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London close: Stocks jump as risk of 'no-deal' rises, sinking the pound

By Alexander Bueso

Date: Friday 21 Sep 2018

(Sharecast News) - London's top-flight index jumped on Friday as sterling slid on jitters about a no-deal Brexit, while a strong performance from the mining sector also provided a boost.
The FTSE 100 was up 1.67% or 122.91 points to 7,490.23, while the pound - which rallied a day earlier on the back of better-than-expected retail sales data - was down 1.44% against the dollar at 1.30725 and 1.18% lower versus the euro at 1.1135 after European Council president Donald Tusk said Theresa May's Chequers proposal "will not work", reigniting concerns about a no-deal Brexit.

That drew a steely response from the Prime Minister, who said it was "not acceptable to simply reject" her plan.

"At this late stage in the negotiations, it's not acceptable to simply reject the other side's proposals without a detailed explanation and counter proposals," Theresa May said in a televised statement from Downing Street.

Weighing-in on the exchange between Brussels and London, Thomas Pugh at Capital Economics said: "Theresa May's combative comments in a surprise press conference earlier today indicated that the chances of a no deal scenario have risen, causing the largest one-day fall in the pound in eleven months.

"Indeed, the two sides remain far apart, meaning that the chances of an agreement being reached in October and finalised in November seem pretty slim."

On the macroeconomic front, figures from the Office for National Statistics showed borrowing rose to £6.75bn in August from £4.35bn in the same month last year, versus expectations of £3.4bn. Still, borrowing for the year to date was down 30.5% at £17.8bn.

Howard Archer, chief economic adviser to the EY Item Club, said: "There will be one, possibly two, more releases before the OBR finalises its forecasts for the Budget. Although borrowing continues to run well below 2017-18 levels, the fact that revenue growth is only running in line with its previous forecast and the likely temporary nature of the undershoot in spending means that major changes to the OBR's projections are looking increasingly unlikely.

"This means the Chancellor may need to use revenue raising measures, or tolerate higher borrowing, in order to fund the extra spending planned for the NHS."

Miners racked up strong gains, with Glencore, Antofagasta, Anglo American, BHP Billiton and Rio Tinto all firmer amid rising metals prices.

Copper was among metals hit hard by the initial trade war concerns, sinking to $5,773 a ton in August, the lowest since June 2017, but noted broker SP Angel, it's since rebounded amid signs of tightness, including a drop in global stockpiles, and spiked to $6,195 on Friday.

Goldman Sachs also put out a note maintaining a year-end target of $6,500, saying that investors have priced in trade-tensions, growth remains strong across top economies and consumers who have delayed purchasing restart. The analysts said: "this week the trade war was escalated and markets shrugged it off with copper rallying. The reason is the market has already factored in an extended standoff between the US and China."

Elsewhere, rare disease specialist Shire ticked up as it announced that the Ministry of Health, Labour and Welfare (MHLW) in Japan has granted manufacturing and marketing authorisation for its treatment for hereditary angioedema attacks in adult patients.

Just Eat bucked the trend, tumbling nearly 5% following reports that Uber is in early-stage talk to buy Deliveroo. Peel Hunt said that while this is isn't a done deal, it would be a shift in the paradigm of the cooked food delivery market in the UK and beyond and could put enormous pressure on "the poster child for takeaway aggregation", Just Eat.

Still, it argued that Just Eat's buying power to get discounts for its restaurants, its invaluable big data assets, and the large swathe of customers that use and continue to use the platform is still a huge barrier to entry for the smaller players.

Smiths Group was sharply lower after saying it returned to growth last year as revenue increased but currency swings and reclassification of costs sent annual profit down 8%. The company also announced the sale of its medical division's water bottling business for an enterprise value of $40m.

SIG was higher after it said profits shrank 22% in the first half of the year as the building products supplier continues its transformation and reported that it was "starting to see evidence of delivery".

Market Movers

FTSE 100 (UKX) 7,490.23 1.67%
FTSE 250 (MCX) 20,590.36 0.19%
techMARK (TASX) 3,510.48 0.67%

FTSE 100 - Risers

Kingfisher (KGF) 256.30p 5.60%
Glencore (GLEN) 336.80p 4.69%
Antofagasta (ANTO) 895.80p 4.41%
TUI AG Reg Shs (DI) (TUI) 1,424.00p 3.98%
Anglo American (AAL) 1,760.80p 3.86%
BHP Billiton (BLT) 1,678.00p 3.71%
Intertek Group (ITRK) 4,950.00p 3.15%
GlaxoSmithKline (GSK) 1,531.40p 3.07%
Prudential (PRU) 1,814.50p 2.89%
Standard Chartered (STAN) 648.10p 2.87%

FTSE 100 - Fallers

Just Eat (JE.) 674.00p -4.80%
Smiths Group (SMIN) 1,520.50p -4.43%
Barratt Developments (BDEV) 560.00p -2.95%
Persimmon (PSN) 2,366.00p -2.79%
Next (NXT) 5,200.00p -2.29%
easyJet (EZJ) 1,394.50p -2.00%
Taylor Wimpey (TW.) 169.90p -1.68%
Berkeley Group Holdings (The) (BKG) 3,668.00p -0.95%
Melrose Industries (MRO) 220.50p -0.94%
Tesco (TSCO) 236.80p -0.88%

FTSE 250 - Risers

Kaz Minerals (KAZ) 584.00p 9.98%
IWG (IWG) 244.70p 6.86%
Ted Baker (TED) 2,350.00p 6.82%
Just Group (JUST) 80.15p 6.80%
Ferrexpo (FXPO) 188.00p 6.03%
Computacenter (CCC) 1,350.00p 5.14%
Thomas Cook Group (TCG) 77.85p 3.80%
UDG Healthcare Public Limited Company (UDG) 685.50p 3.24%
Playtech (PTEC) 504.60p 3.19%
Centamin (DI) (CEY) 103.90p 3.18%

FTSE 250 - Fallers

Fisher (James) & Sons (FSJ) 1,820.00p -5.41%
JD Sports Fashion (JD.) 452.00p -4.94%
Genus (GNS) 2,426.00p -4.53%
Alfa Financial Software Holdings (ALFA) 148.80p -3.75%
IP Group (IPO) 125.20p -3.69%
Renewi (RWI) 62.10p -3.62%
McCarthy & Stone (MCS) 123.80p -3.51%
Workspace Group (WKP) 997.00p -3.48%
Galliford Try (GFRD) 1,031.00p -3.19%
JPMorgan Indian Investment Trust (JII) 642.00p -3.17%

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