By Carla Mozee, MarketWatch
Home builder Berkeley rallies after update; miners gain on
upbeat China data
London-listed bank shares climbed Friday after the president of
the European Commission said a breakthrough in the Brexit deadlock
had been made, clearing the way for negotiations to move on to the
next stage.
The benchmark FTSE 100 was overcoming early weakness as the
pound backed off from session highs. Home builders rose after an
upbeat update from Berkeley Group Holdings PLC, and mining shares
were up after Chinese exports rose for the ninth straight month,
blowing past forecasts.
How markets are moving: The FTSE 100 index was up 0.3% to
7,339.37, but it had dipped into negative territory. Financial and
consumer services shares were among the sectors advancing, but oil
and gas, industrial and consumer goods groups were in the red.
On Thursday, the benchmark fell 0.4%
(http://www.marketwatch.com/story/ftse-100-heads-for-a-win-even-as-china-warning-drags-down-miners-2017-12-07).
For the week, the blue-chip index was on course to rise 0.5%, after
falling 1.5% last week.
The pound bought $1.3468 after hitting an intraday high of
$1.3521. That compares with $1.3475 late Thursday in New York.
Sterling was trading around its highest against the euro in six
months, fetching EUR1.1475, more than EUR1.1445 on Thursday.
The 10-year gilt yield rose 7 basis points to 1.323%, according
to Tradeweb. Yields rise when prices fall.
What's moving markets: Jean-Claude Juncker, the president of the
European Commission, said early Friday that "sufficient progress"
has been made
(http://www.marketwatch.com/story/breakthrough-on-brexit-terms-opens-way-to-next-phase-of-talks-2017-12-08)
on three key issues holding up the Brexit negotiations for the
talks to advance to the next stage.
"I believe we have now made the breakthrough we needed," Juncker
said at a press conference in Brussels.
The announcement comes after a night of intense negotiating for
British Prime Minister Theresa May, who managed to resolve the
final issue -- the Irish border -- needed to satisfy the EU
side.
The Brussels negotiating team is now recommending that EU
leaders give the go-ahead for the next stage when they meet Dec.
14-15.
A move to the second stage of talks would reduce the chances of
the U.K. exiting the bloc without a deal in 2019.
The FTSE 100 had been hampered by pound strength, as roughly 75%
of revenue for companies listed on the London index is generated
overseas. But the pound had trouble sustaining gains even after
data showed the U.K. manufacturing sector expanded in October.
What strategists are saying: "Today is a hugely significant step
forward towards exiting the EU in 2019, and while both sides will
be relieved at the progress, many more tough negotiations lie
ahead. But we can't underestimate how important today is," said
Craig Erlam, senior market analyst at Oanda.
But Erlam pointed out that sterling had backed away from
stronger gains.
"We've seen a rally in the pound over the last couple of weeks
on the expectation of a deal being agreed, so what we may be seeing
is simply a case of buying the rumor and selling the fact," he said
in a note.
Bank shares bulk up: Barclays PLC (BCS) (BCS) leapt 3.3%, and
Lloyds Banking Group PLC (LLOY.LN)(LLOY.LN) jumped 3.7%. Royal Bank
of Scotland Group PLC (RBS.LN) (RBS.LN) added 1.4%.
HSBC Holdings PLC (HSBA.LN) (HSBA.LN) was up 0.8% while Standard
Chartered PLC (STAN.LN) picked up a more modest 0.2%.
London-listed bank stocks were higher on the Brexit progress, as
Friday's breakthrough brightens the prospects the U.K. will
maintain strong trade ties with the EU once it has withdrawn. As
well, European bank shares rallied after a long-awaited agreement
on banking rules by global finance officials highlighted that most
lenders hold a sufficient amount of capital.
The post-financial crisis agreement on Basel III standards for
banks that was struck late Thursday will allow 10 years for a small
number of lenders to raise capital or reduce risk.
House builders higher: Berkeley Group Holdings PLC shares
(BKG.LN) shot up 9% after the home builder raised its five-year
profit forecast
(http://www.marketwatch.com/story/berkeley-pretax-profit-rises-36-lifts-guidance-2017-12-08)and
said half-year pretax earnings rose 36% on higher revenue. Brexit
uncertainty is among the factors weighing on the housing market but
those have been partially offset by low interest-rate financing and
favorable currency movements, said Berkeley.
Shares of rival home builders rose as well. Barratt Developments
PLC (BDEV.LN) was up 4.4%, Persimmon (PSN.LN) was up 2.6% and
Taylor Wimpey PLC (TW.LN) added on 3.2%.
Other movers: Shares of miners were mostly higher after fresh
data showed Chinese exports and imports grew in October
(http://www.marketwatch.com/story/chinas-exports-rise-for-9th-month-in-a-row-2017-12-08).
Chinese companies are key buyers of industrial and precious
metals.
Miner Fresnillo PLC (FRES.LN) put on 0.8% as did Glencore PLC
(GLEN.LN) and BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) . But
Antofagasta PLC (ANTO.LN) was down 0.2%.
International Consolidated Airlines Group SA (IAG.LN) rose 1.8%
as the company said its British Airways unit will launch a new U.K.
flexible-benefits pension scheme
(http://www.marketwatch.com/story/iag-to-end-british-airways-defined-pension-scheme-2017-12-08)
and close its main defined benefit scheme in a move to address
costs.
Economic data:British factory output grew 0.1% in October
compared with September
(http://www.marketwatch.com/story/uk-manufacturing-grows-for-6th-month-in-a-row-2017-12-08),
and by 3.9% compared with the year-ago period, the Office for
National Statistics said.
(http://www.marketwatch.com/story/uk-manufacturing-grows-for-6th-month-in-a-row-2017-12-08)Those
figures were slightly above expectations from a Wall Street Journal
survey of analysts. Manufacturing accounts for roughly a fifth of
the U.K.'s economy, which is largely driven by the services
sector.
Industrial output was flat in October, but annual growth of 3.6%
was slightly above consensus.
Later, investors will shift attention to the U.S., where the
monthly jobs report is scheduled for release at 8.30 a.m. Eastern,
or 1.30 p.m. London time.
Read:Jobs boom likely carried over into November
(http://www.marketwatch.com/story/jobs-boom-likely-carried-over-into-november-2017-12-07)
(END) Dow Jones Newswires
December 08, 2017 06:31 ET (11:31 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
FTSE 100
Index Chart
From Apr 2024 to May 2024
FTSE 100
Index Chart
From May 2023 to May 2024