LONDON MARKET CLOSE: Pound Lower With Johnson And Corbyn To Square Off

(Alliance News) - Stocks in London ended higher on Tuesday, with gains in the FTSE 100 supported by a weakening pound as the leaders of the UK's two main political parties get set to face off in the first televised debate of the general election campaign.

The FTSE 100 index closed up 16.10 points, or 0.2%, at 7,323.80. The FTSE 250 ended up 87.98 points, or 0.4%, at 20,528.48, and the AIM All-Share closed up 2.69 points, or 0.3% at 896.79.

The Cboe UK 100 index finished up 0.2% at 12,401.07. The Cboe UK 250 closed up 0.5% at 18,462.91 and the Cboe UK Small Companies ended down 0.1% at 11,274.76.

"The FTSE 100 has outperformed its peers, as a wider bullish sentiment has been enhanced by declines in the pound. On a day largely devoid of major UK news, markets will be following tonight's election debate as a potential driver of sentiment for the pound," said IG Group's Josh Mahony.

"Given the double-digit lead for Boris Johnson's Conservative party, there is a feeling that tonight's debate is more likely to hinder that lead than enhance it. Johnson's advisors largely kept him out of the spotlight during the leadership race back in July, and thus there is a worry for some that he could come unstuck when faced by a Labour grilling tonight," Mahony added.

In Paris the CAC 40 index ended down 0.4%, while the DAX 30 in Frankfurt ended up 0.1%.

On the London Stock Exchange, Halma ended the best large-cap performer, up 8.5%.

The hazard detection and life protection products supplier said "good organic and acquired growth" resulted in a strong year-on-year rise in first half earnings.

For the six months to September 30, Halma recorded pretax profit of GBP105.8 million, up 12% from GBP94.5 million in the year-ago period. Revenue increased by 12% year-on-year to GBP653.7 million from GBP585.5 million. The revenue growth was attributed to good organic constant currency revenue growth of 5%, a 4% contribution from acquisitions, and a positive currency translation effect of 3%.

Halma raised its interim dividend 7.0% to 6.54p per share from 6.11p a year ago.

Intertek closed up 3.7% after Jefferies raised the testing and inspection company to Buy from Hold. Analysts at the investment bank said Intertek's high surplus capital can be deployed into further shareholder returns.

In the FTSE 250, PureTech Health ended the best performer, up 16%. Shares in the healthcare firm continued to rise after its 32%-owned investment Karuna Therapeutics on Monday reported positive phase II trials on schizophrenic patients.

Shares in Nasdaq-listed Karuna Therapeutics were up 36% in New York.

easyJet closed up 5.3% after the budget airline reported a "strong" end to its recent financial year, with financial results meeting expectations.

The low cost carrier's pretax profit for the year to September was 3.4% lower at GBP430 million, with the headline figure dipping 26% to GBP427 million. This is towards the top of the guided range of GBP420 million to GBP430 million, for headline pretax profit.

Revenue was 8.3% higher at GBP6.39 billion, with passenger numbers rising 8.6% to 96.1 million. easyJet said revenue growth was also helped by a 10% increase in capacity.

The company also announced a new Holidays business as well as a plan to make all flights net zero carbon.

Languishing at the other end of the midcap index, Equiniti Group ended the worst performer, down 13%. The financial services administration outsourcer said annual earnings will be at the lower end of expectations.

The company, which provides share registry, payroll and company secretarial services, said underlying earnings before interest, taxes, depreciation and amortisation for 2019 will be at the lower end of market estimates of between GBP136 million and GBP142 million due to lower activity in higher margin UK corporate business.

The pound was quoted at USD1.2929 at the London equities close, down from USD1.2969 at the close Monday.

As he gets set to go toe-to-toe with Labour leader Jeremy Corbyn in the first televised debate of the UK general election campaign, UK Prime Minister Boris Johnson said the chances of Britain crashing out of the EU at the end of 2020 without a trade deal in place are "absolutely zero".

Johnson expressed confidence that a re-elected Tory government would negotiate a free trade agreement within 11 months of the UK leaving the EU.

Under Conservative plans, Johnson would re-introduce his withdrawal agreement in the Commons with the intent of delivering Brexit by the current deadline of January 31.

This would mark the start of a transition period - set to run to the end of 2020 - in which the UK would have to abide by EU rules while negotiations on a trade deal take place.

However, Johnson's sceptics believe it is not enough time to get an agreement, opening up the prospect of the UK leaving without a deal unless he seeks an extension to the transition period.

Speaking during an election campaign visit to a boxing gym near Manchester, the PM was adamant there was no prospect of breaking with the EU at the end of 2020 without a trade agreement in place.

Morgan Stanley expects to see an orderly resolution to the Brexit conundrum, with a majority Conservative Party government the most likely scenario to emanate from the upcoming UK general election next month.

"We see a higher probability of a softer outcome (orderly Brexit/Remain) and see a 'no-deal' Brexit as less likely, since the Conservatives are campaigning on the basis of ratifying the current deal, and Labour are calling for a second referendum between Remain and a soft Brexit, making it hard to see a pathway through UK politics to a no-deal outcome," Morgan Stanley economist Jacob Nell said.

The euro stood at USD1.1080 at the European equities close, higher than USD1.1068 late Monday.

Against the yen, the dollar was trading at JPY108.56, flat against JPY108.55 late Monday.

Stocks in New York were lower at the London equities close, easing from record highs at the open in an absence of fresh signs of progress in US-China trade negotiations.

The DJIA was down 0.4%, the S&P 500 index down 0.2% and the Nasdaq Composite down 0.1%.

On the US corporate front, Home Depot was down 4.9% on Wall Street after the home improvement retailer downgraded its guidance, as sales failed to live up to expectations in the third quarter due to the timing of investment benefits.

Home Depot cut its guidance for its 2019 financial year, which has 52 weeks instead of the 53 weeks in its 2018 financial year. Sales are expected to rise 1.8% in financial 2019 and 3.5% on a comparable 52-week basis. Prior guidance was for 2.3% sales growth and 4.0% growth on a comparable basis.

Brent oil was quoted at USD61.16 a barrel at the London equities close, down from USD62.20 at the close Monday.

Gold was quoted at USD1,473.28 an ounce at the London equities close, up from USD1,469.08 late Monday.

The economic events calendar on Wednesday has Germany producer prices at 0700 GMT.

The UK corporate calendar on Wednesday has annual results from accounting software provider Sage Group and pub operator Mitchells & Butlers. There are also interim results from water company United Utilities and third-quarter results from DIY retailer Kingfisher.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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