London close: Stocks firmer as Sunak announces new Brexit deal

(Sharecast News) - London stocks managed a positive finish on Monday, with Rolls-Royce pacing the gains after a rating upgrade, with well-received results from Bunzl and a guidance upgrade from AB Foods underpinning the mood. The FTSE 100 ended the session up 0.72% at 7,935.11, and the FTSE 250 was ahead 0.96% at 19,866.10.

Sterling was also in the green, last rising 0.8% on the dollar to $1.2039, and strengthening 0.3% against the euro to change hands at €1.1362.

Sterling rose after the close, as prime minister Rishi Sunak said he had agreed a new Brexit deal for Northern Ireland with European Commission president Ursula von der Leyen.

Sunak said the agreement - which he referred to as the new 'Windsor Framework', as that's where it was struck, was a "historic" and "decisive breakthrough".

It "delivers smooth-flowing trade within the whole of the United Kingdom, protects Northern Ireland's place in our union and safeguards sovereignty for the people of Northern Ireland", he said.

The deal would include green and red lane trade routes, depending on whether goods are staying in the UK or might travel on to the EU.

It would also involve UK VAT and excise changes in Northern Ireland, whereby British products such as food and drink would be available in Northern Ireland.

In addition, pet travel requirements were being removed.

"Friday's PCE shocker certainly gave investors a fright, but the bargain hunters have returned to trading today," said IG chief market analyst Chris Beauchamp.

"After the 'good news is bad news' theme of recent weeks, news of the UK-EU deal on Northern Ireland is one welcome development, and one that doesn't involve the words 'inflation' or 'interest rates'.

"But with a lighter calendar this week and earnings season firmly winding down it looks like bulls will have the chance to grab control in a way that has eluded them for weeks."

In economic news, household energy bills looked set to rise in April despite the price cap being cut by nearly £1,000.

Publishing its latest quarterly review of the cap - which was introduced to ensure customers on standard tariff bills were not overcharged - energy regulator Ofgem said wholesale prices had eased, and the cap would be lowered as a result.

From 1 April, the cap would be set at £3,280 per year, down from its current level of £4,279, for a dual fuel household paying by direct debit and based on typical consumption.

However, government support would also be reduced from April, meaning bills looked set to rise despite the lowered cap.

Since October, the Energy Price Guarantee meant average bills were around £2,500 per year, but that was now poised to increase to £3,000 from April, with the £400 winter discount on all bills also set end.

"Although wholesale energy prices have fallen, the price cap has not yet fallen below the planned level of the EPG," said Jonathan Brearley, chief executive of Ofgem.

"This means that, under current policy, bills will rise again in April. I know that for many households, this news will be deeply concerning.

"However, today's announcement reflects the fundamental shift in the cost of wholesale energy for the first time since the gas crisis began, and while it won't make an immediate difference to consumers, it's a sign that some of the immense pressure we've seen in the energy markets over the last 18 months may be starting to ease."

Elsewhere, business confidence continued to falter across the UK service sector according to a fresh set of survey results, as higher costs weighed heavily.

According to the latest quarterly CBI service sector survey, cost pressures remained elevated while profits continued to fall throughout the sector.

In business and professional services, a net balance of 58% reported strong cost pressures, with 63% expecting costs to continue growing in the next three months.

Profitability, meanwhile, dropped for the fifth consecutive quarter, with a balance of -27%, a noticeable widening on November's -11%.

That hit business sentiment, although the balance of -20% was an improvement on the previous quarter's -55%.

"There's no doubt the services sector continues to face tough times, not least those dependent on consumer spending power during a period of high inflation and rising interest rates," said Charlotte Dendy, head of economic surveys at the CBI.

"Profitability is falling and costs are rising, which is denting many business investment plans and hitting business confidence across the sector."

Retail footfall meanwhile fell across most of the UK last week according to industry data, as children returned to school following the half-term break.

According to retail consultancy MRI Springboard, footfall was down 5.3% week-on-week in the seven days beginning 19 February.

Of the UK's 10 geographies, only Wales and the West Midlands - which had their half-terms last week - recorded increases, MRI Springboard said.

A week earlier, when it was half-term for most of the country, footfall jumped 7.6%.

"Somewhat inevitably, footfall fell back once again last week," said Diane Wehrle, insights director at MRI Springboard.

"Footfall declined across all the range of town types. However, the drop in central London and other city centres was more modest than the rise in the week before last, clearly cushioned by employees to their offices.

"In contrast, in coastal towns - which are attractive for day visits - and in smaller high streets, the reverse was true."

On the continent, eurozone economic sentiment was steady in February, according to a survey from the European Commission.

The headline economic sentiment indicator for the bloc nudged down to 99.7 from 99.8 in January, coming in below consensus expectations for a reading of 101.0.

Across the pond, orders for goods made to last more than three years shrank by more than expected last month, as the surge in jet orders seen at the end of 2022 reversed.

According to the Department of Commerce, durable goods orders shrank at a seasonally-adjusted month-on-month pace of 4.5% to reach $272.26bn.

Finally on data, pending home sales in the US jumped at the start of the year, thanks to a drop in mortgage rates around the new year.

The National Association of Realtors' pending home sales index rose at a month-on-month pace of 8.1% in January, well above consensus expectations for 0.9%, although in annual terms it was down by 24.1%.

On London's equity markets, Rolls-Royce Holdings jumped 6.59% after an upgrade to 'buy' from 'underperform' at Bank of America Merrill Lynch, while Shell was boosted 1.5% by an upgrade to 'buy' from 'neutral' at Goldman Sachs.

Trainline rose 5.2% after an upgrade to 'buy' at Deutsche Bank.

International distribution group Bunzl advanced 2.49% after it reported a rise in annual earnings, driven by product cost inflation, volume recovery in the first half and growth from acquisitions.

Pre-tax profit for 2022 rose 11.6% to £634.6m, as revenue grew 9.8% at constant exchange rates to £12bn.

Shareholders were rewarded with a 10% rise in the total dividend to 62.7p a share.

Bunzl also revealed it had bought a business in Germany and completed the acquisition of another in Canada.

Primark owner Associated British Foods rallied 1.44% after it lifted full-year guidance as consumer spending proved to be more resilient in the first half and inflationary volatility eased.

The group said it now expected adjusted operating profit to be broadly in line with the prior year, having previously forecast adjusted operating profit below the €1.44bn made in 2021-2022.

Online supermarket and warehousing technology specialist Ocado Group was in the black by 2.23% a day ahead of its full-year results, with Tesco up 2.96% and J Sainsbury 3.12% firmer.

Senior leapt 6.77% after hailing a strong trading performance, posting a jump in full-year operating profit and saying that its order book remained healthy.

On the downside, Dechra Pharmaceuticals tumbled 9.21% after it warned that based on the recent US destocking and current exchange rates, it now expected full-year underlying operating profit to be at the lower end of analyst expectations.

Exploration and development firm Capricorn Energy lost 1.5% after saying that its full-year overall production had come in lower than original guidance, but still within its revised range of 33,000 to 36,000 barrels of oil per day.

Refractory products group RHI Magnesita was off 1.43% even after reporting that both revenues and adjusted earnings had risen in the 12 months ended 31 December.

Quilter and Hargreaves Lansdown were 2.82% and 0.28% lower, respectively, after downgrades to 'sell' at Citi.

Reporting by Josh White for Sharecast.com. Additional reporting by Michele Maatouk, Frank Prenesti, Abigail Townsend and Alexander Bueso.

Market Movers

FTSE 100 (UKX) 7,935.11 0.72% FTSE 250 (MCX) 19,886.10 0.96% techMARK (TASX) 4,646.54 0.66%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 145.00p 6.59% Entain (ENT) 1,356.50p 3.83% Sainsbury (J) (SBRY) 271.90p 3.38% Melrose Industries (MRO) 151.25p 3.10% Flutter Entertainment (CDI) (FLTR) 13,465.00p 3.06% Tesco (TSCO) 254.20p 2.96% Prudential (PRU) 1,251.50p 2.88% BT Group (BT.A) 141.25p 2.84% Persimmon (PSN) 1,433.50p 2.76% Kingfisher (KGF) 276.30p 2.68%

FTSE 100 - Fallers

Airtel Africa (AAF) 121.60p -1.62% M&G (MNG) 208.00p -1.56% Smith & Nephew (SN.) 1,203.50p -0.95% Haleon (HLN) 323.75p -0.90% HSBC Holdings (HSBA) 631.80p -0.61% BAE Systems (BA.) 912.60p -0.57% Fresnillo (FRES) 765.20p -0.47% Experian (EXPN) 2,855.00p -0.35% SEGRO (SGRO) 823.00p -0.34% Rio Tinto (RIO) 5,648.00p -0.34%

FTSE 250 - Risers

Senior (SNR) 175.00p 7.76% Wizz Air Holdings (WIZZ) 2,661.00p 5.51% Domino's Pizza Group (DOM) 286.40p 5.22% Trainline (TRN) 258.80p 5.20% Bakkavor Group (BAKK) 112.20p 4.86% Tullow Oil (TLW) 35.38p 4.74% Mitchells & Butlers (MAB) 161.20p 4.40% Hammerson (HMSO) 29.92p 4.36% Baltic Classifieds Group (BCG) 159.00p 4.33% National Express Group (NEX) 126.00p 4.30%

FTSE 250 - Fallers

Dechra Pharmaceuticals (DPH) 2,818.00p -9.21% Jupiter Fund Management (JUP) 140.20p -3.18% Quilter (QLT) 93.10p -2.64% 888 Holdings (DI) (888) 67.65p -2.03% VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 442.50p -1.67% Capricorn Energy (CNE) 249.60p -1.50% RHI Magnesita N.V. (DI) (RHIM) 2,616.00p -1.43% Hays (HAS) 118.40p -1.42% Hunting (HTG) 329.50p -1.35% Drax Group (DRX) 634.00p -1.32%