LONDON MARKET MIDDAY: FTSE 100 Rises As Pound Slips On No-Deal Jitters

(Alliance News) - A weaker pound, dented by no-deal Brexit worries, was helping London's FTSE 100 outperform peers on Wednesday.

The FTSE 100 index was up 13.76 points, or 0.2%, at 6,398.49 midday Wednesday. The mid-cap FTSE 250 index was down 75.98 points, or 0.4%, at 19,768.83 on Wednesday. The AIM All-Share index was down 0.1% at 1,063.85.

The Cboe UK 100 index was up 0.1% at 637.09. The Cboe 250 was down 0.4% at 17,082.67, while the Cboe Small Companies was down 0.1% at 11,459.10.

In mainland Europe, the CAC 40 in Paris was down 0.2% while the DAX 30 in Frankfurt was down 0.3% Wednesday afternoon.

"European markets are replicating the kind of meagre gains seen throughout the Asian session overnight, with news that the UK could begin vaccination next week doing little to lift spirits," said IG's Joshua Mahony.

The UK government said it has authorised Pfizer and BioNTech's Covid-19 vaccine, becoming the first country in the world to give the jab the green light. The vaccine will be made available across the UK from next week.

Pfizer said the approval marked a "historic moment" in the fight against Covid-19, and the US pharmaceutical giant was up 3.7% in New-York pre-market dealings. Partner BioNTech was up 7.7% pre-market.

Helping London's internationally-exposed FTSE 100 on Wednesday was a weaker pound.

Mahony said: "The pound has been hit hard on the news that Michel Barnier has notified the EU27 that a no-deal scenario is looking increasingly likely. While traders have largely taken running commentary with a pinch of salt thus far, the growing fear of a disorderly exit at the end of the month is likely to drag on the pound in the absence of a deal."

Chief EU Brexit negotiator Michel Barnier has warned he can not guarantee he will strike a trade deal with Britain, diplomats said, and the next few days will be crucial.

"We are quickly approaching a make or break moment in the Brexit talks," Barnier told a video meeting of European envoys, a diplomat said, in an account of the video meeting confirmed by other sources.

"Intensive negotiations are continuing in London, but as of this morning it is still unclear whether negotiators can bridge the gaps on issues like level playing field, governance and fisheries," Barnier said.

Sterling was quoted at USD1.3349 on Wednesday, down from USD1.3425 at the London equities close on Tuesday.

The euro traded at USD1.2046 on Wednesday, flat on USD1.2045 late Tuesday. Against the yen, the dollar rose to JPY104.71 versus JPY104.40 late Tuesday.

In the US, Wall Street is on track for a lower start. The Dow Jones is pointed down 0.3%, the S&P 500 down 0.1% and the Nasdaq set to open 0.1% lower.

Due in the economic calendar is US jobs data from private payrolls processor ADP at 1330 GMT. This is followed, on Friday, by the US monthly jobs report.

Analysts expect the ADP figures to show 410,000 jobs were added in November, according to FXStreet, which would be up from 365,000 in October.

Brent oil was trading at USD47.47 a barrel, flat on USD47.23 late Tuesday. Gold was quoted at USD1,826.30 an ounce on Wednesday, higher than USD1,811.03.

Tracking the price of the precious metal higher was London-listed Fresnillo, shares in the Mexican gold miner rising 2.7% at midday. Peer Polymetal International was up 1.1%.

At the bottom of the FTSE 100 was J Sainsbury, down 3.2%. Fellow supermarket chains Wm Morrison and Tesco were down 1.4% and 1.7% respectively.

Tesco said it will repay GBP585 million of business rates relief received from the UK government as a result of the Covid-19 pandemic.

In March, the UK Chancellor of the Exchequer Rishi Sunak said the UK government would give all retail, hospitality and leisure businesses a 100% business rates holiday for the next 12 months, with the holiday intended to help companies weather the pandemic.

On Wednesday, the FTSE 100-listed grocer stated it is "immensely grateful" for the support provided, describing it as a "game-changer" which ensured customers got access to the essentials they needed.

Tesco added that all the funds from rates relief was spent on its response to the pandemic as food retailers had to deal with panic buying, pressure on supply lines, safety concerns and the risk of mass absences from work. However, it noted its latest estimate showed Covid-19 would cost the company GBP725 million this year, above the business rates relief received.

UBS commented: "We note that Wm Morrison had GBP230 million and Sainsbury had GBP450 million in rates relief in the current financial year with cGBP50 million spillover into next year for both. There may now be a question around if their respective boards rethink the rates relief in the light of Tesco's decision."

In the FTSE 250, G4S shares rose 8.3% at 248.10 pence after GardaWorld upped its offer for the London-listed security services firm.

GardaWorld Security Corp declared an increased and final cash offer of 235 pence per share for G4S, valuing the company at GBP3.68 billion. G4S, in its own statement on Wednesday, said it is currently evaluating the revised offer and advised shareholders to take no action in the meantime.

Office workspace provider IWG was down 6.9% amid the launch of an offering of approximately GBP300 million in bonds.

The convertible bonds due 2027 will be issued by wholly owned subsidiary IWG Group Holdings and will carry a coupon of between 0.50% and 1.25% per annum, payable semi-annually in arrears in equal instalments.

Elsewhere in London, Stock Spirits rose 8.4% as it raised its ordinary annual dividend, and also made a special payout amid a fall in profit, due to higher one-off expenses.

For the financial year to the end of September, the owner and producer of premium branded spirits and liqueurs reported a pretax profit of EUR29.9 million, down 22% year-on-year from EUR38.4 million. Stocks Spirits's profit performance was hurt by a rise in selling expenses to EUR65.9 million from EUR61.0 million, and in exceptional costs to EUR25.7 million from EUR15.5 million.

Revenue for the year however, grew by 9.2% to EUR341.0 million from EUR312.4 million, on volume growth by 3.0% to 14.8 million nine litre cases from 14.4 million cases.

Stock Spirits declared a final ordinary dividend of 6.78 euro cents per share, bringing the total payout to 9.55 cents, up 7.4% from 8.94 cents the year before. In addition, the group declared a special dividend of 11 euro cents.

By Lucy Heming; lucyheming@alliancenews.com

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