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ADVFN Morning London Market Report: Friday 18 October 2019

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London open: Investors tread cautiously ahead of Saturday vote in Parliament


Stocks were little changed in early trading on Friday although currency markets appeared to be reflecting investor caution ahead Saturday’s key vote in Parliament on the Brexit deal that was agreed just the day before between the UK and the European Union.

In the background meanwhile, investors were digesting economic data out of China showing the slowest pace of expansion since the early 1990s.

As of 0834, the FTSE 100 was trading 0.1% lower to 7,175.81 while the second-tier index was up by 0.16% at 20,253.45, but the pound was slightly lower against both the US dollar and the European single currency.

Overnight, the International Monetary Fund’s new chief, Kristalina Georgieva, reportedly told an audience at the IMF’s annual meeting in Washington that she “jumped for joy” when she learned of the new Brexit deal, saying that it would spare Britain significant economic damage.

But there were some differences of opinion among analysts, with Janus Henderson fund manager, Paul O’Connor, telling Reuters: “Even if Boris Johnson does manage to close the deal, investor celebration of this might soon be dampened by the recognition that this is a fairly hard Brexit.”

Michael Hewson, chief market analyst at CMC Markets UK was more upbeat, saying: “Amidst all the excitement around yesterday’s EU, UK Brexit deal it was easy to forget that the US and China are also trying to settle their own differences, at a time when China’s economy is showing a lot more stresses than the US economy.”

It thus remained to be seen if the Prime Minister would succeed in getting his deal through the House of Commons, although analysts at Rabobank believed that at this stage “anything was possible”.

“Logic reasoning suggests Saturday’s vote will fail, but sentiment and Brexit fatigue may still play into the hands of Johnson, swaying sufficient MP’s to his side,” Rabobank‘s Elwin de Groot said in a research note sent to clients.

“In that sense, anything seems possible at this stage and that’s probably why the market’s reaction has been volatile but lethargic at the same time.”

In the background, according to China’s National Bureau of Statistics, the year-on-year rate of growth in the country’s gross domestic product slowed from a clip of 6.2% for the second quarter to 6.0% over the three months ending in September (consensus: 6.1%).

However, separate figures showed that industrial production and retail sales grew more quickly than expected in September, albeit not fixed asset investment.

For later in the session, a flurry of Fed speakers were scheduled to take to the podium, including Dallas Fed chief, Robert Kaplan, at 1400 BST, followed by Esther George of the Kansas Fed at 1505 BST and Fed vice chairman, Richard Clarida, at 1630 BST.

No major economic releases were scheduled in the UK, euro area or in the States.

Refinitiv purchase on track, LSE says

Third quarter income at the London Stock Exchange rose 12% to £587m driven by a strong performance in its clearing division. Gross profit for the period rose 14% to £529m as the company said its planned £22bn takeover of data provider Refinitiv was still expected to complete in the second half of 2020.

InterContinental Hotels Group disappointed investors with its third quarter trading update, reporting a 0.8% drop in revenues per available room, alongside a 4.7% year-on-year increase in its net system size to 865,000 rooms. Notably, the company’s RevPAR in Hong Kong SAR plummeted by 36.0%.

Avast reported third quarter adjusted revenue growth of 5% to £220.3m, consistent with the expectations laid out in its half year results in back in August.The global cybersecurity provider consequently reaffirmed its full year guidance for adjusted revenue to be at the upper end of high single digit growth, when excluding FX, discontinued business and the sale of its managed workplace business.

Dechra Pharmaceuticals said it remained confident about its prospects for the current financial year in a trading update on Friday. The FTSE 250 company, which was holding its annual general meeting later in the day, said work was continuing to resolve the supply issues it had previously highlighted, with many of those having now been mitigated. It said it would announce its interim results for the six months ended 31 December on 24 February.


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