London close: Stocks finish weaker as Brexit deadline looms

London stocks closed weaker on Friday as the pound lost further ground, with the Brexit trade deadline looming.

The FTSE 100 ended the session down 0.33% at 6,529.18, and the FTSE 250 was off 0.89% at 20,116.29.

Sterling was in the red against its major trading partners, last falling 0.58% on the dollar to $1.3506, and losing 0.31% against the euro to €1.1040.

“The final full week of trading in London is winding down with modest losses across the board,” said IG chief market analyst Chris Beauchamp.

“It has been a directionless session, lacking any real driver to prompt substantial market movement, and so in the absence of any real newsflow a degree of profit-taking prevails.

“Given the scale of the move since mid-November, which has restored upward movement to the FTSE 100 after a miserable mid-year, it is not surprising that investors are looking to wind back positions, and those that aren’t certainly don’t have much of a compelling reason to keep piling in.”

Beauchamp said the next fortnight would feature some bits of economic data, but were almost entirely devoid of any scheduled corporate news, leaving markets “at the mercy” of US stimulus talks and Brexit discussions.

“As a result, it is hard to argue against the idea that investors should take their foot off the accelerator with just two weeks left of the year.”

Late on Thursday, Prime Minister Boris Johnson said after a call with EU Commission president Ursula von der Leyen that talks to reach a post-Brexit trade deal were in a "serious situation".

He said "time was short" and warned that a no deal scenario was "very likely" unless the EU position changed "substantially".

Earlier on Friday, EU Brexit negotiator Michel Barnier told the European parliament in Brussels that it was "the moment of truth".

“We have very little time remaining, just a few hours to work through these negotiations in a useful fashion if we want this agreement to enter into force on the first of January,” said Barnier, as quoted by Reuters.

“There is a chance of getting an agreement but the path to such an agreement is very narrow.”

Russ Mould, investment director at AJ Bell, described the situation as ‘Groundhog Day’.

“This week ends just like last week with the market focused on an apparent Sunday deadline to approve a Brexit deal,” Mould said.

“Sterling has come back a bit as Government ministers and Boris Johnson himself have appeared to pour cold water on the prospects of a deal.

“Overall though, investors are seeing this as bluster intended to enable the UK side to claim victory in the negotiations assuming an agreement is eventually brokered.”

Sino-US relations were also in focus following a report the US was set to add dozens of Chinese companies, including the country’s top chipmaker SMIC, to a trade blacklist.

On the macroeconomic front, the latest figures from the Office for National Statistics showed retail sales fell in November as lockdown restrictions took their toll, but they remain above pre-pandemic levels.

Sales dropped 3.8% on the month as non-essential shops were closed due to the Covid-19 crisis, compared to a 1.3% increase in October.

Still, that was better than expectations for a 4.2% decline and overall sales remain above their pre-pandemic levels.

On the year, retail sales rose 2.4% versus a 5.8% jump the month before, in line with consensus expectations, with feedback from businesses suggesting that consumers had brought forward Christmas spending.

Thomas Pugh, UK economist at Capital Economics, said the relatively small drop in retail sales in November suggests the second Covid-19 lockdown didn’t change households’ spending behaviour by anywhere near as much as the first.

Pugh noted that while the 3.8% decline wiped out most of the growth so far this year, sales were still 2.7% above their pre-crisis level.

Elsewhere, a survey from the Confederation of British Industry showed manufacturers’ order books improved at their strongest rate since the start of the Covid-19 crisis in December but stayed weak.

The reading for total order books in the business group’s monthly survey improved to -25% from -40% in November, while the balance for December was the highest since February before the Covid-19 crisis erupted but was well below the -14% long-run average.

Improvement in export orders was tepid, leaving order books well below average, the CBI said.

The -44% reading was a long way short of the average of -18%.

In equity markets, Hikma Pharmaceuticals rallied 4.58% after the company said it had received approval from the US Food and Drug Administration and launched its generic version of GlaxoSmithKline’s asthma treatment, Advair Diskus.

Shares of Vectura, which worked with Hikma to develop the proprietary dry powder inhaler and formulation technology, were 6.6% higher.

On the downside, Flutter Entertainment fell 3.81% after it lost a Kentucky legal case relating to a 2015 judgment against The Stars Group, which it subsequently acquired.

As a result of the ruling, an $870m judgement against The Stars Group was reinstated.

Market Movers

FTSE 100 (UKX) 6,529.18 -0.33%
FTSE 250 (MCX) 20,116.29 -0.89%
techMARK (TASX) 4,072.94 -0.37%

FTSE 100 - Risers

Hikma Pharmaceuticals (HIK) 2,580.00p 4.58%
CRH (CRH) 3,162.00p 3.30%
Bunzl (BNZL) 2,450.00p 2.73%
Rentokil Initial (RTO) 524.40p 2.22%
Experian (EXPN) 2,815.00p 2.06%
Just Eat Takeaway.Com N.V. (CDI) (JET) 7,958.00p 2.05%
Evraz (EVR) 479.90p 2.04%
Avast (AVST) 535.50p 2.00%
Ashtead Group (AHT) 3,350.00p 1.58%
Rolls-Royce Holdings (RR.) 113.95p 1.33%

FTSE 100 - Fallers

Land Securities Group (LAND) 667.00p -6.02%
British Land Company (BLND) 478.50p -4.41%
Flutter Entertainment (FLTR) 14,900.00p -3.81%
Lloyds Banking Group (LLOY) 34.90p -3.64%
JD Sports Fashion (JD.) 811.20p -3.61%
NATWEST GROUP PLC ORD 100P (NWG) 157.35p -3.32%
Johnson Matthey (JMAT) 2,482.00p -3.20%
Aveva Group (AVV) 3,209.00p -2.79%
Pennon Group (PNN) 933.80p -2.73%
Whitbread (WTB) 3,075.00p -2.69%

FTSE 250 - Risers

Premier Foods (PFD) 102.20p 6.68%
Vectura Group (VEC) 121.60p 6.60%
IntegraFin Holding (IHP) 547.00p 5.19%
Helios Towers (HTWS) 147.00p 4.34%
QinetiQ Group (QQ.) 311.00p 3.46%
Kainos Group (KNOS) 1,252.00p 3.13%
AO World (AO.) 415.50p 2.85%
Games Workshop Group (GAW) 10,910.00p 2.73%
TI Fluid Systems (TIFS) 248.20p 2.69%
Gamesys Group (GYS) 1,150.00p 2.50%

FTSE 250 - Fallers

Avon Rubber (AVON) 3,060.00p -7.13%
Royal Mail (RMG) 324.90p -5.88%
Network International Holdings (NETW) 273.20p -5.83%
Petrofac Ltd. (PFC) 153.55p -5.59%
BMO Commercial Property Trust Limited (BCPT) 74.70p -5.31%
Capita (CPI) 39.00p -5.01%
UK Commercial Property Reit Limited (UKCM) 67.20p -4.95%
Essentra (ESNT) 295.00p -4.78%
Fisher (James) & Sons (FSJ) 934.00p -4.75%
Apax Global Alpha Limited (APAX) 195.00p -4.41%