LONDON MARKET CLOSE: Stocks Ride Wave Of Brexit Deal Optimism

(Alliance News) - Stocks in London ended higher on Thursday after the UK and EU reached a new Brexit deal following last-ditch talks, focus now shifts to whether the deal will be ratified by Parliament on Saturday.

The FTSE 100 index closed up 14.37 points, or 0.2%, at 7,182.32. The FTSE 250 ended up 33.15 points, or 0.2%, at 20,221.11, and the AIM All-Share closed up 3.03 points, or 0.3%, at 882.64.

The Cboe UK 100 ended up 0.3% at 12,206.26, the Cboe UK 250 closed up 0.1% at 18,173.98, and the Cboe Small Companies ended up 0.4% at 11,102.89.

In European equities, the CAC 40 in Paris ended down 0.4%, while the DAX 30 in Frankfurt closed down 0.1%

CMC Markets analyst David Madden said: "The news raised sentiment around Europe as it seems that we are approaching the end game of the drawn out political process.

"In keeping with their tradition, the DUP have said no to the deal, but some elements of the Conservative Party's eurosceptic wing have backed the agreement. The mood is upbeat as things are moving forward from a political point of view, but Saturday's vote in the House of Commons will be make or break for the Brexit deal."

The pound was quoted at USD1.2831 at the London equities close, flat against USD1.2834 at the close Wednesday, as UK Prime Minister Boris Johnson faces an uphill struggle to get his freshly brokered Brexit deal struck with the European Union through the Commons.

Following days of intense negotiations, Johnson announced an agreement had been reached with Brussels as he headed to a summit of EU leaders on Thursday.

Sterling surged to an intraday high against the greenback of USD1.2988 immediately after news of the agreed deal broke - its highest level since mid-May.

However, sterling's gains were short-lived, slipping to an intraday low of USD1.2750 in afternoon trade as it emerged the Democratic Unionist Party - which props up Johnson's minority UK government - would not give its blessing to the deal.

With the Commons expected to sit on Saturday to go over the deal, the first weekend session of Parliament for 37 years, the DUP insisted it still could not yet back the government's EU withdrawal plans.

The DUP statement said: "As things stand, we could not support what is being suggested on customs and consent issues, and there is a lack of clarity on VAT."

Further, European Commission President Jean-Claude Juncker heaped pressure on MPs to back Johnson's last-minute Brexit deal by ruling out any further delay to the UK's departure from the EU.

Juncker categorically refused to extend Article 50 once again, after the PM called on Parliament to "come together and get Brexit done".

Analysts at FXPro commented: "Northern Ireland's Democratic Unionist Party maintained on Thursday that it will not support the agreement in its current form. That raised doubts, whether Johnson will be able to win the British parliament's approval on a special parliamentary session on Saturday.

"Besides this, formally, the deal is not signed yet by EU leaders, while pessimistic remarks from France President Macron washed away the spark of recent optimism."

In the FTSE 100, Rentokil Initial closed up 2.4% after the pest control company recorded its highest level of quarterly organic growth in over a decade, with the company on track to meet expectations for 2019.

Revenue from continuing operations, or ongoing revenue, for the three months to September 30 increased 14% year-on-year to GBP723.0 million, with organic revenue rising 5.5% versus 4.1% a year ago. Acquisitions in the quarter contributed 4.3% to ongoing revenue. Reported revenue for the third quarter grew 13% year-on-year to GBP727.2 million.

Unilever closed up 1.1% after the consumer goods giant said emerging markets have performed well, though Europe, North America and China remain weaker.

For the three months to September, Unilever's underlying sales growth was 2.9%, with revenue reaching EUR13.25 billion. Volumes increased by 1.4%, and prices by 1.5%. Unilever said the Emerging Markets segment was particularly strong, with quarterly underlying sales growth of 5.1% to USD7.8 billion.

At the other end of the large cap index, BAE Systems ended the worst performer, down 1.1% after the stock went ex-dividend, meaning new buyers no longer qualify for the latest payout.

In the FSTE 250, WH Smith ended the best performer, up 5.8% after the books and stationary retailer unveiled plans to expand further in the US with the purchase of travel retailer Marshall Retail for USD400 million, or around GBP312 million.

Marshall Retail operates 170 stores in North America, with 59 of these inside airports. WH Smith intends to raise GBP155 million, representing 7% of existing share capital, via an accelerated bookbuild to part fund the deal.

Turning to annual results, revenue for the year to August 31 rose 11% to GBP1.40 billion from GBP1.26 billion, while pretax profit edged up to GBP135 million from GBP134 million. Travel total revenue was up 22%, or 8% higher when stripping out InMotion, and 3% higher on a like-for-like basis.

At the other end of the midcaps, Moneysupermarket.com ended the worst performer down 10% after the price comparison website said revenue growth in the third quarter slowed significantly from the pace set earlier in the year.

For the three months ended September, revenue rose 4% on the year prior to GBP100.9 million. This was driven by robust 3% growth in Insurance revenue to GBP49.9 million. Home Services revenue advanced 21% to GBP17.7 million, helping to offset a 5% fall in revenue from Money products. The firm said the Money unit underperformed amid "continuing challenges in product availability".

The euro stood at USD1.1114 at the European equities close, up from USD1.1063 late Wednesday. The single currency hit an intraday high of USD1.1139 versus the greenback - its highest level since late August.

Against the yen, the dollar was trading at JPY108.60, down from JPY108.73 late Wednesday.

Stocks in New York were higher at the London equities close as earnings season continues in earnest.

The DJIA was up 0.1%, the S&P 500 index up 0.3% and the Nasdaq Composite up 0.2%.

Morgan Stanley was up 3.0% on Wall Street as the investment bank boosted its dividend Thursday after third quarter revenue rose.

For the three months ended September 30, pretax profit fell 4.9% to USD2.71 billion from USD2.85 billion the year prior. This was despite revenue rising 1.6% to USD10.03 billion from USD9.87 billion the year before.

Morgan Stanley proposed a 35.0 US cents per share quarterly dividend, up 17% from 30.0 cents the year prior.

Netflix jumped 4.9% after the streaming services provider late Wednesday reported a 65% increase in quarterly profit to USD665 million and executives expressed confidence in its outlook despite increased competition from peers Disney, Apple and Amazon.

Conversely, Philip Morris International was down 0.5% in New York after the Malboro cigarette maker said its profit fell 12% as research and administration costs surged.

For the three months ended September, pretax profit narrowed to USD2.64 billion from USD3.00 billion a year prior. This was despite revenue rising 1.9% to USD7.64 billion from USD7.50 billion the year before.

Profit performance was hurt by marketing, administration & research costs jumping by 30% to USD2.23 billion from USD1.71 billion the year before.

Brent oil was quoted at USD59.82 a barrel at the equities close, higher than USD59.33 at the close Wednesday.

"It seems Brexit and trade war optimism, along with a decent start to earnings season is alleviating some demand growth concerns and helping traders ignore the bearish headline surge with stockpiles," said OANDA analyst Edward Moya.

Gold was quoted at USD1,491.00 an ounce at the London equities close, higher than USD1,487.79 late Wednesday.

"As far as gold is concerned, I continue to think that - despite Brexit optimism and positive signs from the US-China trade situation - the metal may be able to extend its advance over the coming days, now that it has worked off its overbought conditions due to its recent consolidation following a four-month rally that lasted until September," said Forex.com analyst Fawad Razaqzada.

"That rally was explosive, which took prices out of a 6-year consolidation range. So, it is likely in my view that there is more juice left in that rally - even if some of the previous concerns relating to Brexit and US-China trade have eased a little," Razaqzada added.

The economic events calendar on Friday has Japan inflation figures at 0030 BST, China GDP readings at 0300 BST and eurozone current account numbers at 0900 BST.

The UK corporate calendar on Friday third-quarter results from hotel company InterContinental Hotels Group, stock exchange operator London Stock Exchange Group and antivirus software maker Avast.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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