U.K. stocks edged higher Tuesday before a court decision about whether the U.K. government must consult parliament before triggering Brexit negotiations.
BT Group PLC shares, however, plunged after the telecommunications company issued a profit warning stemming from an accounting scandal in Italy.
The FTSE 100 clung to a thin rise of 0.1% at 7,155.14. The index on Monday dropped 0.7% as the pound strengthened against a weakening U.S. dollar.
Dragging on the benchmark Tuesday was BT Group PLC. Shares tumbled 19% after the company said it will take a bigger-than-expected £530 million ($661 million) write-down and that its Italian business will weigh down on earnings for the next two years.
“The improper behavior in our Italian business is an extremely serious matter, and we have taken immediate steps to strengthen the financial processes and controls in that business,” BT said in a statement.
Court case: Investors will watch for a decision from the U.K.’s Supreme Court, expected at 9:30 a.m. London time, or 4:30 a.m. Eastern Time. The government is appealing a High Court ruling in early November that said Britain’s parliament should have a say before the government invokes Article 50, the beginning of the process for Britain to exit the European Union.
The pound will be in focus, and was trading around $1.2480 compared with $1.2536 late Monday in New York.
“If the government wins the appeal — this is the less likely outcome — then the pound is likely to drop again as it paves the way for a hard Brexit. However, assuming the government loses the appeal, it’s likely to be the granularity of the judge’s demands that will determine the scale of the rally,” said Tony Cross, market analyst at TopTradr, in a note.
Volatility may spike in the wake of the event, he added.
Other movers: EasyJet PLC dropped 7% as the budget carrier said first-quarter unit revenue fell.
Anglo American PLC shares climbed 3.9% as the mining heavyweight’s De Beers Group reported a jump in diamond sales.
Source: MarketWatch
