Brexit nerves hit markets as pound takes a hit

The lack of white smoke from the chimneys of Downing Street and Brussels to show a Brexit deal had finally been achieved left investors nervous on Monday.

It was the currency markets that took the brunt, with the pound falling by 1.3% against the dollar at points during Monday’s trading session.

By the close it had regained some ground but was still down 0.42% at 1.336 dollars. Against the euro it was down 0.42% at 1.101.

The FTSE 100 index of leading shares closed the day up slightly by 5.16 points, or 0.08%, at 6555.39.

This was mainly due to international-focused firms enjoying a boost from the weakened pound making shares look cheap to foreign investors.

David Madden, market analyst at CMC Markets UK, said: “The slide in sterling has assisted stocks like Diageo, Unilever and GlaxoSmithKline as they have relatively large international revenue streams, and that is why the FTSE 100 is up on the session, albeit a small gain.”

Rumblings throughout the weekend had led some cause for optimism, but as the first day of the new week ended there were genuine fears a no-deal Brexit could be on the cards.

Connor Campbell, financial analyst at Spreadex, said: “Sinking 1.1% against dollar and euro alike, sterling is seriously worried that, after years and years of negotiations and broken promises, the UK is actually headed for a no-deal departure from the EU.

“It’s a focus that isn’t going to change until investors have a definitive answer, one way or the other.”

The French Cac 40 and German Dax 30 markets shared the pain, closing down 0.64% and 0.21% respectively.

In company news, Mike Ashley’s Frasers Group confirmed it was in talks with Debenhams to avoid a potential liquidation of the department store.

Mr Ashley has had his eyes on the business for years, but has been regularly rebuffed. Shares in Frasers closed down 10p, or 2.3%, at 423.8p.

B&Q owner Kingfisher followed the lead of the supermarkets from a week ago by committing to hand over millions in business rate relief, having previously revealed boosts in profits from its “essential” retail status.

Shareholders were less impressed by Kingfisher’s generosity at the £130 million bill, with shares closing down 3.3p at 265.5p.

The board of Countrywide said it was considering a new offer from its rival Connells, which upped its offer to 325p per share.

Shares soared 22%, up 57p to 312p, although notably this was not to the same level as the offer.

Lockdown success story Games Workshop saw a modest 1.4% boost to shares following a profits upgrade.

The Warhammer specialist said the second national lockdown in England had been fruitful. Shares closed up 135p at 10,010p.

The Hut Group, which issued a revenues upgrade on strong Black Friday sales, also enjoyed a jump in shares. They closed up 19.4p at 668.4p.

But it was a gloomier picture at Ted Baker as the fashion chain released news that pre-tax losses trebled to £86.4 million in the six months to early August. Shares closed down 16.8p at 117.2p.

The biggest risers on the FTSE 100 were British American Tobacco up 128p at 2,849p; Imperial Brands up 50.5p at 1,517.5p; Smurfit Kappa up 84p at 3,358p; Polymetal International up 37p at 1,672p; DS Smith up 7.1p at 348.6p.

The biggest fallers were Berkeley down 343p at 4,421p; Persimmon down 152p at 2,716p; DCC down 302p at 5,464p; Lloyds Banking Group down 1.69p at 37.34p; Whitbread down 134p at 3,171p.