Britain’s FTSE relatively stable as Brexit impasse has mixed impact

Britain’s top share index was steady today as a deadlock in Brexit talks depressed domestic stocks but helped internationally focused companies as it weakened the pound. — Reuters pic
Britain’s top share index was steady today as a deadlock in Brexit talks depressed domestic stocks but helped internationally focused companies as it weakened the pound. — Reuters pic

MILAN, Oct 15 — Britain’s top share index was steady today as a deadlock in Brexit talks depressed domestic stocks but helped internationally focused companies as it weakened the pound.

The FTSE 100 was down 0.1 per cent by 0813 GMT, while the domestically focused midcap index fell 0.7 per cent, further hit by warnings from ConvaTec and Superdry.

The FTSE outperformed the pan-European STOXX 600 index, which declined 0.4 per cent.

“Thanks to the situation with sterling, the FTSE ended up being one of the better performers,” said Connor Campbell, analyst at Spreadex.com.

The stubborn problem of Britain’s land border with Ireland thwarted a drive to clinch a Brexit deal before a European Union summit this week, as negotiators admitted defeat after marathon talks and pressed pause for the coming days.

“Any delay or disagreement only heightens the chances of a no-deal Brexit, hence the pound’s red headache,” added Campbell.

Shares in big international firms such as British American Tobacco, Shire and Unilever, as well as oil majors, which tracked rising crude prices, provided the biggest boost to the FTSE.

Shares in precious metal miners Randgold Resources and Fresnillo also rose, up 3.6 and 2.1 per cent respectively, as gold prices hit a near 12-week high.

Among companies with bigger exposure to the domestic economy, banks Lloyds and Royal Bank of Scotland fell 1.2 and 0.7 per cent respectively, while house builders Derwent and Persimmon dropped by around 1 per cent.

Analysts expect a no-deal scenario to lead to a significant downward revision to Britain’s economic growth, with sterling likely to fall further under such a scenario.

Among mid-caps, ConvaTec plunged 27 per cent after the medical devices maker lowered its expectations for revenues and margins, citing a change in inventory policy by its largest customer in its Infusion Devices business.

Fashion group Superdry warned 2018-19 profit could be as much as 17 per cent below current expectations, blaming a hit to sales from unseasonably hot weather and rising foreign exchange costs. Its shares tumbled 17.7 per cent. — Reuters

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