Investors welcome Brexit deadline extension

No sooner had traders breathed a sigh of relief as the “final” deadline for negotiations over a trade deal between the UK and EU was extended, they were hit with London being placed into Tier 3.

The pound spent most of Monday rising on the extended deadline until the end of the year for a trade deal to be signed – rising more than 1% at points.

But as markets closed, the growth fell back slightly following the Government placing London into the highest tier grouping.

By late afternoon the pound was up 0.7% against the dollar at 1.332 and up 0.51% against the euro to 1.097 compared with the same time on Friday.

As a result of the strong pound, the FTSE 100 index closed down 14.92 points, or 0.2%, at 6,531.83.

David Madden, financial analyst at CMC Markets UK said the FTSE 100 is the underperformer of European markets.

He added: “To a certain extent, today’s move is a reversal of Friday’s declines as housebuilders and banks are some of the biggest gainers on the market. A number of big commodity companies – mining and oil – are holding back the British equity benchmark too.”

NatWest group closed up 7.5p at 157.85p; Lloyds closed up 1.66p at 35.73p and Barclays up 6.3p at 142.36p.

Housebuilders enjoying boosts included Taylor Wimpey, up 6.2p at 156.75p, and Barratt Developments, up 22.2p at 605.6p.

In Europe, the French CAC 40 closed up 0.4% and the German DAX 30 up 0.8%.

In company news, the US games giant Electronic Arts (EA) has agreed a £945 million deal to buy UK racing game specialist Codemasters. Shares closed up 122p at 656p, suggesting investors are hoping for a bidding war – with EA’s offer set at 604p a share.

Hollywood Bowl saw its profits almost wiped out due to the Covid-19 pandemic. The company said pre-tax profits for the year to September 30 fell from £27.6 million to just £1.2 million.

But investors have already priced in the falls and shares closed down just 0.5p at 190p.

Outsourcing giant Capita finally sold its education platform division ESS to private equity house Montagu for up to £400 million. Shares closed down 0.45p at 44.91p.

Shareholders in insurance group Aviva seemed happy with the latest sale of a non-core asset – with shares closing up 4.3p at 320.3p – as the company revealed it had offloaded its Vietnamese life insurance division.

It follows sales of divisions in Italy, Hong Kong and Singapore in recent months.

And investors in consumer goods group Ultimate Products enjoyed an unscheduled update, with bosses saying earnings for the current year should surpass market expectations after an uptick in sales and improving margins. Shares closed up 16.25p at 114.25p.

The biggest risers on the FTSE 100 were Next, up 360p at 6,746p; Melrose, up 8.15p at 163p; JD Sports, up 38.8p at 790.6p; NatWest, up 7.5p at 157.85p; and Persimmon, up 121p at 2,584p.

The biggest fallers were AstraZeneca, down 468p at 7,692p; Polymetal, down 89p at 1,615p; Royal Dutch Shell “A” shares, down 34.6p at 1360.2p; BHP, down 48.6p at 1,940.4p; and Royal Dutch Shell “B” shares, down 28p at 1,309.4p.

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