Tech stocks rebound but Brexit jitters rock market

A robust performance by London’s small band of blue-chip tech stocks stabilised nerves made jittery by the prospect of a No Deal Brexit on Monday morning.

Scottish Mortgage Investment Trust, which holds a significant stake in Elon Musk’s electric car business Tesla, was the biggest riser in the FTSE 100 index after a 5% rebound to 889.5p.

There were also gains of 3% for cyber security business Avast and fast-growing industrial software firm Aveva.

US tech stocks including Apple and Amazon have driven Wall Street markets to record highs in recent weeks, although profit-taking on Thursday and Friday raised fears that the boom times might be drawing to a close.

With US markets closed for Labor Day, the FTSE 100 index was 72.63 points higher at 5871.95 as Europe recouped some of the heavy losses seen at the end of last week.

The rising prospect of a No-Deal Brexit hit sentiment in UK shares but that was balanced out by a corresponding fall in the pound, which benefited exporters.

Meanwhile, housebuilders including Barratt Developments were up 3% after positive house price figures from Halifax.

A stronger gold price meant Polymetal International surged 69p to 1,988p, valuing the Russian miner above £9 billion, while Hochschild Mining was 5.8p higher at 237.8p in the FTSE 250 despite reducing production guidance. Its flagship Inmaculada gold-silver mine in southern Peru is running at full capacity, but output has been hit by recent stoppages caused by Covid-19 related restrictions.

A potential bidding war for America’s biggest fleet of yellow school buses helped spark a much-needed recovery for transport giant FirstGroup shares.

The private equity speculation involving the potential £3 billion sale of FirstGroup’s North American businesses FirstStudent and FirstTransit helped shares rally 14% to 45.2p. The stock is still only valued at just over £500 million.

Vets products firm Dechra Pharmaceuticals jumped 216p to 3304p after it hiked its dividend by 8.5% and said trading in the first few weeks of its new financial year had been encouraging.

Speciality chemicals company Elementis, whose additives are used in anti-perspirants, rose 2% to 74.65p after banking covenant tests were relaxed to cover all of next year. It is also on track to achieve a significant debt reduction. Analysts at Jefferies, who have a price target of 95p, said the covenant agreement reduced risk in the event of further Covid lockdowns.

Small-cap spotlight
A Brighton-based biotech firm focused on hospital superbugs has revealed its involvement in a potential preventative treatment for Covid-19.

AIM-listed Destiny Pharma’s shares surged 15% to a one-year high of 56.4p on the collaboration with fellow UK biotech SporeGen. As an “easy to use” first line of defence, Destiny said the product has the potential to reduce Covid-19 infection rates and transmission significantly.

A grant of £800,000 from Innovate UK is supporting the project, which could enter first human clinical trials within 18 months.