London close: Stocks cling onto gains as pound slides
London stocks held on to slight gains on Monday as the pound slumped back and Wall Street started on the back foot but the UK's major miners saved the day as copper prices rose.
The FTSE 100 added just under six points to close at 7,671.53, though the mid caps of the FTSE 250 fell slightly.
Sterling slipped 0.7% against the dollar to 1.4060 as the greenback gained back some of the ground lost last week and worries emerged about the Brexit transition. Sterling was down 0.2% versus the euro at 1.1372. A weaker pound tends to underpin the top-flight index as around 70% of its constituents derive most of their earnings from overseas.
Sterling slipped against the dollar and the euro after fresh concerns about political uncertainty in the UK and a rebuff by the EU over Britain's position during a Brexit transition period.
After weeks of merciful quiet, UK-EU negotiations are looking like restarting "in a spirit of mutual acrimony", said market analyst Chris Beauchamp at IG.
He added: "The EU’s frustration with the lack of a clear British offer has been reflected in their decision to deny the departing nation any official say during the transition period. This has been enough to take some heat out of sterling’s rally, with the euro gaining against the pound and cable dropping back"
The pound fell against all major currencies after weekend reports that Prime Minister Theresa May could face a leadership challenge with her Conservative MPs divided over the course of Brexit. Meanwhile, the EU ruled out Britain having a say on policy matters after March 2019 when the country will start an interim period that could last two years as it prepares to leave the bloc.
Traders were "salivating with excitement" at the prospect of volatility returning, Beauchamp said, with the VIX index back to highs last seen around two weeks ago.
But London's benchmark index only lumbered higher thanks to a strong performance from its heavily-weighted mining sector, as copper prices advanced to help lift shares in Glencore, Rio Tinto and Anglo American, even though usual effect of a stronger dollar is to push down commodities prices.
There were no major UK data releases due on Monday, though a meeting in Brussels will formally agree negotiating terms on the Brexit transition period.
Things will pick up on Tuesday with the release of UK net lending and mortgage approvals and an important Brexit debate in the House of Lords and get busier stateside too, with President Donald Trump’s State of the Union Address, while the Fed meeting on Wednesday and non-farm payrolls on Friday will also be market highlights.
In corporate news, Anglo American rose after announcing the sale of the New Largo thermal coal project and Old New Largo closed colliery in South Africa for ZAR 850m ($71m).
After the close, Peppa Pig owner Entertainment One revealed it has agreed to acquire the remaining 49% share of the Mark Gordon Company following the successful performance of the business so far, with TV guru Mark Gordon to join the London-listed company as president and chief content officer.
Relx Group ticked up after agreeing to buy California-based security technology company ThreatMetrix for £580m in cash.
John Laing Infrastructure advanced as it said there would be “minimal” service disruption from the Carillion collapse but that it expects additional advisory and transaction costs to be approximately £3m in aggregate.
GKN nudged a touch lower as it looked to clear up a dispute over its pensions deficit as it battles to stave off a hostile takeover from smaller rival Melrose Industries. The FTSE 100 group said its group pension scheme's deficit stood at £0.7bn on one basis of accounting at the end of December, or could be as low as £0.4bn on an actuarial basis or as high as £1.4bn if gilt yields do not rise.
On the broker note front, Smurfit Kappa got a boost as Numis upped its price target on the stock to 2,800p from 2,600p ahead of its results on 7 February, while Shire was lifted by a bullish note from SocGen.
EasyJet flew lower after a downgrade to ‘market perform’ at Bernstein, while Diageo dropped after a downgrade to ‘sector perform’ at RBC Capital Markets and Polymetal was hit by a downgrade to ‘underweight’ at JPMorgan.
Market Movers
FTSE 100 (UKX) 7,671.53 0.08%
FTSE 250 (MCX) 20,577.92 -0.18%
techMARK (TASX) 3,477.55 0.16%
FTSE 100 - Risers
Glencore (GLEN) 415.35p 3.26%
Rio Tinto (RIO) 4,024.50p 2.08%
Carnival (CCL) 5,020.00p 1.62%
BAE Systems (BA.) 588.40p 1.55%
Smurfit Kappa Group (SKG) 2,566.00p 1.50%
Schroders (SDR) 3,771.00p 1.45%
SSE (SSE) 1,300.00p 1.44%
Scottish Mortgage Inv Trust (SMT) 477.00p 1.27%
Anglo American (AAL) 1,756.00p 1.23%
Johnson Matthey (JMAT) 3,334.00p 1.21%
FTSE 100 - Fallers
Severn Trent (SVT) 1,970.50p -1.97%
Old Mutual (OML) 235.90p -1.62%
United Utilities Group (UU.) 736.60p -1.58%
British American Tobacco (BATS) 4,868.00p -1.30%
Next (NXT) 5,152.00p -1.26%
Standard Chartered (STAN) 838.70p -1.24%
Diageo (DGE) 2,529.50p -1.15%
Barclays (BARC) 207.65p -1.12%
British Land Company (BLND) 679.40p -1.02%
BT Group (BT.A) 260.25p -1.01%
FTSE 250 - Risers
Intermediate Capital Group (ICP) 1,164.00p 3.47%
Ferrexpo (FXPO) 310.60p 3.33%
Barr (A.G.) (BAG) 648.00p 2.70%
HICL Infrastructure Company Ltd (HICL) 144.80p 2.62%
Galliford Try (GFRD) 1,153.00p 2.50%
John Laing Infrastructure Fund Ltd (JLIF) 116.60p 2.47%
RPC Group (RPC) 837.40p 2.24%
Stobart Group Ltd. (STOB) 253.00p 2.02%
Ultra Electronics Holdings (ULE) 1,537.00p 1.78%
Cairn Energy (CNE) 220.80p 1.75%
FTSE 250 - Fallers
AA (AA.) 142.85p -4.35%
TalkTalk Telecom Group (TALK) 134.10p -4.08%
Tullow Oil (TLW) 210.60p -3.71%
Dignity (DTY) 875.50p -3.53%
Greencore Group (GNC) 202.20p -3.25%
Brown (N.) Group (BWNG) 207.20p -3.09%
Provident Financial (PFG) 681.00p -2.96%
Capital & Counties Properties (CAPC) 298.70p -2.76%
Hunting (HTG) 631.50p -2.55%
FDM Group (Holdings) (FDM) 926.00p -2.53%