27th Sep 2019 17:01
(Alliance News) - Stocks in London ended higher on Friday, with the FTSE 100 touching its highest level in two months, while sterling came under pressure following dovish comments from a Bank of England policymaker.
The FTSE 100 index closed up 75.13 points, or 1.0% at 7,426.21, ending the week up 1.1%. The internationally-exposed blue chip index hit an intraday high of 7,440.77 in early trade - its highest level in eight weeks.
The FTSE 250 ended up 152.34 points, or 0.8% at 19,970.95, ending the week down 1.1%, and the AIM All-Share closed up 1.47 points, or 0.2% at 872.70, ending the week down 1.6%.
The Cboe UK 100 ended up 0.9% at 12,696.56, the Cboe UK 250 closed up 0.8% at 17,837.42, and the Cboe Small Companies ended up 0.4% at 10,901.18.
CMC Markets analyst Michael Hewson said: "It's been a positive end to the week for markets in Europe with the FTSE100 leading the way closing at its highest levels since early August, despite a high profile company collapse (Thomas Cook), and three profit warnings, from IAG, Pearson and Imperial Brands.
"Today's gains have been helped to some extent by a decent rebound across all sectors, with the best gains coming from housebuilder Persimmon after being on the receiving of an upgrade to Buy from broker Jefferies, with the broker expressing confidence that the company can maintain its margins."
In Paris the CAC 40 ended 0.4% higher, while the DAX 30 in Frankfurt ended 0.8% higher.
On the London Stock Exchange, Persimmon ended the best blue chip performer up 5.2% after Jefferies raised the housebuilder to Buy from Hold.
"We calculate that on a five-years basis, Persimmon can return over half its market capitalisation, with scope further from the return of 'surplus cash'," said Jefferies.
At the other end of the large cap index, gold miners Fresnillo and Polymetal International ended the worst performers, down 3.7% and 2.5% respectively, tracking bullion prices lower.
Gold was quoted at USD1,491.45 an ounce at the London equities close, down from USD1,507.20 late Thursday.
In addition, a trio of blue chip constituents which issued profit warnings on Thursday, saw their losses extend on Friday.
Imperial Brands closed down 1.3%. Shares in the tobacco firm continued to fall after it warned on Thursday that the backlash against vaping and e-cigarettes in the US would weigh on revenue. The stock closed down 13% on Thursday.
Pearson ended down 1.1%. Shares in the education publisher continued to slide after it warned on Thursday that a drop in demand for US college textbooks would hurt earnings. The stock closed down 14% on Thursday.
Carnival closed down 0.7% after UBS downgraded the cruise line operator to Neutral from Buy and Berenberg cut the stock to Sell from Hold.
Carnival on Thursday lowered earnings guidance for both the fourth quarter and for the 12 months to the end of November due to higher fuel prices. The stock closed down 7.2% on Thursday.
The pound was quoted at USD1.2310 at the London equities close, lower than USD1.2358 at the close Thursday.
On the political front, the Government is reportedly considering using the supremacy of European law over UK legislation to take Britain out of the EU without a deal.
Downing Street said UK Prime Minister Boris Johnson intends to comply with the so-called Benn Act – legislation requiring him to extend the Brexit talks if no exit deal is in place by October 19 - but at the same time, take the country out of the bloc by the Halloween deadline.
City AM reported Johnson could deliver on these two seemingly opposing measures by pointing to the fact EU law - which the Article 50 deadline is a part of - supersedes British law in which the Benn Act is written.
The report suggests the UK could come out of the EU without a deal on October 31 if the Government can successfully argue the Article 50 deadline must be respected over the demands of the opposition members of parliament to extend negotiations until January.
Sterling hit an intraday low of USD1.2271 in early trade versus the greenback after Bank of England policymaker Michael Saunders said on Friday he expects to see continuing uncertainty in the UK, regardless of the outcome of negotiations with the European Union.
Speaking to business leaders in Yorkshire, he said: "If the UK avoids a no-deal Brexit, monetary policy also could go either way and I think it is quite plausible that the next move in the bank rate would be down rather than up."
The euro stood at USD1.0954 at the European equities close, broadly flat against USD1.0944 late Thursday.
Stocks in New York were mixed at the London equities close amid political uncertainty, with the DJIA up 0.4%, the S&P 500 index flat and the Nasdaq Composite down 0.1%.
"The major US indices have been spending several days in consolidation near their recent highs. As they haven't dropped more materially on the back of what should have been bearish news (e.g. Trump's impeachment inquiry; weak macro pointers from Germany and US, and ongoing uncertainties over the US-China trade issue, Brexit and the Middle East situation et al) is not exactly bearish, is it? In other words, the markets have absorbed bad news through time than price action. What can't break you makes you stronger," commented Forex.com analyst Fawad Razaqzada.
US Democrats vowed to move quickly on the impeachment investigation of President Donald Trump, saying the evidence of abuse of power from his Ukraine phone call and attempts to cover up wrongdoing were already clear.
An intelligence whistleblower's complaint showing Trump pressuring Ukraine's president to supply dirt on election rival Joe Biden left the White House reeling and Trump doubling down with an implicit threat against witnesses to the call.
"The clarity of the president's actions is compelling and gave us no choice but to move forward," said House Speaker Nancy Pelosi.
Pelosi said House Intelligence Committee Chairman Adam Schiff, who accused Trump of acting like a "mafia boss" this week, would take the lead in the investigation.
Trump wasted little time to go on the offensive with a series of Twitter attacks on Schiff, who has already asked that the whistleblower, identified by the New York Times as a CIA officer who once worked in the White House, testify before his committee.
He accused Schiff of "fraudulently" reading the official White House memorandum of the Ukraine call in a hearing on the whistleblower's complaint Thursday.
On the economic front, US consumer spending slowed more than expected in August, according to the Commerce Department.
Personal consumption expenditures, or household spending, nudged up a seasonally adjusted 0.1% in August from July, the Commerce Department said. The modest growth marked a sharp pullback from July, when spending rose 0.5%, and was the weakest performance since February.
Core personal consumption expenditure in the US in August climbed 0.1% on July, while on the year, core personal consumption expenditure climbed 1.8%, after 1.7% growth in July.
The core reading is the US Federal Reserve's preferred gauge of inflation.
Brent oil was quoted at USD62.36 a barrel at the equities close, up from USD61.78 at the close Thursday.
The economic events calendar on Monday has China manufacturing PMI data at 0245 BST, Germany unemployment figures at 0855 BST and inflation at 1300 BST. There is also UK GDP readings at 0930 BST.
The UK corporate calendar on Monday has interim results from Woodford Patient Capital Trust.
By Arvind Bhunjun; [email protected]
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