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FTSE 100 closes higher on Monday as Wall Street boosts performance

IG analyst warns that the pathway to resolving the Brexit deadlock remains "far from certain"

Toy teeth eating five pound notes
Is an election imminent?
  • FTSE 100 index up 14 points

  • US stocks strong, awaiting earnings

  • Sterling ahead as EU agrees Brexit extension

5.00pm: Positive close for Footsie 

The FTSE 100 index closed higher on Monday, recovering from an earlier torpor in the afternoon thanks to a strong early performance on Wall Street, although a rally by sterling on Brexit-related factors limited the gains in London. 

At the close, the UK blue chip index was 6.8 points, or 0.1% higher at 7,331.28, just below the session peak of 7,344.11 and above the day’s low of 7,291.59. 

In New York, by London’s close, the main attention was the S&P 500 index which hit an all-time high in early trading, before settling up 0.5% to 3,038, while the benchmark Dow Jones Industrial Average added 0.4% at 27,057, also close to record levels, and the tech-laden Nasdaq Composite gained 0.9% at 8,317. 

US investors were focused on a deluge of corporate earnings reports to come, with 162 S&P 500 companies due to release quarterly financial results this week, including the likes of Apple and Facebook. 

Spotify Technology shares stood out on Monday, adding around 15% after the music-streaming service reported an unexpected profit in the third quarter, and beat analyst estimates for monthly active users. 

EU agrees Brexit extension 

On currency markets, the pound ticked higher following news the EU has agreed to a Brexit flextension to 31 January 2020, with traders now hoping to see some form of break in the election deadlock later today in Parliament.  

Against the dollar, sterling was up 0.4% at US$1.2868, and versus the euro took on 0.2% at €1.1603. 

Joshua Mahony, senior market analyst at IG said: “The decision to provide an extension must be seen as a positive thing, given how close we are to a disorderly Brexit. However, while a no-deal has been averted for now, this extension points to more uncertainty and economic decline as businesses remain in the dark over where the country is heading.  

“The pathway to resolving this deadlock remains far from certain, with today’s election vote likely to be rejected despite claims from all sides that they would relish a showdown at the polls.  

“For the conservatives, the fact that this extension has the possibility of an early exit is crucial, with Johnson desperate to maintain his pledge to ‘get Brexit done’ at the earliest opportunity.” 

4pm: FTSE 100 barely changed as vote on General Election looms

London's leading shares were barely changed despite the European Union pushing back the Brexit deadline to 31 January (that's 2020 – presumably).

The FTSE 100 index was up 5 points (0.1%) at 7,329, led by Antofagasta PLC (LON:ANTO), up 3.5% at 901.2p, on a decent day for the miners.

HSBC PLC (LON:HSBA) was the biggest faller, down 4% at 492.8p, after even the chief executive officer admitted its third-quarter earnings were a bit duff.

On the market as a whole, Eurasia Mining PLC (LON:EUA) was the top riser, up 65% after receiving a cash infusion and assuring shareholders it is not planning any new share placings in the foreseeable future.

2.45pm: S&P 500 hits new high as US stocks open higher

The S&P 500 index has hit a new high after US stocks opened on the front foot on Monday.

The index breezed past the previous high of 3,028, set on 26 July, rising to 3,043, up 20 points (0.7%).

The Dow Jones industrial average, meanwhile, shot up 191 points (0.7%) to 27,148.

“It’s a remarkable achievement against faltering corporate earnings, a festering (if not quite total) trade war, and softer macro data everywhere you look,” declared Neil Wilson at markets.com.

“Bulls had tried their hardest Friday but some really positive noises on trade nudged us over the line today. President Trump said the US and China are looking to be ahead of schedule on sign the ‘phase one’ trade deal at the APEC meeting in Chile in mid-Nov. The bar on a US-China trade deal had been set so low that the market seems content with this pretty puny agreement. At least the direction is positive,” he added.

Things in the UK are a bit more mundane, with the FTSE 100 up 9 points (0.1%) at 7,334.

 

London’s leading shares were mixed following the removal of uncertainty over the extension of the Brexit deadline.

The FTSE 100 was up 2 points (0.0%) at 7,327, with the weakness of banks offset by the strength of miners.

“The pound is little moved despite the EU granting a flextension to January. The focus now shifts to the election, with today’s vote unlikely to approve the Conservative timeline. Meanwhile, US-China talks appear to remain on track for a November breakthrough,” said Joshua Mahony at IG Group.

Chris Cummings, the chief executive of the Investment Association, said it was time for politicians to put their differences aside “and work together on a solution that protects UK savers, our economy and our international competitiveness”.

“The investment management industry has been preparing for all potential outcomes, whether the UK leaves with or without a deal; however, after over three years of negotiations, investment managers, UK savers and businesses are more than ever looking for much-needed certainty,” Cummings said.

There was some much-needed halfway decent news for Britain’s hard-pressed retailers today with a better-than-expected reading for the CBI Distributive Trades survey.

The reported sales balance improved to -10 in October, from -16 in September; the consensus forecasts was for a balance (respondents per 100 who reported an increase minus those who reported a decrease) of -20.

“The CBI’s survey has become detached from reality this year, painting a much gloomier picture of conditions for retailers than the official data. We have no doubt that the official data are closer to the truth, given that the CBI’s survey suffers from a declining sample size, a bias towards traditional high-street retailers, and a narrow focus on only the first two weeks of the month,” grumbled Pantheon Macroeconomics.

“Despite this, it is modestly encouraging that the reported sales balance rose in October to its highest level since April and that retailers expect sales to rise next month for the first time since June. Meanwhile, the largest net balance of retailers on record reported that stock levels were more than adequate to meet demand in October. This points to scope for GDP growth in Q4 to be boosted slightly by pre-Brexit stock-building, though note that most goods that retailers sell are imported and so will have a neutral impact on GDP,” it added.

On the share price front, the share price of fags maker Imperial Brands PLC (LON:IMB) was going up in smoke after RBC Capital Markets cut its price target to 1,600p from 2,100p. The shares were down 40p at 1,780p.

9.40am: FTSE 100 dragged down by HSBC

HSBC Holdings PLC (LON:HSBA) led London lower after coming up short of expectations with its third-quarter earnings.

HSBC shares were down 3.9% and as the index’s largest constituent, that had a knock-on effect on the Footsie, which was down 21 points (0.3%) at 7,304.

Commenting on the HSBC trading update, Richard Hunter, the head of markets at interactive investor, said, “Not only are these numbers disappointing and light of expectations, but it seems that things will get worse before they get better.”

“The fourth quarter outlook from HSBC predicts a torrid time, and this follows any number of underperforming units of the banking behemoth failing to deliver in this period,” Hunter noted.

“Somewhat surprisingly, the performance in the Asian region from which HSBC derives the vast majority of its profits held up well, including a resilient performance (for the moment) from Hong Kong,” he added.

Publishing group Informa PLC (LON:NF), down 2% at 758.4p, was the index’s second-biggest faller after Goldman Sachs downgraded the stock to ‘sell’ from ‘buy’.

8.40am: Stocks hit reverse gear as Brexit and a stumbling HSBC exert a drag

The FTSE 100 started the trading week in negative territory, opening 23 points lower at 7,301.28 against a backdrop of further Brexit turmoil.

MPs are due to vote later on a December 12 general election. The parliamentary maths and a blocking pact to prevent a ‘no deal’ exit from the EU are likely to thwart Boris Johnson’s poll call.

This sets the scene for further uncertainty, which markets hate.

At the same time, representatives of the other 27 other member nations meet to officially agree to a Brexit extension of one to three months.

 “It is increasingly likely that EU leaders will grant a Brexit extension until 31 January,” said Michael Hewson, an analyst at CMC Markets.

“And while today’s attempt to get MPs to vote for an election today may well fail, given the higher bar of a two-thirds majority, there does appear to be a Plan B with a LibDem/SNP plan which may well require a simple majority.”

The markets big mover was HSBC (LON:HSBA), which with its significant weighting in the index was also responsible for a good slug of the Footsie’s early decline.

The international bank’s shares receded 3% after it weighed in with what could be best described as a lacklustre set of quarterly results, which undershot expectations.

6.32am: FTSE 100 set for subdued start

The FTSE 100 look set to kick off the week in subdued fashion, with London’s traders keeping their powder dry ahead of what looks set to be another week of Brexit toing and froing.

MPs meet later to decide whether to go to the polls on December 12, with opposition leader Jeremy Corbyn likely to block a pre-Christmas election unless ‘no deal’ is taken off the table.

The parliamentary motion requires a two-thirds majority (that’s 434 MPs) to be approved under the new fixed-term rules.

“While the Labour Party are doing all they can to box in Boris, the SNP plus the Lib Dems are trying to push for a pre-Christmas election too,” said David Madden, an analyst at CMC Markets.

“The smaller opposition parties have drawn up a bill that would simply require a majority in the House of Commons, and the aim is to hold an election on the 9 December.”

EU to set new deadline 

Away from Westminster, representatives from the other 27 EU nations are gathering to consider the date of the latest Brexit deadline extension.

Having agreed to a stay, they are required now to decide how long the delay will be. According to reports, it is likely to be anywhere between one and three months.

All of the above is likely to leave London’s price setters in a state of paralysis until a decisive breakthrough is made. As such, the spread betting firms are expecting the Footsie to open five points lower at 7319.47.

Away from Britain’s political navel gazing, Asia’s main markets were higher amid renewed optimism around Sino-American trade relations.

Around the markets: Pound worth US$1.281 (flat); gold US$1,508.50 an ounce, up US$3.20; Brent crude US$61.89, down 13 cents

Monday’s main corporate news

Trading statement: HSBC Holdings PLC (LON:HSBA), Photo-Me International PLC (LON:PHTM)

AGMs: Bilby PLC (LON:BILB), Petra Diamonds Ltd (LON:PDL), Verseon Corp (LON:VERS)

Economic data: CBI Distributive Trades

Business Headlines

Financial Times

  • Barclay brothers in £500mln cash call for ailing empire
  • Woodford and partner take £20mln dividends amid crisis
  • Brussels close to agreeing to Brexit extension until January
  • HSBC interim CEO to ‘remodel’ bank as profit falls 24%

Times

  • Retail investors may be separated from institutional funds to protect individuals better in the wake of the collapse of Neil Woodford’s business
  • Is Aim in the last-chance saloon or is London Stock Exchange’s junior market set to revive?
  • KPMG is considering closing its private members’ club in Mayfair as part of a plan to save £100mln in costs

Telegraph

  • Which way will the Bank of England jump on Brexit?
  • Louis Vuitton owner aims to put $14bn ring on Tiffany
  • Coca-Cola chief: ‘Have taxes solved the problem of obesity? No’
  • Health giant Acadia plots break up of Priory Group
  • Google algorithm 'hogs' internet traffic, researchers show

Guardian

  • JD Wetherspoon may have breached law over 1.9m Brexit beer mats
  • Mike Ashley tells MPs to investigate the collapse of Debenhams
  • Super-rich fuelling the growing demand for private jets, report finds

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