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FTSE 100 rises 42 points[hhmc]
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FTSE 250 soars 244 points (1.2%)[hhmc]
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Johnson and Juncker reportedly agree on a Brexit deal to be put to parliament[hhmc]
Sterling has staged a remarkable comeback on foreign exchange markets, on reports that a Brexit deal has been reached.
Sterling, down half a cent earlier this morning, is now more than a cent higher at US$1.2930 against the dollar after UK prime minister Boris Johnson tweeted about securing a “great new deal” on Brexit.
Normally, a strong exchange rate would be anathema to the FTSE 100 but Londons index of heavyweight shares was up 42 points (0.6%) at 7,210.
Weve got a great new deal that takes back control — now Parliament should get Brexit done on Saturday so we can move on to other priorities like the cost of living, the NHS, violent crime and our environment #GetBrexitDone #TakeBackControl
— Boris Johnson (@BorisJohnson) October 17, 2019
The FTSE 250, more attuned to an end to uncertainty in the UK, stormed 244 points (1.2%) higher to 20,414.
9.30am: Sterling in the wars
The FTSE 100 and FTSE 250 have gone their separate ways this morning, from which seasoned market watchers will deduce the pound is slumping.
Sterling was half a cent lower at US$1.2777 on foreign exchange markets, providing a boost to the many FTSE 100 constituents that rake in dollars but acting as a drag on the mid-cap FTSE 250 companies, many of which will be hit by higher raw material costs as a result of sterlings slide.
Even so, the FTSE 100 is only up 9 points (0.1%) at 7,177; the FTSE 250 is down 108 points (0.5%) at 20,080.
“Its all about Brexit today,” according to Daiwa Capital Markets.
“Overnight it had appeared that most of the key elements for a deal – perhaps with the exception of what to do about VAT – had fallen into place in the technical level negotiations but there was seemingly still no legal text and while there had seemed scope for a political agreement today, it was clear that domestic challenges, particularly for UK PM Johnson who has conceded most ground over the past week or so, remained,” the broker said.
“Those challenges were highlighted in the past couple of hours as the Northern Irish DUP, upon whose votes Johnson will rely to get any deal through the House of Commons, stated that it could not support what is being suggested on customs and consent while also noting that there is a lack of clarity on VAT. In response, euro area government bonds have on the whole made modest gains, but moves in Gilts have been predictably larger, with 10Y yields down about 3bps [basis points] to below 0.68%,” it added.
Despite the FTSE 250 taking a triple-digit tumble, there were some bright spots among its constituents.
Embattled pizza delivery outfit Dominos Pizza Group PLC (LON:DOM) was up 4.9% after it confirmed it would exit international markets, leaving it to focus on the UK and the Republic of Ireland.
Meanwhile, retailer WH Smith PLC (LON:SMWH) is moving in the opposite direction, doubling the size of its international segment with the £312mln acquisition of US travel retailer, Marshall Retail Group.
The move got the thumbs-up from the market with the shares up 4.7%.
More of the same from WH Smith sends shares up 4.6% to 16-month high, divi raised 8%. I do worry a little though about another acquisition in US even though first one is doing better than expected. Hope it doesn't end in tears.
— Rodney Hobson (@RodneyHobson) October 17, 2019
8.45am: FTSE 100 makes a tentative start as Brexit hogs the headlines;
The FTSE 100 made a tentative start to the trading day with Brexit headlines driving sentiment.
Prime Minister Boris Johnson suffered a major setback after the Democratic Unionist Party said it couldnt support the current plan "as things stand".
The DUPs support is pivotal if the PM is to win a parliamentary majority for the blueprint.
Johnson, meanwhile, is off to Brussels for a make-or-break summit to get the EU's approval for the latest proposals.
On foreign exchange markets, a good indicator for Brexit sentiment, the pound was holding its own at US$1.2786.
The index of blue-chip stock, meanwhile, was up just seven points at 7,174.56.
Leading the gainers list were Rentokil (LON:RTO), up 1.9%, and Unilever (LON:ULVR), ahead 1.5%, which both delivered better than expected third-quarter updates.
On the FTSE 250, the builders merchant Grafton (LON:GFTU) fell 10% after sounding the earnings alarm. Rival Travis Perkins (LON:TPK) fell in sympathy.
6.45am: FTSE 100 set for a muted start
Londons FTSE 100 is expected to begin Thursday trading just a sliver higher as sentiments for blue-chip equities remains on a pre-Brexit knife-edge.
Spreadbetting and CFD firm IG Markets is calling the index up just 1 point, making a price of 7,173 to 7,176.
There can hardly be any surprises that Brexit is the main point of focus after a week of headlines, rumour, conjecture and even sparks of optimism.
CMC Markets analyst Michael Hewson, in a note, said: “hopes continue to rise that the EU and UK governments can put together a deal that can satisfy not only the dissenters to the previous deal, in the form of the Democratic Unionist Party, as well as the more Eurosceptic wing of the Conservative party, but all other parties as well.
“Optimism is rising that this time will be different and the concerns with the Irish backstop can be resolved to everyones satisfaction, with talks set to continue further between the DUP, led by Arlene Foster, and the government, as concerns about consent and customs arrangements are addressed.
“This is where progress could get a little tricky as it does rather call into question as to whether any deal can rely on the support of the rest of the UK parliament, which has been a consistent road block to any sort of consensus in the past two years. It is no secret that while there has always been a hard-core cabal of Eurosceptic MPs it is also true that there is also a significant cabal of MPs who are opposed to any sort of Brexit.”
In the United States, where September retail stats yesterday disappointed, equites were on the back foot but the movements remained quite modest.
The Dow Jones closed Wednesdays session down 22 points, or 0.08%, at 27,001 whilst the S&P 500 edged 0.2% lower to finish at 2,989 and the Nasdaq slipped 0.3% to 8,124.
In Asia, Japans Nikkei was very slightly higher at 22,492 and Hong Kongs Hang Seng moved 0.6% higher at 26,825 while the Shanghai Composite was down 0.04% at 2,977.
Around the markets[hhmc]
The pound: US$1.2806, down 0.2%
Gold: US$1,488 per ounce, up 0.02%
Brent crude: US$58.93 per barrel, up 0.3%
Bitcoin: US$7,950, down 2.64%
Significant events on Thursday 17 October:[hhmc]
Finals: WH Smith PLC (LON:SMWH)[hhmc]
Trading statement: BHP Group PLC (LON:BHP), Domino's Pizza Group PLC (LON:DOM), Moneysupermarket.com Group PLC (Read More – Source
