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London open: Stocks rise as pound hit by political uncertainty
London stocks rose in early trade on Monday as the pound took a hit from political uncertainty.
At 0830 GMT, the FTSE 100 was up 0.4% to 7,464.21, while the pound was down 0.7% against the dollar at 1.3098 and 0.5% lower versus the euro at 1.1251.
Spreadex analyst Connor Campbell pointed out that Prime Minister Theresa May has a lot to worry about at the moment.
“She could be facing defeat on part of her Brexit Bill later in the week, with Tory Remainers likely to team up with Labour to try and secure Parliament a meaningful vote on any deal with the EU, something the PM is keen to avoid. There’s also threats from Michel Barnier – who stated at the weekend the EU was preparing for a ‘no deal’ scenario – that if Britain doesn’t spell out how far it intends to ‘honour its obligations’ within the next two weeks then any trade talks will have to be ‘put back’.
“Finally, there’s the leaked ‘Orwellian’ letter from Michael Gove and Boris Johnson – back to scheming after last year’s Tory leadership falling out – to May, with the prominent Leaver MPs outlining a series of secret Brexit demands.”
Combining all of this with the recent departures of Michael Fallon and Priti Patel, May is arguably in her weakest position since just after the election and this uncertainty has been reflected in the performance of the pound.
In corporate news, Rentokil Initial nudged higher after saying it has acquired North America’s largest provider of mosquito control services, Vector Disease Acquisition, for an undisclosed consideration. The company also lifted its mergers and acquisitions pipeline guidance for the second half to $100m, saying prospects for further purchases remained “very strong”.
Vodafone gained as it announced that its India operation and Idea Cellular have separately agreed to sell their respective standalone tower businesses in India to ATC Telecom Infrastructure for an aggregate enterprise value of INR 78.5bn.
Senior advanced as it appointed former BAE Systems boss Ian King as its chairman-designate, won a long-term component supply contract with Boeing on a range of its next generation of aeroplanes and said its expected full year results to be slightly better than forecast.
John Laing was trading higher after reporting underlying growth in its portfolio value for the nine months to 30 September of 5.5% to £1.23bn, on a rebased value of £1.16bn.
Temporary power provider Aggreko rallied as it announced the appointment of Heath Drewett as its chief financial officer, replacing Carole Cran. Aggreko also benefited from an upgrade to ‘buy’ at Jefferies.
Softcat, which provides IT infrastructure products and services, ticked up after it announced the appointment of Graeme Watt as chief executive with effect from 1 April 2018, replacing Martin Hellawell.
On the downside, housebuilder Taylor Wimpey edged lower as it reported a slowing in its sales rate in the second half of the year but said it still expected full year results to hit their targets.
Ladbrokes Coral fell despite posting a 3% rise in net revenue, while funeral services provider Dignity was weaker as it posted a small increase in revenue and profit in the third quarter, as the number of deaths was broadly flat.
Ultra Electronics tanked after it warned on revenue and pointed to a tough second half as it announced that Rakesh Sharma has stepped down as chief executive with immediate effect. The stock was also hit by a downgrade to ‘neutral’ from JPMorgan.
Coca-Cola HBC was under the cosh after a downgrade to ‘neutral’ at JPMorgan.
