London stocks extended their gains on Friday, with investors taking pound strength in stride and taking heart from the latest Brexit developments in Parliament and signs of progress in Sino-US relations.
By the end of trading, the FTSE 100 was up 0.60% to 7,228.28 as the pound ticked 0.16% higher versus the US dollar to 1.32949 and gained 0.24% versus the euro to 1.1742 after MPs overwhelmingly voted overnight in favour of seeking an extension to the Article 50 deadline.
Any delay to the Brexit process will now need to be agreed by the other 27 EU members, with talks about possible condition for an extension to be held before next week's EU summit.
May also plans to bring back her deal for a third “meaningful vote” by 20 March. If her deal is approved before the summit in Brussels, she could ask the EU to delay Brexit until 30 June. However, if it's rejected again, it's thought an extension of around two years would be required.
Joshua Mahony, senior market analyst at IG, said: “UK traders can finally breathe a sigh of relief, with a week of big volatility and political wrangling drawing to a close. Any respite to the intensity of Brexit is going to be fleeting, for despite the lack of any major economic events today, we are now looking towards another meaningful vote next week.
“For the most part Theresa May is hoping threats of a long extension will push hard-line Brexiteers towards her deal, driven by the fear that Brexit may never even happen. Despite a long extension likely providing a boost for the pound, it would be bad news for businesses who are looking for an end to this constant cloud of uncertainty that has been overhead since 2016.”
Away from Brexit, fresh optimism about trade relations between the US and China helped to underpin sentiment, following a report that the two were making progress. According to news agency Xinhua, Chinese Vice Premier Liu, US Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer made “further substantive progress” on trade talks in a telephone conversation on Thursday.
Investors were also reacting to quotes from Trump that negotiations were coming along “really well” and that his team will probably announce the results in the “next three to four weeks”, adding that China had been “very responsible and very reasonable”.
Also helping to boost the mood was news that China has passed a new foreign investment law aimed at levelling the domestic playing field for overseas investors. The new law, which will come into effect in January 2020, will address concerns from foreign investors such as unfair treatment in terms of market access and government procurement.
“However, with China seemingly rushing the law through to avert further economic disruptions, there are questions over quite how much of an impact it will have for firms that continue to encounter problems when expanding into China,” Mahony said.
In corporate news, housebuilder Berkeley rallied as it said the trading environment over the four months to end-February had remained “consistent with that experienced over the last two years”. The FTSE 100 group said that it expected to have around Â£860m of net cash at its April year as it currently “assessing a number of opportunities”.
Shares in the rest of the building sector followed suit, led by Galliford Try, Persimmon and Taylor Wimpey.
Restaurant Group surged as its full-year pre-tax profit came in ahead of expectations despite an 8% drop, and the company – which bought Wagamama last year – reported an uptick in full-year sales.
EI Group, the pub chain formerly known as Enterprise Inns, was on the rise as it said that it has completed the sale of its commercial property portfolio, the proceeds of which will be used to pay down debt and return up to Â£35m to shareholders via a share buyback programme.
Fellow pub group JD Wetherspoon was also higher even as it said profits fell 18.9% in the first half of its trading year as a big jump in labour costs outweighed an increase in sales for the pro-Brexit pub chain.
On the downside, food companies Bakkavor and Greencore retreated on the back of downgrades by Berenberg, while Britvic fizzed lower after a downgrade to 'neutral' at Citi.
FTSE 100 7,228.28 +0.60%
FTSE 250 19,491.03 +1.08%
FTSE 100 – Risers
Whitbread (WTB) 5,114.00p +4.84%
Paddy Power Betfair (PPB) 5,945.00p +4.30%
Standard Life Aberdeen (SLA) 264.65p +3.54%
GVC Holdings (GVC) 546.00p +3.02%
Hargreaves Lansdown (HL.) 1,805.50p +2.94%
easyJet (EZJ) 1,259.00p +2.78%
British American Tobacco (BATS) 3,079.50p +2.70%
Hikma Pharmaceuticals (HIK) 1,598.50p +2.70%
Melrose Industries (MRO) 188.00p +2.68%
Prudential (PRU) 1,624.50p +2.59%
FTSE 100 – Fallers
Morrison (Wm) Supermarkets (MRW) 221.15p -1.71%
Sainsbury (J) (SBRY) 223.80p -1.45%
3i Group (III) 949.20p -1.12%
BP (BP.) 544.50p -0.98%
Wood Group (John) (WG.) 577.20p -0.93%
Marks & Spencer Group (MKS) 270.30p -0.73%
BHP Group (BHP) 1,718.60p -0.68%
Spirax-Sarco Engineering (SPX) 7,080.00p -0.63%
Informa (INF) 728.40p -0.63%
AstraZeneca (AZN) 6,274.00p -0.55%
FTSE 250 – Risers
Clarkson (CKN) 2,610.00p +12.99%
Restaurant Group (RTN) 139.40p +10.11%
EI Group (EIG) 215.50p +7.21%
UDG Healthcare Public Limited Company (UDG) 602.50p +7.21%
Dixons Carphone (DC.) 147.35p +6.78%
Equiniti Group (EQN) 203.50p +5.44%
Funding Circle Holdings (FCH) 405.05p +5.19%
Quilter (QLT) 147.64p +5.13%
Energean Oil & Gas (ENOG) 810.00p +4.52%
Games Workshop Group (GAW) 3,005.00p +4.34%
FTSE 250 – Fallers
Just Group (JUST) 81.75p -4.16%
Greencore Group (GNC) 200.20p -3.61%
Hochschild Mining (HOC) 190.70p -3.27%
Millennium & Copthorne Hotels (MLC) 455.00p -3.19%
Cairn Energy (CNE) 171.50p -2.94%
Acacia Mining (ACA) 197.30p -2.71%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 333.00p -1.77%
Centamin (DI) (CEY) 91.16p -1.70%
Jupiter European Opportunities Trust (JEO) 717.00p -1.51%
Grafton Group Units (GFTU) 837.50p -1.47%