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Domestic stocks lift FTSE as MPs reject no-deal Brexit

UK markets lifted by domestic stocks as MPs reject no-deal Brexit in parliamentary vote

Domestic stocks lift FTSE as MPs reject no-deal Brexit

UK markets have been led higher by domestic stocks which rose after MPs rejected a 'no-deal' Brexit in parliament last night.

The FTSE 100 was up 32 points, or 0.5%, to 7,191, as lawmakers voted against leaving the EU without a withdrawal agreement on 29 March, making a delay to the UK’s exit more likely.

Financial stocks led gains in the UK blue-chip index, with Lloyds (LLOY) up 2.3% to 62p, while Barclays (BARC) rose 0.7% to 165.1p and Royal Bank of Scotland (RBS) climbed 1.9% to 266.1p.

The pound rallied sharply overnight, hitting a peak of $1.335 as MPs delivered their verdict, falling back to $1.325 this morning.

MPs will vote again this evening on an extension to Brexit, though this would then need to be approved by EU officials, who have stressed there would need to be a good reason for the delay.

However, David Zahn, head of European fixed income at Franklin Templeton, warned there was still a risk of an ‘accidental no-deal’ as options for the UK government are limited with just days to go until the deadline.

‘Pushing out the leave date by more than a few months might give more time for a new referendum or general election, but those events would likely bring more uncertainty and financial market dislocation,’ he said. ‘We can’t imagine the EU offering a better deal than the one currently on the table, so we’d expect the situation at the end of any extension to be exactly the same as it is now.’

‘If the UK does secure an extension and maintains its resolve to rule out a no-deal Brexit, we think the ultimate outcome will be that the UK stays in the EU in some form, at least temporarily.’

Oil majors extended gains from previous sessions, as oil prices hit their highest point this year, with crude oil futures reaching $68 a barrel in early trading, on Opec supply cuts and US sanctions against Iran and Venezuela. Shell (RDSb) rose 0.8% to £23.83 and BP (BP) was up 0.4% to 549.9p.

The FTSE 250 also rose 152 points, or 0.8%, to 19,332 with Cineworld (CINE) up 7.2% to 310p as the cinema chain reported a surge in annual profits, up 125% to £262 million, following the purchase of US rival Regal Entertainment.

The deal entailed Cineworld borrowing in excess of three-and-a-half times earnings as well as launching a rights issue. AJ Bell investment director Russ Mould said the results showed progress, with promising signs ahead.

‘In terms of getting bums on seats, the remainder of this year has plenty of big blockbusters with the latest instalments in the Toy Story, Avengers and Star Wars film series coming to the big screen,’ he said.

‘Reassuringly Cineworld is not taking cinemagoers for granted as it rolls out a refurbishment programme across its estate. It will need to balance this investment with the need to rapidly reduce its debt.’

Meanwhile, Just Group (JUST) shares tumbled 14.1% to 83.8p, after the annuity specialist said it would raise money via a share placement and a debt offering in order to strengthen its balance sheet amid changes to capital requirement rules.

Under new regulation, Just will need to have in place more capital to protect against risks related to mortgages.

It planned to place almost 10% of existing issued share capital at 10p a share and launch a debt offering at a minimum of £300 million.

Savills (SVS) dropped 4.7% to 880p, after the estate agent cautioned on the outlook for the rest of 2019, forecasting a fall in transactions amid global economic and political uncertainty. It also reported profits had fallen 3% in 2018.

Real-estate investment trust Capital & Regional (CAL), which invests in shopping centres, saw shares slip 9.6% to 28.9p, after slashing its annual dividend from 1.9p per share in 2017 to 0.6p for 2018.

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