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London open: Stocks edge lower amid political uncertainty; Mitie bucks trend
London stocks edged lower in early trade, with politics firmly in focus as Prime Minister Theresa May prepared to meet with Conservative party backbenchers angered by the election result.
At 0830 BST, the FTSE 100 was down 0.4% to 7,499.09, while the pound was trading down 0.1% against the euro at 1.1371 and flat versus the dollar at 1.2742.
Spreadex analyst Connor Campbell said: “This week’s calendar is bursting at the seams, including a wave of inflation readings, the latest UK jobs report, a Bank of England meeting and a potential rate-hiking session from the Federal Reserve. None of this, however, prevents Monday from being entirely uninteresting from an economic perspective.
“That means the market may be particularly sensitive to any news surrounding the aftermath of the UK election, specifically whether Theresa May can last the week. The vultures are circling the Tory leader, and with a growing backlash to her ‘confidence and supply’ deal with the DUP she faces an uphill battle to keep hold of the keys to Number 10.”
May was due to meet with Tory backbenchers on Tuesday, but the meeting was brought forward a day after the 1922 Committee demanded to meet the PM earlier than planned.
With Brexit negotiations due to start next Monday, it was understood that MPs will be urging May to change her leadership style and take a more pragmatic approach to the UK’s divorce proceedings with the EU.
The PM reshuffled her cabinet over the weekend, bringing Michael Gove back to the front bench as environment secretary, while Damian Green was made first secretary of state, a position seen as a deputy PM to act as a fixer in the Cabinet Office and help to soothe simmering tensions in the party”, according to The Times. Meanwhile, previous environment secretary Andrea Leadsom was made leader of the House of Commons. Lizz Truss has gone from justice to chief Treasury secretary, while Commons leader David Lidington has been appointed justice secretary and Lord Chancellor and chief Treasury secretary David Gauke has been appointed work and pensions secretary.
Most of the main cabinet jobs, however, such as chancellor of the exchequer and health secretary, were left unchanged, with Philip Hammond and defence secretary Michael Fallon among those putting pressure on May to soften her line on Brexit.
In corporate news, outsourcer Mitie surged after it withheld its final dividend as it tumbled into losses, with the market impressed by the new management team’s expectations of a quick return to growth in underlying profits this year.
Weir Group was in the red after announcing an agreement to acquire KOP Surface Products, a provider of advanced surface pressure control technologies, systems and services for the oil and gas industry for $114m in cash.
Rio Tinto was on the back foot after Glencore offered to buy its interest in Coal & Allied Industries for $2.55bn in cash plus a coal price-linked royalty.
Acacia Mining retreated as the Tanzanian government was due to publicly present the results, in Swahili, of an investigation into the disputed gold concentrate exports of the London-listed mining company.
TalkTalk was hit by a downgrade to ‘sell’ at Berenberg, but was Ashtead was lifted by an upgrade to ‘buy’ at HSBC.
