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FTSE 100 edges higher ahead of big Brexit vote

"It’s over. The deal and perhaps May’s premiership. The DUP & the ERG & Cox have seen to that. What’s extraordinary is that no-one knows what happens next," tweeted the BBC's Nick Robinson
Brexit and the City
At least 12 Conservative MPs who voted against the prime minister's previous deal intend to support her new deal tonight
  • FTSE 100 rises 14 points

  • Geoffrey Cox, the attorney general, opines that the latest concessions from the EU do not amount to a legally binding guarantee on the backstop

  • FTSE 250 up 0.2% despite shoeing for Equiniti

3.30pm: May makes one last effort (until the next one) to win round doubters

Ahead of this evening's parliamentary Brexit vote, the UK's leading shares were modestly firmer.

The FTSE 100 was up 14 points (0.2%) while the mid-cap FTSE 250 was up 33 points (0.2%), despite payments specialist Equiniti Group PLC (LON:EQN) taking a pasting following the publication of its results for 2018.

Liberum Capital Markets said there were “fewer positives than negatives” in the results but reiterated its faith in the underlying business.

Liberum has a price target of 290p for Equiniti, down from its previous target price of 320p. Equiniti shares trade at 189p, down 6.9% on the day.

It was a different story for asset manager Quilter PLC (LON:QLT) after its prelims. The shares rose 4.8% to 138.36p after the company reported a r4% decline in assets under administration to £109.3bn from £144.4bn a year earlier, with negative market movements wiping £7.8bn off the value and more than offsetting net inflows of £2.7bn.

2.35pm: The blue-chip index does its Grand Old Duke of York impersonation

US stocks opened mixed, mirroring the performance of the Footsie.

The Dow Jones, once again weighed down by Boeing, was 9 points (0.0%) lower at 25,641 but S&P 500 was up 12 points (0.4%) 2,795.

The US consumer price index (CPI) rose by 0.2% in February from January, which was the first increase since October.

The year-on-year rise eased to 1.5% from 1.6% the month before, compared to the consensus forecast of 1.6%.

“The 0.4% m/m increase in energy and food prices (m/m) drove the headline m/m gain. Given that energy prices continue to rise, it seems that headline inflation may bottom out soon,” suggested Roiana Reid at Berenberg.

Nancy Curtin, the chief investment officer at Close Brothers Asset Management, said: “The US economy is showing signs of improvement, returning to normality as we begin to emerge from the global slowdown. The Fed will take heart in these inflation figures, which reflect a pick-up in oil prices and accelerating wage growth, but still remain subdued in terms of the Fed’s longer term inflation target”.

Curtin believes that Jerome Powell, the head of the Federal Reserve, will be keeping an eye on wage growth in particular to ensure it doesn’t feed through into increasing inflation in the medium term.

“All eyes are now on the culmination of successful trade talks, which should help to improve export growth globally while stabilising growth in China. If this happens, corporate confidence and economic growth should pick up, boosting investment spending and maybe even productivity as we move towards the second half of the year,” she added.

In the UK, where the prime minister, Theresa May, is addressing the House of Commons ahead of tonight's big Brexit vote (unless it is cancelled), the FTSE 100 was up 10 points (0.1%) at 7,140.

On the corporate front, two mining tiddlers were on the move.

Bacanora Lithium PLC (LON:BCN) was up 12% for reasons that were not known to the market while Greatland Gold PLC (LON:GGP) shot up 28% on the back of a farm-in agreement with Assie mining firm Newcrest Mining.

 

12.30pm: FTSE 100 returns to base as pundits do the maths 

The attorney general, Geoffrey Cox, has possibly upset Theresa May’s apple-cart but has provided a boost to share prices.

The FTSE 100 was just about holding on to gains at 7,136, up 5 points on the day, as the pound – feeling a bit cocky this morning after the prime minister Theresa May did her best Neville Chamberlain impression on her return from Strasbourg – wilted in the wake of Cox’s judgement on what the latest Brexit proposal means for the so-called backstop arrangement over the Irish border.

“The Attorney General’s withering legal opinion has thrust a giant pin into sterling’s balloon,” was the colourful opinion of JR Zhou, a market analyst at Infinox.

“Optimism that Theresa May’s eleventh-hour concession from Brussels might be enough for her Brexit deal to squeak through its parliamentary vote got the Pound off to a flying start on Tuesday but as the hours ticked by, the pound wobbled as one Tory MP after another expressed doubts about the final iteration of the Prime Minister’s battered Brexit deal – and it soon became clear the EU’s concessions were modest at best,” the analyst added.

“For arch-Brexiteers and the DUP, the Attorney General’s verdict that the ‘new’ deal still doesn’t guarantee that the UK will avoid becoming trapped in the backstop is likely to be a deal breaker,” according to Zhou.

The political shenanigans have overshadowed a halfway decent set of gross domestic product numbers this morning.

“UK GDP grew a better-than-expected 0.5% month-on-month in January, which was partly a correction after the economy contracted by 0.4% month-on-month in December. Prior to December’s slump, the economy had grown 0.2% month-on-month in both November and October after flat performances in both September and August,” reported Howard Archer, the chief economic advisor to the EY ITEM Club.

Despite January’s rebound, the overall impression remains that the economy is struggling in the first quarter of 2019 amid heightened Brexit uncertainties and weaker global growth, Archer suggested.

“The economy still looks soft with the three-month/three-month growth rate in GDP remaining at 0.2% in the three months to January, which was the weakest performance since growth of 0.1% in the three months to May 2018 (when it had been held back by the impact of the severe weather in March).

“The Office for National Statistics also reported that the UK trade data deficit widened to a five-month high of £3.8 billion in January from £3.4 billion in December and £3.1 billion in November. Exports rose 2.3% month-on-month in January while imports increased by 2.8%,” Archer noted – although no one seems to care much about the trade figures these days.

11.15am: Sterling sinks as attorney general fails to wholeheartedly back May's deal

 The Footsie has moved into positive territory after comments from the Attorney General Geoffrey Cox put the kibosh on sterling’s revival.

The FTSE 100 was up 35 at 7,166.

“Sterling took a nose dive on the back of the Cox statement. It was his opinion which matters the most; now that he has made it clear that the recent deal has no weight, the door is wide open for the sterling to move lower against the dollar,” suggested Naeem Aslam at thinkmarkets.com.

“Another historic defeat is strongly on the cards for Mrs May and all options are on the table with respect to another election or no Brexit at all,” he added.

According to Sporting Index, 363 MPs are set to spurn Theresa May’s Brexit deal – and that was before Cox put his oar in.

“The under-fire Prime Minister faces a second vote in the House of Commons later today and the traders at Sporting Index believe May will inevitably face more disappointment, predicting ‘ayes’ to be at 275,” the spread betting firm said.

“Theresa May has been to hell and back with Brexit [that’s no way to talk about Strasbourg – Ed.], and it looks almost certain that MPs will spurn her second deal, but she could have more on her side this time around,” said Ed Fulton, the political trading spokesman for Sporting Index.

10.00am: GDP rises by more than expected

 After an early wobble, the Footsie has almost made it back to level par, thanks in part to broker-inspired enthusiasm for banks.

The FTSE 100 was down 7 points (0.1%) at 7,123.

Royal Bank of Scotland Group PLC (LON:RBS) was up 3.0% at 264.9p after Goldman Sachs increased its price target to 395p from 350p.

Other banks to attract the vampire squid’s eye included Lloyds Banking Group PLC (LON:LLOY), up 2.8% at 63.5p (target price increased to 65p from 57p); Standard Chartered PLC (LON:STAN), down 0.3% at 609.5p (target price raised to 925p from 910p); Barclays PLC (LON:BARC), up 1.7% at 163.68p (target price hiked to 235p from 215p) and HSBC PLC (LON:HSBA), down 0.7% at 620.1p (target price cut to 775p from 780p).

The Office for National Statistics (ONS) has released the monthly estimate of gross domestic product (GDP) for January, showing that UK GDP grew by 0.2% in the three months to January.

The ONS said the services sector was the main driver of GDP growth, while the production and construction sectors contracted.

Monthly gross domestic product growth was 0.5% in January 2019, as the economy rebounded from the 0.4% decline seen in December 2018.

“The UK’s GDP data provided an extra boost for sterling, which is already up on the back of Brexit deal hopes; however, the devil is in the detail because the new construction orders fell but the increase in the industrial output and manufacturing have balanced the overall equation,” said Naeem Aslam at thinkmarkets.com.

Rupert Thompson, the head of research at asset management firm Kingswood, said: “The January GDP data provided some reassurance that the UK economy is not already heading headfast [sic] into a Brexit black hole.”

According to Thompson, GDP bounced back more than expected in January “and while the 3m/3m gain was in line with expectations at 0.2%, the y/y gain was a stronger than expected [at] 1.4%. Moreover, while growth of 1.4% is undoubtedly on the sluggish side, it is actually a bit higher than the growth being seen in the eurozone at the moment," he added.

8.15am: Footsie pressured by the pound

With sterling enjoying a morning in the sun following the latest Brexit developments, London’s blue-chips were finding it hard going.

The pound was up 0.87 cents against the US at US$1.3235. The Footsie, which is chock-full of companies that earn a lot of foreign currency, was down 31 points at 7,099.

"Sterling has held onto its gains overnight and remains bid at 1.32 against the US dollar after Theresa May secured what looks like a revised offer from the EU, but caution remains the order of the day ahead of the key vote(s) in Parliament starting tonight,” reported Neil Wilson at markets.com.

“The question is whether it's enough to get the hardcore of the ERG to back her. Sterling's refusal to move beyond 1.32 really betrays the doubts that remain. Specifically, the wording of this new deal is somewhat opaque on Britain's ability to unilaterally exit the backstop arrangements. One feels right now that it won't be enough to persuade Brexiteer MPs to budge as the text seems well caveated in favour of the EU. Comments from Labour leader Jeremy Corbyn have not been encouraging for May to secure the majority she needs. Ahead of the vote this evening the advice of Attorney General Geoffrey Cox is of vital importance,” Wilson added.

Kallum Pickering, an economist at Berenberg Bank, is similarly sceptical over the chances of May winning the votes she needs to.

“While May has probably done enough to reduce the size of the defeat - vote one was 230 MPs - she will probably still fall short well of a majority when parliament votes on her deal tonight,” Pickering predicted, giving May a one-in-ten chance of pulling off the great escape.

“This is probably May’s last chance to get her deal through the UK parliament. The EU has made clear that it cannot go further than these new agreements on the Irish border. If the UK parliament votes down May’s deal tonight she will be under huge pressure to give MPs a chance to debate and vote on alternative models for future UK-EU relations,” he added.

Were Parliament to approve May's deal, Pickering asserted it would “eliminate the hard Brexit uncertainty and probably trigger a rebound in U.K. domestic economic activity sooner than we currently expect, say Q2 rather than Q3”.

On the company news front, as was the case yesterday, there is a lot more going on among the mid-caps than there is among the blue-chips.

Controversial security services firm G4S PLC (LON:G4S) was on the retreat after saying it had set aside £100mln to settle a class action lawsuit in California.

The shares were down 4.8% at 198.4p.

So-called “exceptional items” also made a mess of the results of oil producer Cairn Energy PLC (LON:CNE).

The company has written down the value of its Kraken field following a reserves downgrade, resulting in a loss before tax of US$1.14bn, versus a profit of £218mln in 2017.

The shares were off 3.2% at 169.2p.

Proactive news headlines:

Greatland Gold PLC (LON:GGP) has signed a farm-in agreement with Newcrest Mining LTD (ASX:NCM) for the further advancement of the Havieron project in the Paterson region of Western Australia.

Concepta PLC (LON:CPT) has inked an agreement to supply its myLotus fertility testing kit to high street chemist Boots.

Ariana Resources PLC (LON:AAU) is guiding for gold production from the Kiziltepe mine in Turkey to come in at 25,000 ounces this year.

Pawnbroking group H&T GROUP PLC (LON:HAT) put in a strong fourth quarter performance in 2018 ensuring that full-year results will be in line with expectations.

Sirius Minerals PLC (LON:SXX)has put its long-running debt financing talks on hold as it has received a new alternative funding proposal. In a statement, the UK mine developer said the new proposal contains an alternative senior debt structure which would replace the structure envisaged in the prior negotiations, that began back in 2016.

Bacanora Lithium PLC (LON:BCN) has said it does not know why its shares have moved recently.

Metal Tiger PLC (LON:MTR) shares jumped in early trading Tuesday after it hailed “significant” drilling results from a programme carried out at the T3 copper project in Botswana by investee company MOD Resources, in which it holds a 10.48% stake.

Rockfire Resources PLC (LON:ROCK) has completed initial soil sampling, rock sampling and geological mapping at the Copper Dome porphyry copper project in Central Queensland.

Primary Health Properties PLC (LON:PHP) has contracted to acquire a standing let primary care centre in the Republic of Ireland.

Bluebird Merchant Ventures PLC (LON:BMV) expects to hear in around two weeks whether its application to re-open the Gubong mine in Korea has been approved. The miner expects to be asked for clarification on some issues but is confident it can answer these.

Pre-tax profits for Mineral and Financial Investments Ltd. (LON:MAFL) rang in at £722,000 for the six months to 31 December 2018.  That equates to 2p per share.

ClearStar Inc. (LON:CLSU), the technology and service provider to the background check industry, announced that Ken Dawson, its chief information officer has sold an aggregate of 198,000 ordinary shares in the company in two transactions - 10,000 shares sold on 7 March 2019 at a price of 61p each; and 188,000 shares sold on 11 March 2019 at a price of 55p each. The group said, following these transactions, Dawson holds 4,090,000 ordinary shares in the company, representing 11.3% of the issued share capital.

IronRidge Resources Limited (LON:IRR), the African focused minerals exploration company, said it will be holding a shareholder update meeting and presentation followed by a Q&A session on 2 April 2019, at 6:00 pm (UK local time), at 1 America Square, 17 Crosswall Street, London EC3N 2LB.

6.40am: Sterling's strength to sap enthusiasm for blue-chips

The FTSE 100 index is expected to slip back on Tuesday weighed by a jump from the pound after the European Commission agreed to changes to Theresa May’s Brexit deal ahead of a key parliamentary vote today.

Spread betting firm IG expects the blue-chip index to open around 3 points lower at 7,127 having added 26 points on Monday.

Overnight on Wall Street, the Dow Jones Industrials Average gained 200 points, or 0.8% higher to close at 25,650, buoyed by the Brexit deal hopes as well as talk of monetary stimulus measures for the Chinese economy as trade deal talks continue with the US.

In Asia today, Japan’s Nikkei 225 index jumped 1.9% while Hong Kong’s Hang Seng index took on 1.4% as stock markets took heart from hopes that having secured what she called ‘legally binding changes’ to her Brexit deal, the UK prime minister could swing MPs into backing the plan.

On currency markets, sterling rose versus the US dollar and rose against the euro as investors await probably the last chance for MPs to vote on the Brexit deal.

After previous hefty parliamentary rejection votes, the UK prime minister will be hoping that the reassurances she has wrung out of Brussels can make a difference.

But another big defeat to her plans could still mean either the UK leaves the EU on 29 March with no deal in place, or the departure date gets delayed.

UK growth data to keep slowing

Aside from the crucial Brexit vote, January’s UK GDP growth numbers will also be a focus on Tuesday, a day ahead of the Chancellor’s Spring Statement which will bring updated official forecasts for the UK economy.

UK GDP fell by a relatively large 0.3% month-on-month in December as output in services, industry and construction all fell on the month, the first time that had been seen since September 2012, as Brexit uncertainties started to take a toll.

Economists at RBC Capital think the weak finish to last year coupled with recent dull survey data suggests an even slower start to this year, which could see the three month GDP growth rate drop to 0.1%.

Weather holding back Domino’s

On the corporate front, investors will have results from Domino’s Pizza Group PLC (LON:DOM) to chew over, with the FTSE 250-listed firm having issued a profit warning in January after experiencing “growing pains” in some of its international markets.

Things seemed better in its core UK business, where like-for-like sales climbed 4.5% in the final quarter.

But investors will keep an eye on the bottom line, as City broker Liberum thinks most of that growth was driven by price cuts.

Investors already know that Domino’s full-year underlying pre-tax profits will be at the lower end of the consensus range of £93.9mln-£98.2mln, so the focus on Tuesday will instead be on the outlook.

Significant announcements expected on Tuesday:

Finals: Domino’s Pizza Group PLC (LON:DOM), G4S PLC (LON:GFS), Cairn Energy PLC (LON:CNE), Computacenter PLC (LON:CCC), Quilter PLC (LON:QLT), Goals Soccer Centres PLC (LON:GOAL), 888 Holdings PLC (LON:888), John Menzies PLC (LON:MNZS), Pendragon PLC (LON:PDG), Forterra PLC (LON:FORT), Forbidden Technologies plc (LON:FBT), French Connection Group PLC (LON:FCCN), Gresham Technologies PLC (LON:GHT), Gamma Communications PLC (LON:GAMA), H&T GROUP PLC (LON:HAT), Midwich Group PLC (LON:MIDW), Pennant International Group PLC (LON:PEN), Surgical Innovations PLC (LON:SUN)

Interims: Close Brothers Group PLC (LON:CBG), Purecircle Limited (LON:PURE)

Economic data: UK GDP monthly estimate; US core inflation rate; US NIFB business optimism index

Around the markets:

  • Sterling: US$1.3215, up 0.2%
  • Gold: US$1,288.80 an ounce, unchanged
  • Brent crude: US$66.70 a barrel, up 0.1%

City Headlines:

  • Theresa May and Jean-Claude Juncker, president of the European Commission, unveiled an “improved Brexit deal” after the UK prime minister secured changes that she said ensured Britain could not be trapped in the Irish backstop – The Times
  • Ryanair has announced that British citizens who own shares in the company will be barred from buying more stock, voting on company resolutions or attending annual shareholder meetings in the event of a no-deal Brexit – The Guardian
  • WPP has added Cindy Rose, the chief executive of Microsoft in the UK, to its board as it continues to battle a seismic shift in the sector – The Times
  • Unilever has revealed that its former boss Paul Polman was paid a total of €11.7mln for his final year at the company – Daily Telegraph
  • Activist investor Crystal Amber has called an emergency meeting to try to oust the chairman of struggling vehicle hire group Northgate – Daily Mail
  • HMV’s unsecured creditors are owed more than £65mln but are likely to get only a fraction of that, despite its rescue by Sunrise Records – The Times
  • Barrick Gold has dropped a US$18bn hostile bid for Newmont Mining after agreeing on a deal to combine operations in the US state of Nevada – Financial Times
  • Tesla has taken a U-turn over its decision to close all its stores and move to an online-only sales model – The Guardian
  • Brilliant Energy is the latest small supplier to announce that it has ceased trading – affecting 17,000 domestic customers – Daily Mail
  • The US is set to eclipse Saudi Arabia as the world’s largest exporter of oil and petroleum products – The Times
  • Government is set to replace the accounting watchdog by a stronger regulator with powers to issue harsher penalties and investigate company directors – Financial Times
  • The monthly snapshot of trading at major UK pub chains open for more than one year recorded growth of 1.4% after the freak February heatwave provided rare cheer for the struggling sector – The Guardian

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