London stocks crept ahead yesterday, mirroring gains elsewhere, after earlier dipping when Britain’s opposition Labour Party vowed to nationalise parts of telecoms giant BT and offer free broadband Internet in an eye-catching election promise.
Labour leader Jeremy Corbyn, hitting the campaign trail in the city of Lancaster in northwestern England, said he would bring the parts of BT that deal with broadband into public ownership as part of a sweeping programme of nationalisations.
As the overall index closed the week down 0.77% on a week earlier, BT shares dived 3.7% before limiting the loss to 1.15% as dealers digested news that its broadcasting division had obtained exclusive broadcast rights to UEFA’s European football matches until 2024.
Corbyn is seeking to seize the initiative from Prime Minister Boris Johnson’s Conservative Party ahead of the December 12 election that has been dominated so far by Brexit.
“Current polling suggests Labour is unlikely to win a majority in the looming election, however if the party was to enjoy a late surge in the polls, BT shareholders might start to get a little bit more nervous,” said Russ Mould, investment director at online broker AJ Bell.
Corbyn proposes to privatise BT’s Openreach division, which runs almost all of Britain’s existing digital network, and other elements of the firm to create a new public entity, British Broadband.
Labour estimates the plan will cost some £20.3bn (€23.7bn, $26.1bn), but some analysts were quick to pour cold water on the plans.
“With the party planning to provide free fibre optic broadband via taxation of big tech firms, this proposal has a wide reach that would essentially wipe out the whole broadband business in the UK,” said IG analyst Joshua Mahony, while voicing doubt that such “radical” proposals would emerge as a likely coalition would crimp its room for policy manoeuvre.
Stock markets elsewhere gained ground on resurgent trade war optimism, dealers said.
Asian indices mainly rose as trade hopes were given a boost by US President Donald Trump’s economic aide saying “enormous progress” had been made in talks with China, easing recent concerns that they were stumbling.
The gains came after top White House adviser Larry Kudlow said that the long-awaited mini trade deal with China was on track as part of a wider pact.
“The deal is not complete but we’ve made enormous progress,” he told reporters, adding that the talks were “coming down to the short strokes”.
His comments follow a week of unease about the much-vaunted talks, after Trump dismissed Chinese claims of a plan to roll back tariffs as the negotiations progress, while reports said Beijing was uneasy about some aspects of the developing deal.
Eurozone stocks were happy to take Asia’s optimistic lead to trade modestly firmer in the afternoon.
London’s FTSE 100 closed 0.1% up at 7,302.94 points, Frankfurt’s DAX 30 ended 0.5% higher at 13,241.75 points and Paris’s CAC 40 gained 0.7% at 5,939.27 points, while the EURO STOXX 50 added 0.6% at 3,711.61 points at close.
Wall Street opened higher, too, as Kudlow’s comments gave optimistic traders an incentive to buy.
In Santiago de Chile, meanwhile, stock prices rose more than six% after political parties agreed to hold a constitutional referendum, a key demand of protesters to resolve weeks-long unrest.
Chile’s peso rose against the dollar, also boosted by the government’s promise to hold a referendum to change the country’s dictatorship-era constitution.
An engineer from EE, the wireless network provider owned by BT Group, checks 5G masts in London. Labour leader Jeremy Corbyn said he would bring the parts of BT that deal with broadband into public ownership as part of a sweeping programme of nationalisations.
