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LONDON MARKET MIDDAY: Stocks Higher After MPs Vote To Delay Brexit

Fri, 15th Mar 2019 12:28

LONDON (Alliance News) - Stock prices in London were higher midday Friday after UK legislators approved a move to extend the timeline for the stuttering Brexit process, whilst Restaurant Group shares were a popular dish following the company's annual results.

The FTSE 100 index was 0.6% higher at 7,228.91 Friday midday. The FTSE 250 was up 0.7% at 19,420.05, and the AIM All-Share index was up 0.3% at 916.13.

The Cboe UK 100 index was up 0.5% at 12,270.72. The Cboe UK 250 was up 0.7% at 17,406.68, and the Cboe UK Small Companies up 0.3% at 11,159.24.

In mainland Europe on Friday, the CAC 40 in Paris was 1.0% higher and the DAX 30 in Frankfurt was up 0.9% at midday.

The pound was quoted at USD1.3256 at midday, down from USD1.3277 late Thursday.

London markets were higher on Friday following the decision by Parliament late Thursday to push for an extension to the Brexit process, capping a series of votes this week.

Late Thursday, UK lawmakers vote 413 to 202 in favour of seeking an extension to Article 50 from the European Union. Article 50 is the treaty clause that UK invoked to leave the EU on March 29.

Subsequently, Prime Minister Theresa May moved to put her much-maligned withdrawal deal in front of MPs for a third time. The deal already suffered a defeat in January with a 230 vote margin and another on Tuesday with a smaller but still hefty 149 vote margin.

"After a third night of voting this week here is where we stand: MPs will vote next Tuesday for a third time on Theresa May's Brexit proposal and if it is accepted the PM will ask the EU to postpone Brexit until 30 June", CityIndex Senior Market Analyst Fiona Cincotta said.

"Theresa May opted for one more vote despite being rejected by a vast majority twice because there are signs that Eurosceptic within the Tory party are shifting towards accepting the current deal rather than facing Britain staying in Europe for much longer," Cincotta continued. "If British lawmakers reject the PM's proposal yet again she will ask for a longer delay in Brexit which could stretch into a year or two."

Towards the top of the FTSE 100, TUI was 2.8% higher as it extended gains made on Thursday following an optimistic broker note.

On Thursday, the Anglo-German travel firm closed 3.7% higher after Morgan Stanley upgraded its rating to Overweight from Equal Weight with a 1,250 pence price target.

The US bank argued that TUI had an "attractive valuation" following a sharp fall in its share price. Although Morgan Stanley cut its profit expectations, it also believed TUI could benefit from a softer or delayed Brexit.

Berkeley Group was up 1.6% after the housebuilder reiterated its guidance over the next few years amid a stable trading environment.

Previously, Berkeley had guided for pretax profit for the two years to April 30 of at least GBP1.58 billion, with guidance for the five years ending April 2021 of at least GBP3.38 billion.

At its interim results in December, however, the company upgraded its pretax profit forecast for the current year "by more than 5%" with the split in profit across the year likely to be similar to previous years. Its guidance for the next two years, however, was unchanged.

On Friday, Berkeley confirmed its trading environment had remained "consistent with that experienced over the last two years". This "stability", the firm added, allowed it to "reiterate the updated pretax profit guidance".

The company added it had completed early its GBP139.7 million cash return. Berkeley has since committed to returning another GBP139.7 million to shareholders by the end of September 2019, thus far having returned GBP5.2 million through buybacks.

In the mid-cap FTSE 250, restaurant franchise operator Restaurant Group was topping the index, up 7.5% after like-for-like sales in 2019 were strong, despite reporting 2018 profit halved.

In 2018, pretax profit more than halved to GBP13.9 million from GBP28.2 million a year prior. This was despite revenue rising 1.0% to GBP686.0 million from GBP679.3 million the year prior. Like-for-like sales, however, were down 2.0%.

Profit performance at the Frankie & Benny's and Chiquito chain owner was hurt by GBP39.2 million exceptional charge due to an onerous lease review and a GBP14.8 million charge related to its GBP357 million acquisition of Wagamama in December.

Adjusted pretax profit - excluding one-off costs - was 8.1% lower at GBP53.2 million from GBP57.8 million the year prior.

In the ten weeks to March 10, Restaurant Group's like-for-like sales are up 2.8%, in line with management expectations.

Edison Investment Research analyst Paul Hickman said: "Restaurant Group's results show a decline but not a disaster. The end of 2018 could just mark a crucial inflexion point for the group, where it now has the critical mass to address the structural weakness of its traditional Leisure division while hopefully preserving the momentum of growth, debt control and a dividend stream. At this point, however, it is all still to be done."

"Wagamama is already in strong growth, which, together with its strategic potential for Restaurant Group, increases the justification for the high price paid for it," Hickman added. "Its third quarter like-for-like sales to February grew 9.1% making 9.7% in its year to date."

Pub operator EI Group was 3.2% higher after it announced a debt reduction programme and GBP35 million share buyback following the completion of the sale of an initial tranche of 348 properties.

EI will use the initial GBP333 million in net proceeds from the sale for these purposes. EI is still to receive a further GBP11.4 million gross funds from an outstanding sale of a further 22 properties.

Sandwich marker Greencore was at the bottom of the mid-cap index, down 3.4%, after Berenberg cut its rating on the stock to Hold from Buy. This was after it deemed 2019 as likely to be a "challenging year for UK food manufacturers" amid costs rises and more cautious spending patterns.

In European economic news, inflation accelerated in February to 1.5% on the year from a downwardly revised 1.4% in January. The January print for the consumer price index had initially been reported at 1.5%.

Core inflation, however, slowed to a year-on-year growth of 1.0% in February from an upwardly-revised 1.1% in January. The January figure was initially reported at 1.0%.

On Wall Street, the Dow Jones and S&P 500 are pointed to open 0.5% higher, whilst the Nasdaq is seen to open up 0.6%.

In the US economic calendar are industrial production figures due for release at 1315 GMT with consumer sentiment data printed at 1400 GMT.

By Ahren Lester;

Copyright 2019 Alliance News Limited. All Rights Reserved.

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