LONDON MARKET MIDDAY: Brexit Deal Euphoria Sends FTSE To 9-Month High

(Alliance News) - Stocks in London were powering higher at midday on Tuesday following the Christmas break, with the FTSE 100 at a level last seen before the nationwide lockdown in March, as investors cheered a long-awaited, last-minute post-Brexit trade deal.

The FTSE 100 index was up 140.94 points, or 2.2%, at 6,643.05. 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 index was up 474.66 points, or 2.3%, at 21,021.31. The AIM All-Share index was up 1.8% at 1,147.86.

The Cboe UK 100 index was up 2.2% at 661.11. The Cboe 250 was up 2.3% at 18,353.40, and the Cboe Small Companies up 0.8% at 11,673.85.

In mainland Europe, the CAC 40 in Paris was up 0.3%, while the DAX 30 in Frankfurt was up 0.4%.

Last Thursday the UK reached an agreement with the European Union which allows for continued tariff-free trade with the EU single market.

"The FTSE 100 and FTSE 250 are both up nicely in the early exchanges and sterling is holding on to the USD1.35 and EUR1.10 marks, so markets seem to be welcoming the Brexit deal that was announced on Christmas Eve," said AJ Bell Investment Director Russ Mould. "However, the agreement struck between London and Brussels is yet to win universal acclaim, even if that is the inevitable result of the compromises that the prime minister had to make to get the deal over the line before the end of the transition period and confirmation of the UK's departure from the economic bloc."

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.

In the FTSE 100, AstraZeneca was up 4.0%, 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.

Further, AstraZeneca on Monday said its Lynparza cancer treatment has secured approval in Japan for the treatment of advanced ovarian, prostate and pancreatic cancers.

Admiral Group was up 3.5%. 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.

Cardiff-based Admiral expects net proceeds of around GBP450 million, with a majority of this to be returned to shareholders. Admiral expects the deal to close in the first half of 2021. ZPG, which stands for Zoopla Property Group, will control the acquired businesses through its comparison site division, RVU - which operates Confused.com rival Uswitch.

At the other end of the large-cap index, banks were the worst performers amid uncertainty over future implications of the UK's Brexit deal on the financial services sector.

Lloyds Banking was down 3.8%, NatWest down 3.0%, Barclays,down 2.8%, and HSBC down 1.0%.

"First banks were lower because of no trade deal, now banks are lower because of a limited trade deal. There are many positives, but there will be a lot of disruptions in the UK banking circle getting access to the single market, but the problem is no one knows where financial services fit into this deal. Financial services were not a bigger priority in the deal," explained Axi's Stephen Innes. "It 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."

Elsewhere in London, THG Holdings was up 5.2%. 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.

The pound was quoted at USD1.3511 on Tuesday at midday, down from USD1.3587 at the London equities close on Christmas Eve.

The euro was priced at USD1.2250, up from USD1.2197. Against the yen, the dollar was trading at JPY103.63, flat from JPY103.62.

Brent oil was quoted at USD51.55 a barrel Tuesday at midday, sharply higher than USD50.74 at the London equities close Thursday. Gold was priced at USD1,879.35 an ounce, up from USD1,874.60.

"Investors are optimistic about oil prices, and they believe that the pandemic relief aid package along with the coronavirus vaccine should continue to improve oil demand. There is also optimism about the tightening of oil supply, and traders believe that US crude oil stockpiles should continue to see more tightening position," said AvaTrade analyst Naeem Aslam.

Wall Street has more records in its sights, as investors cheered the passage of a much-needed US stimulus bill. This has tempered fears about surging coronavirus infections.

The Dow Jones Industrial Average was called up 0.5%, the S&P 500 up 0.4% and the Nasdaq Composite up 0.5%. All three major indices set record closes on Monday.

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.

Democrats led passage of the motion, by 275 to 134, their majority favouring additional assistance. They had earlier settled for smaller USD600 payments in a compromise with Republicans over the big year-end relief bill Trump reluctantly signed into law.

The vote divides Republicans who mostly resist more spending, although many House Republicans joined in support, wary of opposing the president's wishes. Senators are set to return to session on Tuesday to consider the measure, with stiff resistance expected.

By Arvind Bhunjun; arvindbhunjun@alliancenews.com

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