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Pound slips, FTSE rises after May loses control of Brexit

(Update) After an early spike the pound waned as speculation about Theresa May's future as prime minister grew, enabling the FTSE 100 to extends its gains.

Pound slips, FTSE rises after May loses control of Brexit

(Update) The pound strengthened after MPs last night voted to take control of the Brexit process but waned during the day as speculation about Theresa May's future as prime minister grew, enabling the FTSE 100 to extend its gains.

Sterling rose to $1.323 against the dollar after last night's fresh parliamentary defeat for May, sparking three pro-remain ministers – Richard Harrington, Alistair Burt and Steve Brine – to resign and join rebels in an attempt to find a new settlement with Europe.  

MPs will now try to break the deadlock over Brexit by staging indicative votes in parliament tomorrow on the various options to avoid crashing out of the EU without a deal.

Conservative MP and Brexiteer leader Jacob Rees-Mogg provided some support for the pound after indicating he could swing behind May's deal despite it being overwhelmingly rejected twice by the House of Commons.

'The choice seems to be Mrs May's deal or no Brexit,' he said on Twitter.

However, after the Sun website reported that May could quit tomorrow in a desperate bid to get her withdrawal agreement approved by Parliament, the pound edged back to $1.322, up 0.1% on the day.

The FTSE 100, which had earlier inched 12 points higher to 7,189, stretched its gains to close 28 points or 0.4% up at 7,206.

Ocado (OCDO) was the biggest blue-chip riser, up 4% to £13.07 after announcing another major international partnership with Coles. The Australian supermarket generates £22 billion sales annually, making it one of the larger deals for Ocado and the fifth in a year.

Most recently, Ocado agreed a tie-up with UK supermarket Marks & Spencer (MKS), up a penny to 269.4p. It has also struck deals with Casino in France, Sobeys in Canada and ICA in Sweden. Since it signed its first international clients to its Ocado Smart Platform – which combines proprietary software and algorithms as well as robotic warehouses – in June 2017, its shares have risen four-fold.

‘As with other deals of this sort, it’s going to be jam tomorrow – cash flow negative to begin with while Ocado sets up its customer fulfilment centres, with revenues to flow later,’ said Neil Wilson, chief market analyst at Markets.com.

‘Having agreed the partnership with Marks & Spencer, Ocado is now well placed to focus on delivering more and more of these international deals, which will result in ongoing sustainable revenue flows.’

Ferguson (FERG) tumbled 7% to £48 after the plumbers’ merchant warned of a slowdown in second-half sales growth. It also announced it would be moving its headquarters back to the UK due to unfavourable Swiss tax reforms.

Carnival (CCL) was the biggest blue-chip faller, sinking 8.5% to £38 after the cruise ship operator cut its annual profit forecast due to higher forecast fuel prices and a strong dollar. It now expects adjusted earnings of $4.35 to $4.55 per share, down from $4.50 to $4.80. results.

Shares were also buoyant outside the FTSE 100. The FTSE Mid 250 index advanced 117 points or 0.6% to 18,917 with Crest Nicholson (CRST) a bright spot, jumping 5% to 371p after hiring Galliford Try (GFRD) boss Peter Truscott to take over as chief executive. Galliford Try fell 2.4% to 669.5p.

Fever-tree (FEVR) was up 5.2% to £26.74, as the Alternative Investment Market-listed (AIM) tonic maker reported a 26% rise in profits after tax to £61.8 million in 2018. Though the UK sugar tax weighed on margins, which fell 2% to 51.8%.

AJ Bell investment director Russ Mould said: ‘Having cracked the UK market, Fever-tree is now trying its hand at success elsewhere in the world. The key focus is rolling out the brand across the US where it not only has to get its name in front of consumers, but also help develop the premium spirits mixer industry which is still relatively immature in the country.

Fever-tree has been a favourite among UK equity fund managers, with the AIM darling’s share price having risen from 165p since listing in 2014.

Independent (IIT) investment trust, managed by Max Ward, is the largest backer with a 10.6% holding, according to Refinitiv data but was having a bad day with its shares down 5.25% at 542p.

Citywire A-rated manager Harry Nimmo is also a fan, with a 3.5% position in his Standard Life Investments UK Smaller Companies fund. His Standard Life UK Smaller Companies Trust (SLS) added a penny to 445p.  

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