LONDON MARKET CLOSE: Pound Weighs On FTSE As Market Bets On Tory Win

(Alliance News) - London shares ended mixed on Thursday with the strong pound weighing on the FTSE 100, as investors anticipate the prospect of a victory for the Conservative Party in the upcoming general election.

The FTSE 100 closed down 50.65 points, or 0.7%, at 7,137.85. The FTSE 250 ended up 41.85 points, or 0.2%, at 20,707.33, and the AIM All-Share closed down 1.44 points, or 0.2%, at 906.05.

The Cboe UK 100 ended down down 0.5% at 12,111.74, the Cboe UK 250 closed up 0.3% at 18,628.57, but the Cboe Small Companies ended up 0.1% at 11,394.52.

"The FTSE 100 has been volatile over the past month but is roughly back where it was at the start of November, in line with the subdued movements in overseas indices. After underperforming the FTSE 100 for the last two years, the prospect of a Conservative win in the general election and a Brexit deal has brought the more domestically-exposed FTSE Local back into line with the main index," analysts at Capital Economics said.

In Paris the CAC 40 ended flat, while the DAX 30 in Frankfurt ended down 0.7%.

The pound was quoted at USD1.3150 at the London equities close, up from USD1.3118 at the close Wednesday - trading at seven month highs, with one week to go until the UK general election.

Capital Economics said the market has "almost fully priced" in a Conservative Party election win and a Brexit deal, however a Labour victory could lead to a sharp drop in sterling and equity prices.

"While investors still see a good chance of a rate-cut in the near term, the increasing probability of a Conservative majority has pushed up interest rate expectations further out. Finally, we think that investors' fear of higher taxes resulting would result a sharp drop in equity prices if there is a surprise result and Labour managed to form a government. What's more, specific industries would be even harder hit by nationalisation plans and windfall taxes," analysts at Capital Economics said.

On the London Stock Exchange, Glencore ended the worst performer, down 9% after the UK Serious Fraud Office has opened an investigation into "suspicions of bribery in the conduct of business" at the commodities house.

Glencore said it will co-operate with the investigation.

The SFO in a short statement said: "Following the announcement by Glencore PLC, the SFO confirms it is investigating suspicions of bribery in the conduct of business by the Glencore group of companies, its officials, employees, agents and associated persons."

DS Smith closed down 7.2% despite the packaging firm reported an improved performance in the first half of its current financial year and said it expects further growth in the remainder.

The FTSE 100-listed firm said pretax profit grew by 31% in the six months to the end of October to GBP213 million, as revenue climbed by 3.9% to GBP3.19 billion. On a constant currency basis, revenue increased by 3%.

"It may have been neatly packaged up in an apparently robust set of first half results from DS Smith but investors haven't missed the fact that organic volume growth for its corrugated boxes is below target and pricing is under pressure," noted AJ Bell's Russ Mould.

Peers Smurfit Kappa and Mondi closed down 3.5% and 1.4%, respectively.

TUI closed down 4.1% after Commerzbank cut the Anglo-German travel operator to Hold from Buy.

In the FTSE 250, Dunelm Group closed up 20% after the homewares retailer confirmed the "successful" transition of all of its customers to a new digital platform and said it now expects annual profit to beat its previous forecasts.

Aston Martin Lagonda closed up 18% after Autocar magazine reported that billionaire Lawrence Stroll is preparing a bid to buy a major stake in the luxury carmaker.

Lawrence Stroll is father of Formula 1 race car driver Lance Stroll and owner of F1 team Racing Point.

The euro stood at USD1.1096 at the European equities close, up from USD1.1087 late Wednesday.

In economic news from the continent, the eurozone gross domestic product grew in broadly line with prior forecasts for the third quarter, data showed.

The eurozone economy expanded 0.2% sequentially in the third quarter of 2019, in line with prior estimates as well as the second quarter's reading. Annually, GDP rose by 1.2% in the euro area, which also matched the second quarter's growth rate, though upwardly revised from the 1.1% previously estimated for the third quarter.

Elsewhere, eurozone construction companies saw a slight rise in activity during November, IHS Markit surveys showed. The eurozone construction purchasing managers' index was little changed at 50.6 in November from 50.7 in October. Any reading over 50 indicates expansion in the sector, implying eurozone construction firms saw minimal growth in November.

Against the yen, the dollar was trading at JPY108.71, marginally lower than JPY108.80 late Wednesday.

Stocks in New York were lower at the London equities close were flat as positive momentum was hit by news the US Congress is moving ahead in the impeachment of President Donald Trump.

House Speaker Nancy Pelosi ordered articles of impeachment to be drawn up which will lead to a trial in the Senate, saying Trump's abuse of power for political benefit "leaves us no choice but to act".

Meanwhile, the US Labor Department will unveil the latest employment figures on Friday, and the economy is expected to have added 180,000 new jobs in November, up from 128,000 in October. The unemployment rate is expected to hold steady at 3.6%.

Brent oil was quoted at USD63.72 a barrel at the London equities close, up from USD63.26 at the close Wednesday.

Oil prices were higher as the Organisation of the Petroleum Exporting Countries convened in Vienna, Austria, with expectations raised over whether the cartel will make further cuts to its output at the two-day gathering.

The cuts of 1.2 million barrels per day from October 2018 levels were originally fixed in December last year and were already extended at OPEC's last meeting in July.

Some observers say fresh production cuts and a boost to prices would suit Saudi Arabia as it tries to support the IPO of its national oil company Aramco.

Saudi Aramco priced its IPO at the high end of the target range and raised USD25.6 billion, according to media reports. Aramco shares will sell on the Riyadh stock exchange at a starting prices of SAR32 riyals, around USD8.53, putting the value of the company at USD1.7 trillion, making it the biggest company ever.

Gold was quoted at USD1,477.30 an ounce at the London equities close, up from USD1,473.24 late Wednesday.

The economic events calendar on Friday has Germany industrial production data at 0700 GMT, UK Halifax house price index data at 0830 GMT and the US jobs report at 1330 GMT.

The UK corporate calendar on Friday has interim results from housebuilder Berkeley Group.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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