London close: Stocks jump as pound hits 28-month low

Britain's top-flight index outperformed peers on the Continent and across the Atlantic on Monday as the Sterling endured one of its biggest one-day drops since the Brexit referendum and helped by a wave of fresh mergers and acquisitions-related news.

By the end of trading, the FTSE-100 had climbed 1.82% to 7,686.61, while the pound was 1.44% weaker against the single currency at 1.0968 and by 1.345% to 1.2218 versus the US dollar.

The second-tier index on the other hand only managed to eke out a gain of 0.14% to stand at 19,886.70 by the session's close.

"The reasons for the pound’s fall are well worn: there is an increased risk of a no-deal Brexit, with the rhetoric from key government ministers over the last day or so sharpening up," said Neil Wilson, chief market analyst at Markets.com.

"The message is clear that the Boris regime is prepared to take this to the wire. In many ways it’s his only choice."

Speaking on a visit to Scotland, the new Prime Minister said the old withdrawal agreement that had been draw up by Theresa May and EU leaders, only to then be repeatedly shot down by lawmakers in Westminster, was "dead".

And in an op-ed articled for the Sunday Times, Michael Gove said that the UK "must operate on the assumption" that Brussels will refuse to change the Withdrawal Agreement forcing a no-deal Brexit.

Against that backdrop, financial markets were also digesting the latest news out around the ongoing US-China stand-off on trade.

Also at the weekend, state-owned Chinse broadcaster, Xinhua, said the country had bought millions of tonnes of US soybeans and that its companies would continue to buy other agricultural commodities.

The move was portrayed by the People’s Daily come Monday as a "concrete" and "goodwill" step, but in parallel Chinese officials were blaming America for playing a hand in the Hong Kong protests and said they had found evidence of further illegal actions by US parcel delivery company FedEx as part of its ongoing investigation into the mistaken rerouting of packages sent by Huawei Technologies to the US.

US and Chinese trade officials were set to take up trade talks again the next day.

Back on home turf, according to the Office for National Statistics, mortgage approvals for home purchase rose from 65,600 in May to 66,400 for June (consensus: 65,900).

Net consumer credit meanwhile increased by £1.0bn, which was slightly quicker than the pace seen over the previous six months, after rising by £0.8bn in May (consensus: £0.9bn).

In parallel, year-over-year growth in households' broad money holdings, know as M4, accelerated from the 3.5% clip observed in May to 3.6% for June, providing "reassurance that the economy isn’t grinding to a halt ahead of the October Brexit deadline, said Samuel Tombs, chief UK economist at Pantheon Macroeconomics.

Tombs added: "Granted, all these data are a month old and so do not show if households and firms have taken fright since Mr. Johnson took over as PM. But the resilience of the economy in Q1, when households' spending rose by 0.6% quarter-on-quarter and business investment increased by 0.5%, demonstrates that Brexit uncertainty is not the be-all and end-all."

Later in the week, decisions on official interest rates were scheduled in the US, UK and Japan, followed by July non-farm payrolls data in the States, on Friday.

Shares in Just Eat and LSE Group soar

Just Eat and Takeway.com reached a preliminary agreement on the key terms for merging the two food delivery giants. The deal valued Just Eat shares at 731.0p each, for a 15% premium versus the previous session's closing price. Nonetheless, there was no guarantee that a transaction would take place. Indeed, according to Canaccord Genuity the possibility existed that a rival bid might surface. And the two sides were still working to hammer out the remaining details.

London Stock Exchange Group confirmed on Monday it was in talks to buy financial data and trading platform provider Refinitiv in a deal that could be valued at $27bn. A Blackstone Group-led consortium bought a majority 55% stake in Refinitiv from information publisher Thomson Reuters last year in a deal last year that valued the business at $20bn. The exchange said it would issue shares as part of the transaction with Refinitiv holders potentially getting a stake of 37%, LSE said in a statement. Thomson Reuters said over the weekend it expects to hold round 15% if the deal went through.

Lloyds of London insurer Hiscox reported interim profits at the upper end of its guidance range, with a 4.8% investment return offsetting higher claims volume. Pre-tax profits came in at $168m, up from $162.7m. The company earlier this month forecast first-half pre-tax profits of $150m - $170m (£119m - £135m). It added that the impact of events such as typhoon Jebi in Japan and hurricane Michael in Florida would impact reserve strengthening needed for those catastrophes of around $40m.

GlaxoSmithKline (GSK) said on Monday that its ViiV Healthcare business has submitted a regulatory application to the European Medicines Agency for its HIV-prevention drug cabotegravir to be used alongside rilpivirine as the first ever monthly, injectable treatment for HIV.

Cranswick said on Monday that first quarter trading was encouraging and in line with expectations as revenues were boosted by increased Chinese demand, while the business also confirmed a new acquisition. The UK food producer reported that its overall revenue in the three months ended 30 June was 1.5% ahead of strong comparatives in the same period last year, with the strong demand from China coming after the widespread outbreak of African Swine Fever in the region.

Specialist media group Future acquired US-based digital media publisher SmartBrief on Monday for an initial sum of $45m. Future's initial payment will include a cash consideration of $32.2m, funded from its existing debt facilities, with a further $12.8m to be satisfied through the issue of 1.02m new ordinary shares. The FTSE 250 resident noted the acquisition also included a deferred consideration, based on certain financial targets, subject to a cap of $20m.

Market Movers

FTSE 100 (UKX) 7,686.61 1.82%
FTSE 250 (MCX) 19,886.70 0.14%
techMARK (TASX) 3,910.48 1.52%

FTSE 100 - Risers

Just Eat (JE.) 780.00p 22.72%
London Stock Exchange Group (LSE) 6,542.00p 15.34%
Vodafone Group (VOD) 152.24p 4.27%
AstraZeneca (AZN) 7,203.50p 3.98%
Centrica (CNA) 90.84p 3.84%
Reckitt Benckiser Group (RB.) 6,670.00p 2.92%
British American Tobacco (BATS) 3,106.00p 2.88%
Smith & Nephew (SN.) 1,848.00p 2.87%
SEGRO (SGRO) 789.00p 2.68%
Diageo (DGE) 3,412.00p 2.68%

FTSE 100 - Fallers

Smith (DS) (SMDS) 369.20p -1.68%
Sage Group (SGE) 735.60p -0.92%
Bunzl (BNZL) 2,145.00p -0.60%
Flutter Entertainment (FLTR) 6,850.00p -0.52%
Pearson (PSON) 922.20p -0.52%
TUI AG Reg Shs (DI) (TUI) 845.40p -0.19%
St James's Place (STJ) 1,062.00p -0.19%
Micro Focus International (MCRO) 1,720.80p -0.17%
Hiscox Limited (DI) (HSX) 1,770.00p -0.11%
Persimmon (PSN) 2,096.00p 0.00%

FTSE 250 - Risers

TBC Bank Group (TBCG) 1,380.00p 11.27%
Cranswick (CWK) 2,780.00p 7.92%
Amigo Holdings (AMGO) 168.80p 5.11%
Centamin (DI) (CEY) 123.05p 4.10%
QinetiQ Group (QQ.) 299.60p 3.52%
Barr (A.G.) (BAG) 674.00p 2.90%
PayPoint (PAY) 960.00p 2.45%
Ultra Electronics Holdings (ULE) 1,972.00p 2.44%
Hikma Pharmaceuticals (HIK) 1,879.00p 2.34%
Domino's Pizza Group (DOM) 263.90p 2.33%

FTSE 250 - Fallers

Sanne Group (SNN) 498.00p -33.78%
Hammerson (HMSO) 251.00p -7.21%
Sports Direct International (SPD) 214.80p -6.53%
Woodford Patient Capital Trust (WPCT) 51.00p -4.32%
Intu Properties (INTU) 75.02p -3.07%
Balfour Beatty (BBY) 216.00p -2.96%
Vesuvius (VSVS) 504.00p -2.80%
Spirent Communications (SPT) 163.00p -2.63%
Rank Group (RNK) 148.60p -2.62%
Morgan Advanced Materials (MGAM) 252.20p -2.54%