The FTSE 100 closed higher on Monday and the sterling got a boost, as the UK Prime Minister Rishi Sunak signed a deal with the EU over post-Brexit trading arrangements for Northern Ireland.
Sunak will now seek to win the backing of unionists and Tory Eurosceptics.
The FTSE 100 index closed up 56.45 points, 0.7%, at 7,935.11. The FTSE 250 ended up 189.57 points, 1.0%, at 19,886.10, and the AIM All-Share closed up 5.84 points, 0.7%, at 858.47.
The Cboe UK 100 ended up 0.6% at 794.35, the Cboe UK 250 closed up 1.2% at 17,430.00, and the Cboe Small Companies ended up 0.3% at 14,074.36.
Sunak and the European Commission President Ursula von der Leyen finalised an agreement to ease the trading issues created by the Northern Ireland Protocol during a summit at Windsor on Monday.
Sunak hopes the deal will win the approval of the Democratic Unionist Party, so power-sharing can be restored in Northern Ireland to get Stormont back up and running.
DUP support would also be key in convincing Conservative brexiteers to back the deal as pressure mounted on the prime minister to give MPs a Commons vote.
DUP party leader Jeffrey Donaldson said: ‘We’ll take our time to consider the detail and measure a deal against our seven tests.’
The European Commission president will go on to have tea with the King at Windsor Castle despite criticisms that the meeting would drag Charles into the politically contentious deal.
Investor sentiment was up following the deal, after Friday’s hotter-than-expected inflation figures from the US.
According to the US Bureau of Economic Analysis last week, the personal consumption expenditures index increased 5.4% on-year in January. The rate of PCE inflation quickened from 5.3% in December and came in markedly ahead of the FXStreet cited consensus of a slowdown to 4.9%.
Core PCE inflation, the Federal Reserve’s preferred price gauge, quickened to 4.7% year-on-year in January, from 4.6% in December. The figures suggest inflationary pressures are proving stickier than ideal, and may suggest more rate hikes are in the offing by the Fed.
Sterling climbed back above the $1.20 mark on Monday afternoon after the UK and EU struck the long-awaited deal on the Northern Ireland protocol.
The pound was quoted at $1.2019 at the London equities close Monday, higher compared to $1.1947 at the close on Friday. The euro stood at $1.0591, up against $1.0545 at the same time on Friday. Against the yen, the dollar was trading at JP¥136.24, down compared to JP¥136.31 late Friday.
In European equities on Monday, the CAC 40 in Paris ended up 1.5%, and the DAX 40 in Frankfurt ended up 1.1%.
Stocks in New York were higher at the London equities close, with the Dow Jones Industrial Average up 0.2%, the S&P 500 index climbing 0.4%, and the Nasdaq Composite adding 0.7%.
In the FTSE 100, Bunzl gained 2.4% making it one of the best blue-chip performers.
The London-based distribution services company said annual revenue rose 17% year-on-year to £12.04 billion from £10.29 billion. Pretax profit increased 12% to £634.6 million from £568.7 million.
Bunzl increased its dividend by 10% to 62.7 pence from 57.0p.
The company left guidance for 2023 unchanged from its December trading statement. Back then, it said it expected a ‘resilient’ adjusted operating profit, with its operating margin ‘slightly higher than historical levels’.
Separately, Bunzl said it has agreed to acquire Arbeitsschutz-Express, a German distributor of workwear and personal protection equipment. It also said it completed the acquisition of Capital Paper Products, a Canadian packaging company.
Both acquisitions are for undisclosed sums. Bunzl added that Arbeitsschutz-Express generated a revenue of €41 million in 2022, while Capital Paper had a revenue of C$26 million, around £16 million in 2021.
In the FTSE 250, Senior gained 6.8%, after it reported a double-digit rise in yearly revenue.
The components and systems manufacturer said revenue for 2022 was £848.4 million, up 29% from £658.7 million a year earlier.
Pretax profit, however, fell by 5.5% to £22.4 million from £23.7 million.
The company declared a total dividend of 1.30 pence per share, compared to none a year earlier.
Chief Executive Officer David Squires said: ‘We have delivered a strong set of results for 2022, overcoming what was a difficult macroeconomic environment.’
At the other end of the FTSE 250 index, Dechra dropped 9.0% on a profit warning.
The veterinary pharmaceutical company said revenue in the six months to December 31 rose 14% to £377.4 million from £332.4 million a year before.
‘The global companion animal healthcare market has returned to more normalised levels of growth following the extraordinarily high rates seen during the Covid-19 pandemic, and against that context our performance has been robust,’ the firm said.
Pretax profit fell sharply to £29.7 million from £53.4 million, as operating profit fell to £44.6 million from £57.4 million a year before.
Dechra declared an interim dividend of 12.50 pence each, up 4.2% from 12.0p a year prior.
Looking ahead, Dechra now expects full year underlying operating profit to be at the lower end of analyst expectations.
However, Liberum said its forecasts are ‘more conservatively set than consensus’, expecting 1% to 2% lower earnings before interest and tax compared to consensus. Liberum expects full year revenue of £779.8 million.
On AIM, Elixirr International surged 24%. The consultancy firm said 2022 was a ‘strong year’, with all metrics to be ‘in line or above’ market expectations.
Revenue is expected to rise 40% to £70.7 million, within previous guidance, and adjusted earnings before interest, tax, depreciation and amortisation are expected to amount to £20.4 million - which is in line with Elixirr’s guidance of exceeding £20 million.
It said 2023 has started ‘strongly’ with an acceleration of organic growth in the first quarter, and January seeing record monthly revenue.
Brent oil was quoted at $82.28 a barrel at the London equities close Monday, up from $81.83 late Friday. Gold was quoted at $1,816.96 an ounce, up against $1,811.07.
In Tuesday’s UK corporate calendar, wealth manager St James’s Place will release its full-year results. Investment company and asset manager abrdn will also post its annual results. Online grocer Ocado also reports annual results.
On Tuesday, UK Bank of England Monetary Policy Committee member Catherine Mann and Chief Economist Huw Pill will each speak at around 1230 GMT.
There are a slew of PMI prints from the UK, EU and the US on Wednesday, as well as EU and US unemployment data on Thursday.
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