Devdiscourse
Development News Edition
Give Feedback
VisionRI - Urban Development

UPDATE 1-UK shares surge as investors pounce on tobacco, consumer goods ahead of Brexit vote


Reuters
Updated: 29-01-2019 16:04 IST
UPDATE 1-UK shares surge as investors pounce on tobacco, consumer goods ahead of Brexit vote

British shares surged on Tuesday as investors sought safety in tobacco, utility and household goods companies amid worries about the U.S.-China trade spat and ahead of a key parliamentary vote on Brexit later in the day. The FTSE 100 index added 1.2 percent and the FTSE 250 rose 0.7 percent by 1005 GMT.

Against the trend, Hargreaves Lansdown was set for its worst daily performance since May 2017 after a weak half-year update, while Royal Mail plunged to record lows after failing to deliver on its full-year guidance. The UK parliament will vote on what changes lawmakers want British Prime Minister Theresa May to seek to her Brexit deal with Brussels, in another attempt to give structure to the country's exit from the European Union.

"Today's vote is by no means the end of the Brexit saga. In fact, it will open the door to further debate and discussion, as a result the impact on the pound could be limited," said London Capital Group analyst Jasper Lawler. London stocks were comfortably outperforming their euro zone peers, pressured by a series of U.S. corporate profit warnings overnight and after the U.S. announced criminal charges against Huawei Technologies days before a round of trade talks with Chinese Vice Premier Liu He.

"The FTSE 100 and the pound aren’t factoring in that a no-deal is a possibility... There is some sort of blind faith that it (Brexit) is either going to be extended or pushed back," said CMC Markets analyst David Madden. The market looked "a bit over-optimistic", he added.

"I think we are in a similar situation to how the FTSE 100 and the pound behaved in the run-up to the (membership) referendum in June 2016 where the markets weren't really correctly pricing in certain possibilities." Defensive stocks seen as a safer bet during uncertain economic times, and tobacco companies, Unilever and utilities were among the best performers.

British American Tobacco jumped nearly 5 percent to lead blue-chip gainers after rating upgrade from Piper Jaffray. Fund supermarket Hargreaves Lansdown slid 5.3 percent after it reported a drop in assets under administration.

Gains in midcaps were capped with Royal Mail - a former FTSE 100 constituent - slumping 10.8 percent to a lifetime low on a downbeat trading update and PZ Cussons tumbling 11.2 percent to lows not seen since June 2009 after a profit alert. Domino's Pizza fell 7.4 percent and was on track for its worst day since August after guiding to profit at low end of the consensus range.

Support came from UDG Healthcare, which surged 7.6 percent to lead mid-cap gainers after forecasting higher adjusted earnings, and housebuilder Crest Nicholson jumped 6 percent following a rise in revenue and volumes. Intermediate Capital Group gained 5.3 percent after its assets under management topped market expectations.

(Reporting by Muvija M in Bengaluru; editing by Josephine Mason and John Stonestreet)


POST A COMMENT