LONDON MARKET OPEN: Pound And Stocks Rise As UK-EU Brexit Deal Awaited

Thu, 24th Dec 2020 08:32

(Alliance News) - Optimism was running high on Christmas Eve in anticipation of an agreement between the UK and EU on a post-Brexit trade deal, sending stocks higher on Thursday morning.

UK financial markets will close early, at 1230 GMT, on Thursday and reopen on Tuesday next week. Markets in both France and the US also close early on Thursday, while markets in Germany are shut entirely.

The FTSE 100 index was up 23.00 points, or 0.3%, at 6,518.75 early Thursday, held back by a rising pound. The more domestic-oriented mid-cap FTSE 250 index outperformed, rising 190.48 points, or 0.9%, to 20,488.24. The AIM All-Share index was up 0.5% at 1,119.82.

The Cboe UK 100 index was up 0.4% at 618.87. The Cboe 250 was up 1.4% at 23,674.25, and the Cboe Small Companies up 0.6% at 15,353.55.

An announcement of a UK-EU post-Brexit trade trade is expected on Christmas Eve. Talks were continuing through the night on the details of an agreement.

The development came as Britain and the EU were believed to have made progress on resolving issues including fishing rights and the "level playing field" measures aimed at preventing unfair competition. The expected deal comes with just days left before the current trading arrangements expire on December 31.

UK Prime Minister Boris Johnson led a late-night call with Cabinet ministers to update them on the situation.

It was widely reported Britain offered a longer transition period regarding fishing rights than it previously wanted and would agree to the EU handing back only 25% of its quotas in British waters at the start of the process. And as the battle to spin the situation began, French sources reportedly claimed the UK had made "huge concessions", especially on fisheries â€“ a symbolically important issue on both sides of the Channel.

"There has been talk in the last few hours that Prime Minister Johnson will make a speech at 11am (UK time) with regards to trade situation â€“ sterling is higher as optimism is in circulation," said David Madden at CMC Markets.

Sterling was quoted at USD1.3580 early Thursday, rallying from USD1.3525 at the London equities close on Wednesday and approaching last week's highs above USD1.36.

At the top of the FTSE 100 in opening trade were UK-exposed firms, especially banks, rising on hopes of imminent news of a Brexit deal.

Lloyds Banking was up 6.7%, Barclays up 3.8% and NatWest up 3.1%.

Housebuilders also gained, with Berkeley Group up 3.6%, Persimmon up 2.6% and Taylor Wimpey up 1.7%.

Towards the bottom of the FTSE 250 was Network International, down 2.3% after noting a recent report by short seller ShadowFall Research.

"We take any critique of the company seriously. While we believe many of the issues raised have already been addressed, the historical nature of certain statements in the report means that a full response will take some time," said Network International, adding it expects to publish a response by the end of January.

The FTSE 250-listed payment solutions provider said it remains confident in its strategy and the long-term fundamentals of its markets.

ShadowFall, in a report on Wednesday stating it was short Network International shares, alleged that the firm "pulled on many strings to present as good numbers as it could" ahead of its IPO in 2019, and claimed there is a "rising risk" of debt covenant breach.

In mainland Europe, the CAC 40 in Paris was up 0.2%. The euro traded at USD1.2206 early Thursday, rising from USD1.2195 late Wednesday.

In Asia on Thursday, the Japanese Nikkei 225 index closed up 0.5%. Against the yen, the dollar was quoted at JPY103.61, flat versus JPY103.55.

In China, the Shanghai Composite closed down 0.6%, while the Hang Seng index in Hong Kong is up 0.2%. The S&P/ASX 200 in Sydney closed up 0.3%.

Gold was quoted at USD1,880.10 an ounce early Thursday, higher than USD1,872.05 on Wednesday. Brent oil was trading at USD51.48 a barrel, up from USD51.03 late Wednesday.

By Lucy Heming; lucyheming@alliancenews.com