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What happened in the stock market today

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Today started unpromisingly, with Boris Johnson heading to Brussels for a crunch Brexit summit, hampered by a statement from the Democratic Unionist Party (DUP) that it couldn’t support his proposals for Northern Ireland.

As usual, this bit of Brexit deal-related pessimism led to the sterling weakening, the FTSE 100 – with its large exposure to overseas earnings – edging up, and the more domestically focused FTSE 250 edging down.

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However, the mood shifted mid-morning on news that a Brexit agreement had been struck between the UK and EU negotiators. Boris Johnson said: “We’ve got a great new deal that takes back control.” He and European Commission President Jean-Claude Juncker urged their respective parliaments to back it.

Sterling immediately strengthened, surging to a five-month high against the dollar and euro. And the FTSE indexes headed north, with UK domestic stocks leading the charge.

Blue-chip trading updates

Meanwhile, in company news, consumer goods giant Unilever and pest control and washroom supplies group Rentokil Initial both made gains on the back of positive trading updates.

Unilever said it had “maintained momentum” in Q3 with underlying sales growth of 2.9% and a “good balance” between volume and price. Emerging markets and home care were the key growth drivers. Management said it continues to expect full-year underlying sales growth to be in the lower half of its multi-year 3%–5% target range.

Rentokil reported “another strong quarter,” posting organic revenue growth of 5.5%. It said this was its highest level in over 10 years, and that it’s on track to meet full-year expectations. Management added that after acquiring 15 businesses in Q3, its M&A pipeline going into Q4 and 2020 “remains strong.”

BAE Systems and Smiths Group, which both went ex-dividend today, were among the Footsie’s biggest fallers.

Mid-cap winners and a big loser

In the FTSE 250, WH Smith topped the risers board (up over 10% on the day at one stage), following news it’s agreed to another significant acquisition in the international travel space. This came alongside the release of its annual results in which it reported an 11% rise in revenue for its financial year ended 31 August. As ever, growth came from its travel division (+22%), with its high street business lagging (-2%).

It said its agreement to acquire US travel retailer Marshall Retail Group for $400m (£312m) will double the size of its international travel business, and is a “compelling opportunity” to accelerate its growth. The deal will be funded by a £155m equity placing and new debt facility.

In his review of WH Smith’s results (also covering the aforementioned Rentokil), my colleague Harvey Jones concluded the retailer is definitely one to watch and, maybe, even buy.

The market also responded positively to trading updates from fellow mid-caps Domino’s Pizza and National Express. However, it hammered, whose shares traded down as much as 12% on the day. Bargain buy or one to avoid? Harvey, in a separate article, concluded the valuation of this one still looks pricey.

Back to Brexit

In a switchback day, sterling retreated in the afternoon on fears the Brexit deal could yet be scuppered, notably because the DUP maintained its earlier stance, saying it wouldn’t vote for it. Another day in the Brexit saga and the ultimate outcome remains as clear as mud. I wonder if anyone’s kept a tally of how many ‘crunch’ days we’ve had so far!

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Unilever. The Motley Fool UK has recommended Domino's Pizza,, and WH Smith. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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