(Alliance News) - Stocks in London ended higher on Thursday as investors shrugged off the impeachment of US President Donald Trump, while Brexit dominated the proceedings at the Queen's Speech.
The FTSE 100 index closed up 33.07 points, or 0.4%, at 7,573.82. The FTSE 250 ended up 3.01 points at 21,666.14, and the AIM All-Share closed up 3.04 points, or 0.3%, at 938.27.
The Cboe UK 100 ended up 0.2% at 12,833.24, the Cboe UK 250 closed down 0.1% at 19,554.19, and the Cboe Small Companies ended up 0.4% at 12,001.18.
In Paris the CAC 40 ended up 0.2%, while the DAX 30 in Frankfurt ended down 0.1%.
"Stock markets are primarily in the green today, as tentative optimism continues to help drive equities higher in response to recent breakthroughs in the UK and US. Comments from Steve Mnuchin point towards the US-China deal being signed in early-January, ensuring that we should have a key driver of market gains play out throughout the festive period," said IG Group's Josh Mahony.
In the FTSE 100, Just Eat closed up 2.2% at 819.93 pence after Dutch firm Takeaway.com increased its own offer for the London-listed online takeaway platform soon after Prosus did the same.
Takeaway.com is now offering an all-share merger with FTSE 100 takeaway platform Just Eat worth 916 pence per Just Eat share, compared to a previous 731p offer. Just Eat shares were 0.9% higher late on Thursday in London at 811.20p.
The new bid, which is final, will see Just Eat shareholders' stake in the enlarged company rise, to 58% from 52% under the previous offer. Just Eat shareholders will receive 0.12111 of a Takeaway.com share for each Just Eat share, up from 0.09744.
Takeaway.com shares closed down 8.9% in Amsterdam following its announcement.
At the other end of the large cap index, NMC Health ended the worst performer, down 11% amid a volatile week for the UAE-focused healthcare provider. NMC Health shares have shed 39% in the week so far after short seller Muddy Waters alleged "rot" at the FTSE 100 constituent, with NMC Health hitting back at the "baseless" claims.
"NMC Health shares tumbled as traders continue to be cautious of the stock as earlier in the week a report circulated that there were concerns about the company's accounting. The company have hit back at the report, and they described it as 'baseless'. Traders have been caught out by accounting scandals too many times before, so whenever a firm's financial statements are being called into question, there is usually a rush for the exit. While the fear factor circulates, the share price is likely to remain under pressure," said CMC Markets analyst David Madden.
TUI closed down 3.0% after Berenberg cut the Anglo-German travel operator to Hold from Buy. TUI is making a "strategic error" by letting focus drift from its tour operator business, Berenberg said in a note. TUI should be focusing on its vertically integrated offering following investments in hotels and cruises rather than pursuing entirely different avenues of growth, such as its online travel agent.
In the FTSE 250, JD Wetherspoon ended the worst performer, down 5.2% after HSBC cut the pub chain to Hold from Buy.
The pound was quoted at USD1.3015 at the London equities close, down from USD1.3070 at the close Wednesday, as the Queen performed the State Opening of Parliament for the 66th time following the Conservative Party's decisive election win last Friday.
Conservative MPs cheered as the Commons agreed to sit on Friday to consider legislation required to implement UK Prime Minister Boris Johnson's Brexit deal.
The EU Withdrawal Agreement Bill will be debated at second reading before the Commons breaks for Christmas.
Johnson unveiled the "most radical Queen's Speech in a generation" with measures to toughen up criminal justice, invest in the National Health Service and deliver on the "people's priorities".
Of the 25 Bills detailed in Johnson's second Queen's Speech in less than three months, seven are devoted to the UK's departure from the EU and contained legislation on trade, agriculture, fisheries, immigration, financial services and private international law.
Analysts at Danske Bank said: "Boris Johnson will ease fiscal policy but due to the fiscal policy lag, it takes time before we see an impact on actual growth. We also think that it is too early to say Brexit-related uncertainties are diminishing. It is true that we now know with certainty that the UK is leaving the EU by 31 January 2020 but as highlighted many times there is still a risk of a no-deal Brexit by year-end 2020 if the EU and the UK cannot agree on a permanent deal.
"If this happens, the EU and the UK will trade on WTO terms from 1 January 2021. This has not been made easier by PM Boris Johnson, as it will be written into law that the transition period cannot be extended into 2021 or 2022. With continued elevated political risk, we doubt business investments will rebound, as companies will await the outcome of the upcoming negotiations before taking investment projects up from the drawer again."
Elsewhere, the Bank of England held interest rates at 0.75% before Brexit next month, but left the door open to a reduction in the event of fresh turmoil.
The Monetary Policy Committee voted 7-2 to hold borrowing costs, according to minutes of the two-day December gathering, with policymakers Jonathan Haskel and Michael Saunders repeating their November call for a 0.5 percentage point cut.
Thursday's decision was the first since Johnson's election triumph, and comes ahead of the UK's departure from the EU on January 31 - when BoE Governor Mark Carney is due to step down.
The BoE's chief task is to keep British 12-month consumer price inflation close to a 2.0% target.
"If global growth fails to stabilise or if Brexit uncertainties remain entrenched, monetary policy may need to reinforce the expected recovery in UK GDP growth and inflation," the bank's meeting minutes said.
In the absence of those risks and if the economic recovery strengthens as expected, the central bank added it may need to tighten policy to keep inflation on target.
Analysts at Pantheon Economics said: "Despite the subdued medium-term outlook, we think the MPC is more likely to hike than to cut Bank Rate next year. At 0.75%, rates are well below the neutral range of 1.5% to 2.0%. Brexit will inflict more damage to potential supply than demand, and will raise costs and prices across the board. Granted, the headline rate of CPI inflation looks set to remain below-target until late 2020. But it will be driven by falls in energy and imported goods prices. Importantly, domestically-generated inflation has risen over the last year and has further to increase; firms do not have infinite capacity to absorb rapid increases in unit wage costs.
"That said, the outlook for monetary policy will depend on Carney's successor, who is due to take over in February. The PM might choose someone willing to keep rates low for long, in order to mask the costs of Brexit. While the Governor is just one of nine Committee embers, others will step down if they do not get the top job. Visibility on the outlook for interest rates, therefore, is poor."
The euro stood at USD1.1111 at the European equities close, marginally lower than USD1.1125 late Wednesday.
Against the yen, the dollar was trading at JPY109.28, lower than JPY109.52 late Wednesday.
Stocks in New York were higher at the London equities close, as investors shrugged off a House vote which made President Donald Trump the third US leader to face impeachment.
The DJIA was was up 0.3%, the S&P 500 index up 0.2% and the Nasdaq Composite up 0.3%.
Lawmakers in Washington voted Wednesday evening along party lines, formally accusing Trump of abuse of power and obstruction.
In the US House of Representatives where a majority vote was enough to pass impeachment, two thirds of senators will need to vote to remove Trump from office.
In the Senate there are 100 senators, meaning 67 would need to vote in favour of an impeachment. However this seems unlikely to pass with the Democrats only having 47 senators on Capitol Hill, meaning 20 opposition senators would have to back the move.
In US history only two presidents have been impeached, Andrew Johnson in February 1868 and more infamously, Bill Clinton whose impeachment process lasted from October 1998 to February 1999. Neither Johnson or Clinton were removed from office. Johnson survived by one vote but failed to win party's nomination for the next election, while Clinton left office after his second term expired.
OANDA markets analyst Edward Moya said: "Markets should not see much of a reaction with the president's impeachment saga as it is unlikely for the Democrats to get two-thirds of the vote in the Senate to convict Trump.
"Comparisons to President Bill Clinton's impeachment is suggesting to many investors that we could continue to stocks outperform throughout the whole process. During Clinton's 5-month impeachment process that finished in February of 1999, the S&P 500 index gained over 26%. Clinton however had much of his rally based on the dotcom bubble, while Trump has his based on massive stimulus from central banks globally."
Brent oil was quoted at USD66.50 a barrel at the London equities close, up from USD66.12 at the close Wednesday.
Gold was quoted at USD1,476.20 an ounce at the London equities close, firm from USD1,475.70 late Wednesday.
The economic events calendar on Friday has GDP readings from the UK and US at 0930 GMT and 1330 GMT respectively. In addition, there are US personal consumption expenditure figures due at 1330 GMT - the core reading is the US Federal Reserve's preferred gauge of inflation.
The UK corporate calendar on Friday has annual results from utility Jersey Electricity. In the afternoon, Anglo-American cruise line operator Carnival is expected to release fourth quarter earnings.
By Arvind Bhunjun; arvindbhunjun@alliancenews.com
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