FTSE, pound drift as MPs look to vote on Brexit options

The UK blue-chip index initially fell 24 points, or 0.4%, but recovered close flat at 7,184, as investors refrained from big bets ahead of the votes.

The pound also weakened then edged 0.15% higher to $1.3229 against the dollar.

Theresa May was due to address her Conservative MPs, with reports she might set out a date for her exit as prime minster as a trade-off to get the necessary support for her twice-rejected Brexit deal.  

‘Will these votes actually matter? First, these are not binding on the government,’said Neil Wilson, chief market analyst at Markets.com. ‘Second, it seems unlikely there will be a majority in parliament for anything.

‘Three, we could yet see meaningful vote three come back after Rees-Mogg, the leading Brexiteer, said he could back the deal. Time is running out though and, without parliament coalescing around a majority view, the default is still no-deal.’

Debenhams (DEB) shares soared 27% to 2.8p, as Sports Direct boss Mike Ashley continued his pursuit of the beleaguered department store, offering 5p per share, more than double their price at yesterady’s close. Sports Direct (SPD) shares slipped 1.5p or 0.6% to 285.7p.

Ashley’s offer is conditional on Debenhams appointing him as chief executive with immediate effect and dropping its refinancing plans, which would give lenders greater control of the company, and may wipe out shareholders.

‘The Debenhams board are bound by their duty to shareholders to give this proposal proper consideration, though it’s not yet a firm offer for the company,’ said Hargreaves Lansdown senior analyst Laith Khalaf. ‘There’s a bit of a chicken and egg situation here too. If Debenhams appoints Mike Ashley as chief executive, then there’s little to bind Sports Direct to making a firm offer.

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‘This is not conventional corporate behaviour by any means, but that’s what we’ve come to expect from the Sports Direct chief executive. What we haven’t had from either Mike Ashley or Debenhams is a strategic plan for the long-term future of the company, and today that still remains sadly lacking.’

In a mirror image of the blue-chip index, the FTSE 250 rose then fell to close 2.5 points lower at 18,893. Bellway (BWY) remained a bright spot, up 2.2% to £30.65 after reporting a decade of growth in volumes in its first-half results.

Bellway said it had capacity to build around 13,000 units this year, up from 10,500 last year. Though it is starting to experience some pressure on margins due to a softening housing market, down from 22.5% to 21.5%, and this is set to continue in the second half of the year.

‘At the very least, Bellway’s management has been upfront about the likelihood of a narrowing of its margin performance for some time, and the combination of lower selling prices and rising construction costs is one all of its peer group has to face,’ said AJ Bell investment director Russ Mould.

‘Its strategy to continue growing despite reduced profitability is not one which will necessarily be replicated elsewhere though, and time will tell if this is a sound approach or not.’

Avast (AVST) slide 4.5% to 283.5p after one of its major investors sold half its shares in the cyber security firm.



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