London midday: Stocks maintain gains as May defends Brexit deal
London stocks were holding on to gains by midday on Monday as investors digested Theresa May's speech to business leaders.
The FTSE 100 was up 0.3% to 7,035.20, while the pound was 0.2% higher against the dollar and the euro at 1.2864 and 1.1256, respectively, after May outlined at the annual Confederation of British Industry conference how industries would be protected under the Brexit plan, which would safeguard free flowing trade for car makers and food providers.
May said Brexit was about "getting a good deal that unlocks the opportunity of a brighter future for this country and all our people". She also said that while immigration will continue to make a positive contribution to UK life, EU nationals will no longer be able to "jump the queue" ahead of people from other parts of the world. Instead, the UK immigration system will be "built around the talent and skills" a person has to offer.
John Allan, president of the CBI, gave his backing to May's plans, saying it would avoid "the wrecking ball" that would be a no-deal Brexit, while the organisation's director-general, Carolyn Fairbairn, said the PM's agreement "is not perfect. It is a compromise. But it is hard-won progress."
David Cheetham, chief market analyst at XTB, said: "Business leaders would no doubt prefer an agreement with more favourable terms but the majority seem to be behind this treaty as it at least would provide some clarity and alleviate the cloud of uncertainty that has hung overhead since the referendum back in 2016."
Market participants were also digesting the latest comments from the EU's chief Brexit negotiator, Michel Barnier, who told a news conference that EU ministers generally approved of the draft agreement reached last week, which he called "fair and balanced". Barnier also suggested that the transition period could be extended to 2022. Under the draft withdrawal agreement published last week, the transition period would begin when the UK leaves the EU on 29 March 2019 and run until 31 December 2020.
Meanwhile, with the Brexit deal due to be finalised on Sunday, it remained to be seen whether the Conservative party grandees would collect the 48 letters necessary to trigger a vote of no-confidence in the PM.
Housebuilders Berkeley, Barratt Developments and Persimmon were all in the red as the latest Rightmove survey showed that house prices fell by 1.7% on the month in November versus a 1% increase in October. This marked the largest November drop since 2012, as new sellers priced their homes more realistically in the run-up to Christmas against a backdrop of stretched affordability and Brexit uncertainty.
On the year, house prices were down 0.2% compared to a 0.9% rise in September.
Rightmove said that while it is normal for seller asking prices to fall at this time of the year, cooling markets in the south and in the upper price sectors, along with political uncertainty, have resulted in new sellers lowering their asking price aspirations earlier than usual.
The biggest declines were seen in London, where the typical asking price dropped by 1.7%, or £10,793. Rightmove said this was not unexpected as the capital usually sees greater seasonal volatility tan the rest of the country.
Miles Shipside, Rightmove director and housing market analyst, said: "New sellers and their agents are reacting to market forces and lowering their pricing aspirations by more and sooner than usual. Stretched buyer affordability and the cooling markets in the south and in upper price brackets have combined with the ongoing political uncertainty to change pricing optimism into pricing realism."
Elsewhere, banks and retailers were on the rise following heavy losses last week, with B&Q owner Kingfisher and Lloyds Banking Group both firmer. In other sectors, miners were mostly in the green, while oil majors BP and Shell were up slightly in contrast to their smaller peers as oil prices levelled off, with Brent crude at not far off $67 a barrel.
Babcock International was in the green as it played down a weekend report about a large write-down that the defence contractor will have to take to its accounts this week. After Sky News reported that a near-£100m hit will be taken on the value of its helicopter business, the FTSE 250 group emphasised that it does "not expect the net cash costs to be material".
Diploma rallied as it posted a 9% jump in full-year adjusted pre-tax profit and said it remains confident of further progress in the coming year.
CYBG ticked up as it announced that chief operating officer Debbie Crosbie was stepping down to take on the role of chief executive officer at TSB Bank.
Intermediate Capital Group racked up strong gains again following well-received first-half results last week, as JPMorgan reiterated its 'overweight' stance on the stock and upped the price target to 1,450p from 1,440p.
Market Movers
FTSE 100 (UKX) 7,035.20 0.30%
FTSE 250 (MCX) 18,682.31 0.50%
techMARK (TASX) 3,404.75 0.75%
FTSE 100 - Risers
Micro Focus International (MCRO) 1,513.00p 3.38%
Pearson (PSON) 950.40p 2.15%
Kingfisher (KGF) 247.45p 1.92%
Morrison (Wm) Supermarkets (MRW) 248.50p 1.74%
3i Group (III) 809.00p 1.71%
Smith (DS) (SMDS) 357.60p 1.71%
Lloyds Banking Group (LLOY) 55.38p 1.61%
Fresnillo (FRES) 878.60p 1.57%
Sage Group (SGE) 564.20p 1.55%
Standard Chartered (STAN) 599.40p 1.51%
FTSE 100 - Fallers
Just Eat (JE.) 543.80p -2.02%
Ocado Group (OCDO) 754.20p -1.85%
Barratt Developments (BDEV) 496.70p -1.25%
Centrica (CNA) 143.65p -1.10%
SSE (SSE) 1,106.00p -1.07%
Johnson Matthey (JMAT) 2,968.00p -1.07%
British Land Company (BLND) 588.27p -1.06%
Croda International (CRDA) 4,850.00p -1.02%
GVC Holdings (GVC) 780.00p -0.89%
AstraZeneca (AZN) 6,167.00p -0.60%
FTSE 250 - Risers
Diploma (DPLM) 1,364.00p 5.33%
Hochschild Mining (HOC) 165.50p 4.52%
Lancashire Holdings Limited (LRE) 613.50p 3.98%
Kaz Minerals (KAZ) 547.40p 3.83%
Just Group (JUST) 88.70p 3.50%
Intermediate Capital Group (ICP) 1,021.00p 3.39%
Inchcape (INCH) 575.00p 3.14%
NewRiver REIT (NRR) 237.00p 2.60%
Crest Nicholson Holdings (CRST) 348.00p 2.59%
AA (AA.) 96.48p 2.55%
FTSE 250 - Fallers
Premier Oil (PMO) 79.35p -2.99%
Games Workshop Group (GAW) 2,920.00p -2.34%
On The Beach Group (OTB) 401.00p -2.20%
UDG Healthcare Public Limited Company (UDG) 629.00p -2.18%
Weir Group (WEIR) 1,495.00p -2.06%
Energean Oil & Gas (ENOG) 615.00p -1.91%
Hilton Food Group (HFG) 927.58p -1.74%
Hikma Pharmaceuticals (HIK) 1,710.50p -1.67%
Petrofac Ltd. (PFC) 530.00p -1.63%
Equiniti Group (EQN) 212.00p -1.62%