Stocks eased on Friday as prime minister Johnson warned of a ‘strong possibility’ that the UK would eave the EU on 1 January without a trade deal. The two sides have set a deadline of Sunday to resolve their differences over fishing rights, a ‘level playing field’ and ongoing regulation.

At 8.30am the FTSE 100 index was down 29 points or 0.4% at 6,571, pulled lower by telecoms, house builders and financial stocks.

The pound shrugged off fears of a no-deal Brexit, rising to $1.332 against the dollar, while Brent crude oil traded marginally higher at $50.30 per barrel and gold trod water at $1,837 per ounce.

COMPANY NEWS

Banks were in focus after the regulator said it would allow lenders to restart capital pay-outs in the form of dividends and share buybacks.

However, any distributions by large banks for this year should be "prudent" and fall within temporary "guardrails" published by the Prudential Regulation Authority.

Shares were mixed, with Barclays (BARC) dipping 3.3% to 137p and NatWest Group (NWG) losing 3% to 156p while HSBC (HSBA) initially added 0.7% to 406p and Standard Chartered (STAN) rose 0.5% to 478p.

Shares in drug maker Glaxosmithkline (GSK) traded sideways at £14.17 despite the announcement the firm was delaying its Covid-19 vaccine programme, run in conjunction with French pharmaceutical maker Sanofi, due to a weak response in elderly patents during Phase 1 and Phase 2 trials.

The ‘insufficient response’ in older adults means the vaccine needs refining with a higher concentration of the antigen ‘in order to provide high-level immune response across all age groups’. Glaxo doesn’t expect its drug to be available until the final quarter of next year assuming further trials are successful.

Aero engine maker Rolls-Royce (RR.) descended 5.9% to 119p after a trading update which showed the civil aerospace business was still suffering from the fall-out of travel restrictions with large-engine flying hours still almost 60% below 2019 levels.

The firm reaffirmed its target of turning cash-flow positive ‘at some point’ in the second half of next year and of generating at least £750 million of positive free cash flow the following year, but investors seemed unimpressed.

House builder Bellway (BWY) issued a more positive trading update, covering the 17 weeks from August to November, citing strong demand for new homes. Reservations were up 6% on the same period last year and the order book of close to 6,200 homes was valued at £1.77bn, an increase of nearly 19%.

The firm also raised its forecast for completions for the full year to July 2021 to around 9,400 homes, an increase of 25% on the previous year. Notwithstanding, shares drifted 3% lower to £26.74.

There was a more positive response to the latest trading update from London estate agency Foxtons (FOXT), which benefitted from the unlocking of the housing market with an 11% increase in house sales in the last two months.

The firm also announced a plan to buy back up to £3 million of shares as a reflection of its strong capital position. Shares added 3.4% to 45.5p.

Shares in air-conditioning equipment maker Volution (FAN) jumped 11% to 284p after it revealed that earnings for the new financial year would be ‘significantly ahead of expectations’ thanks to strong organic growth and the firm hitting its 20% operating margin target a full eight months ahead of target.

Like-for-like sales rose by nearly 8% in Europe and 18% in Australasia thanks to new product launches and market share gains.

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Issue Date: 11 Dec 2020