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London close: Stocks boosted by weak pound ahead of Fed minutes

By Alexander Bueso

Date: Wednesday 21 Aug 2019

London close: Stocks boosted by weak pound ahead of Fed minutes

(Sharecast News) - London stocks finished higher on Wednesday, helped by a weaker pound as investors eyed minutes from the US Federal Reserve\'s latest policy meeting which were due out later in the day.
The FTSE 100 was up 1.11% at 7,203.97, with the pound down 0.21% against the US dollar to 1.21434 and by 0.24% versus the euro to 1.0937, as Prime Minister Boris Johnson was set to meet German Chancellor Angela Merkel later in the day to discuss Brexit, among other things.

Sterling spiked higher briefly on Tuesday after Merkel said she would consider \"practical\" solutions on the Irish backstop. It had fallen earlier in the day after EU officials dismissed Johnson\'s attempts to re-negotiate Brexit and scrap the backstop.

Be that as it may, analysts at Barclays Research had shifted towards a \'hard Brexit\' as their base case scenario, projecting that slower economic growth would force Bank to slash policy interest rates by 50 basis points by mid-2020.

That view was seemingly also taking hold across the Channel, with an official from French President Emmanuel Macron\'s office telling Bloomberg that the Elysee was also anticipating that the UK would leave the European Union without a withdrawal deal.

The same official also said Macron and the German Chancellor were on the same page when it came to Brexit and that France was still expecting London to pay the £39.0bn Brexit bill.

Away from Brexit, investors were looking ahead to the release of the minutes from the Fed\'s July meeting, which were due out at 1900 BST.

London Capital Group analyst, Jasper Lawler said: \"The next move by the market depends greatly on what the Fed will do with interest rates. Given the current climate, the markets are ultra-sensitive to the Fed\'s outlook meaning that the FOMC minutes could be scrutinised more closely than usual. The market is fully pricing in a 25-basis point rate cut for the September meeting and a 50 point basis rate cut by the end of the year.\"

Lawler said investors would be looking for acknowledgement that downside risks had increased.

In equity markets, travel company TUI was the standout gainer, closely followed by luxury fashion brand Burberry.

Credit-checking firm Experian gained as it announced the acquisition of Look Who\'s Charging (LWC), an Australian provider of transaction enrichment and categorisation technology to banks, for an undisclosed sum.

Victrex was up after an upgrade to \'equalweight\' from Barclays, which highlighted 20% upside risk to consensus 2021 earnings per share estimates. Outsourcer Capita was boosted by an upgrade to \'buy\' from \'neutral\' at Goldman Sachs and Tullow Oil was lifted by an upgrade to \'buy\' from \'speculative buy\' at Canaccord Genuity.

On the downside, shares of BHP and Rio Tinto retreated amid falling base metals prices.

OneSavings Bank traded down after it reported a rise in interim profit ahead of its merger with rival Charter Court Financial, as the loan book grew amid high demand from its core market segment, but a drop in the net interest margin. The company also said it had tightened its underwriting criteria \"in light of the current macroeconomic outlook\".

Charter Court Financial was also on the back foot after its first-half results, which showed a drop in pre-tax profit.

Market Movers

FTSE 100 (UKX) 7,203.97 1.11%
FTSE 250 (MCX) 19,207.75 1.05%
techMARK (TASX) 3,858.81 1.57%

FTSE 100 - Risers

Burberry Group (BRBY) 2,204.00p 4.50%
NMC Health (NMC) 1,936.00p 4.09%
Flutter Entertainment (FLTR) 6,684.00p 3.89%
TUI AG Reg Shs (DI) (TUI) 789.00p 3.73%
Smith (DS) (SMDS) 332.60p 3.23%
Aveva Group (AVV) 3,920.00p 3.19%
DCC (DCC) 6,782.00p 3.01%
Ashtead Group (AHT) 2,178.00p 2.83%
Micro Focus International (MCRO) 1,621.60p 2.83%
Mondi (MNDI) 1,607.00p 2.68%

FTSE 100 - Fallers

Phoenix Group Holdings (PHNX) 643.50p -2.43%
Royal Bank of Scotland Group (RBS) 181.90p -1.41%
Legal & General Group (LGEN) 221.10p -1.29%
BHP Group (BHP) 1,713.80p -1.21%
BT Group (BT.A) 161.76p -0.66%
Tesco (TSCO) 214.30p -0.65%
Rio Tinto (RIO) 3,990.00p -0.49%
Lloyds Banking Group (LLOY) 49.52p -0.39%
Direct Line Insurance Group (DLG) 292.40p -0.20%
Evraz (EVR) 492.40p -0.12%

FTSE 250 - Risers

Amigo Holdings (AMGO) 166.20p 9.20%
Ted Baker (TED) 960.00p 6.08%
Entertainment One Limited (ETO) 438.20p 5.95%
Victrex plc (VCT) 1,998.00p 5.38%
Tullow Oil (TLW) 215.60p 4.31%
Bodycote (BOY) 692.50p 4.29%
Grafton Group Units (GFTU) 715.50p 4.00%
Softcat (SCT) 991.50p 3.82%
Marshalls (MSLH) 678.50p 3.59%
Marston\'s (MARS) 122.60p 3.55%

FTSE 250 - Fallers

OneSavings Bank (OSB) 337.80p -4.95%
Wood Group (John) (WG.) 410.40p -4.65%
Charter Court Financial Services Group (CCFS) 278.00p -4.63%
Mitchells & Butlers (MAB) 334.00p -4.57%
Woodford Patient Capital Trust (WPCT) 42.00p -4.00%
Kainos Group (KNOS) 491.00p -3.35%
TBC Bank Group (TBCG) 1,284.00p -2.88%
PureTech Health (PRTC) 285.00p -2.74%
Clarkson (CKN) 2,390.00p -2.65%
Intu Properties (INTU) 33.87p -2.59%

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