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Jan. 2, 2020, 7:45 a.m. EST

British stocks rise in new year rally but pound slides on hard Brexit fears

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By Callum Keown


Getty Images
London’s New Year celebrations extended to the stock market on the first trading day of 2020

British stocks began the new year with a bang on Thursday but the pound slipped as 2020 started with the same old Brexit fears.

The internationally-exposed FTSE 100 /zigman2/quotes/210598409/delayed UK:UKX +1.75%   jumped 0.9% led by strong gains for mining stocks as China’s central bank cut its reserve requirement ratio for banks in a bid to boost its economy. The U.K.’s blue-chip index was also helped higher by a weaker pound. The domestically-focused FTSE 250 /zigman2/quotes/210598417/delayed UK:MCX +1.30%   also climbed 0.8% as global stocks began the new year with a rally.

The pound /zigman2/quotes/210561263/realtime/sampled GBPUSD +0.1224%   dropped 0.4% back to $1.3204 as traders remained concerned over a possible hard Brexit later this year. The U.K., which is expected to leave the European Union later this month, has until the end of the year to strike a trade deal with the EU, and Prime Minister Boris Johnson has ruled out an extension to that deadline.

What’s moving the markets?

After a subdued end to 2019 followed by the New Year’s holiday, renewed optimism over a U.S.-China trade deal helped propel European stocks higher on the first day of 2020 trading. President Trump also plans to visit Beijing to begin talks on a ‘phase 2’ deal, while ‘phase 1’ will be signed in a White House ceremony on Jan.15.

China’s central bank added to the feel good factor, announcing on Wednesday it would cut the amount of money banks will be required to have on hand from Monday in a bid to boost the slowing economy. The bank reserve requirement ratio (RRR) will be cut by 50 basis points, which is expected to release about 800 billion yuan ($114.6 billion) into the economy.

The U.K. manufacturing sector contracted in December at its fastest rate since 2012 as factory output, orders and employment fell, according to the CIPS purchasing managers index (PMI).

Which stocks are active?

Tullow Oil /zigman2/quotes/205079109/delayed UK:TLW +2.10%   fell 7% after the company said it found four metres of net oil pay at its offshore Guyana well, which was less than expected. The oil and gas company said the Carapa-1 exploration well, drilled to a depth of 3,290 metres in 68 metres of water, would now be plugged and abandoned.

Greggs /zigman2/quotes/205743109/delayed UK:GRG +0.71%   shares rose 2.3% as the U.K. bakery chain launched a vegan steak bake, following the success of the company’s vegan sausage roll last year.

Mining stocks enjoyed solid gains following China’s RRR cut announcement. The policy news from the world’s largest metals consumer, sent Glencore /zigman2/quotes/201400686/delayed UK:GLEN +2.03%  shares up 3.4% and Antofagasta /zigman2/quotes/200173667/delayed UK:ANTO +1.92%   2.8% higher.

/zigman2/quotes/210598409/delayed
UK : FTSE UK
6,156.35
+105.76 +1.75%
Volume: 97,207
Aug. 11, 2020 9:01a
loading...
/zigman2/quotes/210598417/delayed
UK : FTSE UK
17,954.87
+229.93 +1.30%
Volume: 57,233
Aug. 11, 2020 9:01a
loading...
/zigman2/quotes/210561263/realtime/sampled
US : Tullett Prebon
1.3088
+0.0016 +0.1224%
Volume: 0.0000
Aug. 11, 2020 4:16a
loading...
/zigman2/quotes/205079109/delayed
UK : U.K.: London
26.74 p
+0.55 +2.10%
Volume: 1.82M
Aug. 11, 2020 8:58a
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
£359.63 million
Rev. per Employee
N/A
loading...
/zigman2/quotes/205743109/delayed
UK : U.K.: London
1,417.00 p
+10.00 +0.71%
Volume: 66,978
Aug. 11, 2020 9:00a
P/E Ratio
451.27
Dividend Yield
0.00%
Market Cap
£1.43 billion
Rev. per Employee
N/A
loading...
/zigman2/quotes/201400686/delayed
UK : U.K.: London
175.30 p
+3.48 +2.03%
Volume: 4.62M
Aug. 11, 2020 9:01a
P/E Ratio
N/A
Dividend Yield
0.00%
Market Cap
£23.07 billion
Rev. per Employee
£1.04M
loading...
/zigman2/quotes/200173667/delayed
UK : U.K.: London
1,116.50 p
+21.00 +1.92%
Volume: 114,952
Aug. 11, 2020 9:00a
P/E Ratio
28.09
Dividend Yield
1.22%
Market Cap
£10.62 billion
Rev. per Employee
N/A
loading...

Callum Keown is a Barron's Group reporter for the Europe, Middle East and Africa region. He writes for MarketWatch, Barron’s, Penta and Financial News.

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