London close: Shares extend 'relief rally'

London stocks extended their relief rally on Wednesday amid optimism about the latest round of US-China trade talks and hopes that moves in Westminster have lowered the chance of a no-deal Brexit, with housebuilders leading the charge.

The FTSE 100 was up by 0.66% or 45.03 points at 6,906.63 and trading at its best levels in around a month, alongside a gain of 1.31% or 237.92 points to 18,413.71 for the FTSE 250.

In particular, investors seemed to take heart from remarks by US Under Secretary of Agriculture for Trade and Foreign Agricultural Affairs, Ted McKinney, who told CNBC that the first round of talks with China had gone "just fine".

Meanwhile, sterling was up 0.26% against the dollar at 1.27532 but lower by 0.39% versus the euro at 1.1072 as news broke that the Prime Minister had lost the second vote in Parliament on her Brexit plans in two days, with MPs in effect gaining control of the timetable in the event that the vote on her proposal, on 15 January, goes against her.

According to some observers, her defeat meant that the range of possible outcomes for negotiations with Brussels spanned everyhing from a disorderly Brexit to a secopnd referendum.

"Another day, another loss for Theresa May in parliament, with a cross-party alliance of MPs doing their utmost to ensure the PM cannot lead the country into a no-deal scenario. Today's latest loss for Thresa May means that if her Brexit bill is rejected on Tuesday, Parliament will have to provide information on the next steps within three sitting days (likely to be 21 January)," said Josh Mahony at IG.

"The interesting thing is that quite frankly, no one knows what Theresa May’s Plan B would be in the likely event that she loses Tuesday's vote."

On the corporate front, housebuilders were the standout gainers as Taylor Wimpey rallied after saying it would report 2018 full year results in line with expectations as the housing market remained stable despite uncertainties caused by Brexit. In a trading statement for the year to 31 December 2018, it said total home completions increased by 3% to 14,947, including joint ventures.

Peers Persimmon, Barratt Developments, Berkeley and Crest Nicholson all advanced.

Sophie Lund-Yates, equity analyst at Hargreaves Lansdown, said: "These are pretty good numbers from Taylor Wimpey. Sales rates are moving in the right direction, the development pipeline looks promising and investors will be pleased that the dividend’s set to grow again next year too.

"That said, the group can’t hide from the Brexit question. Build costs are still creeping up and any major blow to house prices would test Taylor’s foundations as margins get a squeeze. The housing market in the South East is already stagnating, and the company could really do without the malaise spreading."

Meanwhile, Sainsbury's reversed earlier losses to trade up even as it reported a fall in revenues over the past 15 weeks due to a slump in general merchandise sales, which the grocer blamed on cautious customer spending and a decision to reduce Black Friday promotions.

Total sales fell 0.4% in the third quarter ending 5 January, with like-for-like sales excluding fuel down 1.1%. City analysts had forecast a 0.3% dip in LFL sales after the 0.2% gain in the first quarter and 1.0% in the second.

Richard Hunter at Interactive Investor said the supermarket's headline sales figures "are not pretty" but "all is certainly not lost".

"Argos had a strong run-in over the Christmas weeks and remains an inspired acquisition. The increasingly important channels of online and convenience continue to post strong sales growth of 6% and 3% respectively, whilst the group’s planned cost savings of £200 million remain on track. In the meantime, grocery sales held up relatively well and, from an investment perspective, the projected dividend yield of 4.1% is an attraction to income-seeking investors."

Fashion brand Ted Baker, which was recently rocked by harassment claims against founder Ray Kelvin, rose sharply as it posted 12.2% jump in sales over the Christmas period thanks to strength in the online segment.

Bakery chain Greggs - which launched its controversial vegan sausage roll last week - advanced as it bumped up its full-year profit guidance and hailed a strong finish to last year.

Retailers were also in focus outside the FTSE 350, with Majestic Wine, Shoe Zone, Topps Tiles, Mothercare and Sosandar all releasing updates. Shoe Zone outshone the rest with its full year results sending the shares marching 10% higher.

Softcat, a provider of IT infrastructure products and services, surged after saying in a very brief update that it is now "materially ahead" of where it expected to be at this stage of the year.

In broker note action, Vodafone was hit by a note from Macquarie, which said the company's structural challenges remain significant.

Auto Trader was initiated at 'hold' by Jefferies, while BHP was cut to 'sell' at Deutsche Bank, HSBC was downgraded to 'underweight' at Barclays and Prudential was cut to 'sell' at Societe Generale.

Serco was boosted by upgrades to 'buy' at Citi and Shore.

Market Movers

FTSE 100 (UKX) 6,906.63 0.66%
FTSE 250 (MCX) 18,413.71 1.31%
techMARK (TASX) 3,394.03 1.04%

FTSE 100 - Risers

Taylor Wimpey (TW.) 149.10p 6.20%
ITV (ITV) 137.85p 4.91%
Wood Group (John) (WG.) 592.80p 4.55%
Micro Focus International (MCRO) 1,499.00p 4.39%
Antofagasta (ANTO) 845.80p 4.06%
NMC Health (NMC) 2,982.00p 3.61%
Berkeley Group Holdings (The) (BKG) 3,744.00p 3.46%
SSE (SSE) 1,124.50p 3.45%
Persimmon (PSN) 2,106.00p 3.24%
Barratt Developments (BDEV) 495.50p 3.23%

FTSE 100 - Fallers

Royal Bank of Scotland Group (RBS) 220.90p -2.17%
Vodafone Group (VOD) 152.80p -1.80%
Hargreaves Lansdown (HL.) 1,884.50p -1.13%
Paddy Power Betfair (PPB) 6,740.00p -1.03%
Relx plc (REL) 1,633.50p -0.88%
British Land Company (BLND) 543.00p -0.69%
Rightmove (RMV) 466.80p -0.69%
HSBC Holdings (HSBA) 646.10p -0.46%
Land Securities Group (LAND) 826.00p -0.46%
Centrica (CNA) 130.70p -0.42%

FTSE 250 - Risers

Ted Baker (TED) 2,120.00p 31.19%
Softcat (SCT) 694.00p 17.83%
Superdry (SDRY) 545.50p 7.38%
Greggs (GRG) 1,459.00p 6.73%
Cairn Energy (CNE) 169.60p 6.33%
JD Sports Fashion (JD.) 395.60p 5.78%
Dixons Carphone (DC.) 123.00p 5.62%
888 Holdings (888) 180.30p 5.62%
Bank of Georgia Group (BGEO) 1,527.40p 5.57%
Serco Group (SRP) 114.50p 5.43%

FTSE 250 - Fallers

Just Group (JUST) 93.80p -6.20%
TBC Bank Group (TBCG) 1,408.00p -5.38%
Man Group (EMG) 136.55p -3.33%
Rank Group (RNK) 145.80p -2.41%
Stobart Group Ltd. (STOB) 149.80p -2.22%
Charter Court Financial Services Group (CCFS) 263.60p -2.15%
Hikma Pharmaceuticals (HIK) 1,571.50p -1.75%
Ascential (ASCL) 404.20p -1.65%
Assura (AGR) 54.59p -1.62%
Clarkson (CKN) 2,305.00p -1.50%