 7.4% increase in full-year sales but a 4.5% drop in profit before tax and exceptional items to £102.5m. Shares were a touch weaker.
Spirits company Diageo was in the red after Reuters reported on Thursday that unions were demanding a 5% pay rise for workers set to strike this month in Scotland.
IMI slumped as Berenberg initiated coverage of the stock at ‘sell’.
On the upside, SSE was in the green after agreeing to sell its retail business to OVO Group for £500m, comprising £400m cash and £100m in loan notes. The proceeds will be used to cut debt.
Education publisher Pearson was the top riser on the FTSE 100 after an upgrade at UBS, while Fresnillo shone after an upgrade to ‘outperform’ at Macquarie and Britvic fizzed higher after an upgrade to ‘buy’ at Jefferies.
