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London open: Stocks edge up as pound drops on Scottish referendum worries
Stocks in London edged higher in early trade, underpinned by some solid earnings from Persimmon and AB Foods, and a weaker pound.
At 0830 GMT, the FTSE 100 was up 0.4% to 7,273.55, as the pound was hit by reports that Scotland could call for another referendum.
Sterling fell 0.5% versus the dollar to 1.2399 and 0.7% against the euro to 1.1723.
Tony Cross, market analyst for TopTradr, said: “The idea of another Scottish independence referendum is having a surprisingly broad impact on currency markets with sterling rattled and the yen even finding some safe haven support. However this may prove to be little more than a side-show, with concern mounting over the length of time it’s taking the Trump administration to come up with any meaningful stimulus or taxation policies.
“Not only is this dragging on the dollar, but it could prove to be the catalyst for killing off the equity market rally, too.”
In corporate news, housebuilder Persimmon rallied as it reported a rise in 2016 revenue and pre-tax profit and said it remained on track with its growth strategy and aims to further increase its capital return plan to shareholders.
Primark owner Associated British Foods gained after saying it expects “excellent progress” in profits and earnings this year, with growth in all parts of the business in the first half and a further boost from exchange rates.
Distribution and outsourcing company Bunzl advanced as it reported a 12% jump in full-year pre-tax profit to £362.9m, boosted by the post-Brexit vote slump in the pound.
Rotork racked up healthy gains after it posted a drop in full-year pre-tax profit and adjusted operating profit as underlying revenue fell, but noted an improvement in the trading environment.
On the downside, insurers were under the cosh after the Ministry of Justice said the discount rate used to calculate lump sum payouts has been cut to -0.75% from the 2.5% rate that was in place since 2001. Admiral, Direct Line, Aviva, RSA Insurance, AA, esure, Saga and Hastings were all in the red as the change in the rate will mean insurers will have to pay out more to personal injury claimants.
The London Stock Exchange Group dropped as it said on Sunday that it did not think its proposed merger with Deutsche Börse will be approved by the European Commission, after competition regulators came up with “unexpected” demands last week.
There are no UK data releases of note due, but in the US, durable goods orders are at 1330 GMT, while pending home sales are at 1500 GMT.
