LONDON MARKET CLOSE: FTSE Hits March High Amid Brexit Deal Elation

(Alliance News) - Stock prices in Europe ended largely in positive territory on Tuesday, with the FTSE 100 surging to a nine-month high, getting a boost from both Christmas Eve's post-Brexit trade deal and the passage of a much-needed US stimulus bill.

It was the first day of trading in London financial markets since the abbreviated session on Christmas Eve. Last Thursday, the UK reached an agreement with the European Union which allows for continued tariff-free trade with the EU single market.

The blue-chip FTSE 100 index closed up 100.54 points, or 1.6%, at 6,602.65. The large cap index hit an intraday high of 6,676.60 in early trade - its highest reading since March.

The mid-cap FTSE 250 ended up 350.91 points, or 1.7%, at 20,897.59. The AIM All-Share closed up 22.00 points, or 2.0%, at 1,149.92.

The Cboe UK 100 ended up 1.6% at 658.10, the Cboe UK 250 rose 2.0% at 18,296.03, and the Cboe Small Companies ended up 1.5% at 11,755.17.

In Paris the CAC 40 ended up 0.5%, but the DAX 30 in Frankfurt ended down 0.1%.

EU ambassadors have given provisional approval for Britain's post-Brexit trade deal, which will be implemented from Friday.

A spokesman for the German EU presidency said the ambassadors had unanimously agreed to "green light" the settlement hammered out on Christmas Eve. It comes as UK MPs were preparing to vote on the deal in a special sitting of Parliament called for Wednesday.

The agreement came as ministers stepped up calls for businesses and individuals to prepare for the new procedures that will apply in just four days' time, regardless of the agreement.

Boris Johnson's post-Brexit trade deal with the EU has won the backing of the Brexiteer backbenchers, who have said the agreement "preserves the UK's sovereignty".

A self-styled "star chamber" of lawyers – led by senior Tory Bill Cash – was assembled by the European Research Group to examine the 1,246-page text of the agreement.

They concluded that the agreement "preserves the UK's sovereignty as a matter of law and fully respects the norms of international sovereign-to-sovereign treaties".

On the virus front, pressure is growing for the expansion of the toughest coronavirus restrictions in the face of increasing strain on hospitals in England where the number of patients has surpassed the April peak of the first wave.

Figures from NHS England show there were 20,426 patients in NHS hospitals in England at 0800 GMT on Monday, compared with 18,974 on April 12. The UK government said a further 357 people had died within 28 days of testing positive for Covid-19 as of Monday, taking the UK total to 71,109.

The number of further lab-confirmed cases recorded in a single day in the UK also hit a new high of 41,385 at 9am on Monday, rising above 40,000 for the first time, according to government figures.

UK Health Secretary Matt Hancock is due to announce any changes to tier areas in a statement to the Commons on Wednesday.

An expert adviser to the government said national coronavirus restrictions are needed to prevent a "catastrophe" amid rising infections, and the head of an organisation representing health trusts said "as much of the country as possible" should go into the harshest Tier 4.

The pound was quoted at USD1.3509 at the London equities close, down from USD1.3587 at the end of last Thursday's abbreviated session. The euro stood at USD1.2246 at the European equities close, up from USD1.2197.

Against the yen, the dollar was trading at JPY103.51, down from JPY103.62 at the early London equities close on Thursday and down from JPY103.79 at the New York stock market close on Monday.

Wall Street started the day with more records in its sights, as investors celebrated the US stimulus deal, which has tempered fears about surging coronavirus infections.

All three indices opened higher after notching closing highs on Monday. Though at the time of the London market close on Tuesday, Wall Street was mixed. The Dow Jones Industrial Average was flat, the Nasdaq Composite was down 0.1%, while the S&P 500 was up 0.1%.

US President Donald Trump signed into law the USD900 billion coronavirus relief bill and the USD1.4 trillion federal government budget on Sunday after days of delays. The move offers respite for investors following months of bickering between Democrats and Republicans over the size of the package.

In the latest developments, the US House of Representatives voted to increase Covid-19 relief cheques in the country to USD2,000, meeting Trump's demand for bigger payments and sending the bill to the Republican-controlled Senate, where the outcome is uncertain.

"Senate majority Leader Mitch McConnell will have to decide if he will present this bill for a vote. Even if the effort for bigger checks fails now, the goal posts have been moved and the Biden administration will have a better chance of passing additional stimulus once he is inaugurated," OANDA analyst Edward Moya said.

In London, drugmaker AstraZeneca rose 3.3% amid hopes the Anglo-Swedish drugmaker's coronavirus vaccine, created in partnership with Oxford University, will be rolled out imminently.

Over the weekend, the Sunday Telegraph reported the Oxford jab could be rolled out en masse from a few days into the new year.

According to the newspaper, the UK government hopes that the approval could mean more than two million could receive their first dose within a fortnight, with doses of the Oxford vaccine available from next Monday.

Elsewhere in London, the UK and EU post-Brexit trade deal had a mixed response, noted AJ Bell Investment Director Russ Mould.

"Multinationals, who are the likeliest beneficiaries of frictionless, tariff-free trade and overseas currency earners are generally leading the charge in the FTSE 100, including Intertek and Diageo. Yet the laggards are nearly all banks and providers financial services, a trend which can also be seen in the FTSE 250 where asset managers and insurers such as Ninety One and Sabre are among the day's losers," Mould explained.

Guinness owner Diageo rose 4.5% while assurance, inspection, product testing firm Intertek climbed 3.0%. Ninety One fell 1.0% while Sabre Insurance Group lost 2.3%.

The FTSE 100's banking sector was also worse off on Tuesday, amid uncertainty over future implications of the UK's Brexit deal on the financial services sector.

Lloyds Banking shed 4.8%, Barclays dropped 3.0% and NatWest ended down 3.3%. In Frankfurt's DAX index, Deutsche Bank was down 3.0%. The financial services firm employs about 7,000 in London.

"[The deal] leaves a cloud of uncertainty hanging over London financial markets, and investors will have to wait until January to learn what type of access UK banks have to the single market," explained Axi's Stephen Innes.

Admiral Group rose 3.4%. The insurer said it has reached an agreement with ZPG Comparison Services Holdings UK's RVU business over the sale of the insurer's Penguin Portals and Preminen comparison businesses, for a total value of GBP508 million.

Penguin Portals is made up of online comparison portals Confused.com, Rastreator.com and LeLynx.fr, technology operations Admiral Technologies and its 50% share of Preminen Price Comparison Holdings. Admiral's US comparison business, compare.com, is not included in the transaction, the insurer noted, and it also said the deal will "slightly reduce" its future earnings.

Cardiff-based Admiral expects net proceeds of around GBP450 million, with a majority of this to be returned to shareholders.

On the AIM market, THG Holdings closed up 8.9%. The Hut Group owner agreed to acquire US-based online skincare and specialty beauty brands retailer Dermstore.com, for USD350 million in cash from major retailer Target Corp, subject to US regulatory approval.

THG said the Dermstore.com acquisition provides the opportunity to accelerate the growth of its own beauty brands via a new and large US customer base.

In addition, THG acquired two of its long-standing UK-based nutrition product suppliers, Claremont Ingredients and David Berryman, for a combined purchase price of GBP59.5 million in cash.

Brent oil was quoted at USD51.16 a barrel at the equities close, up from USD50.74 at the London market close on Thursday last week. Gold rose to USD1,882.29 an ounce, against USD1,874.60.

A quiet economic calendar on Wednesday has the UK's Nationwide house price index at 0900 GMT before US goods trade balance numbers at 1330 GMT.

By Eric Cunha; ericcunha@alliancenews.com

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