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London open: Stocks nudge up as May faces Commons showdown; Indivior surges
London stocks nudged a touch higher in early trade on Monday as Prime Minister Theresa May faced a showdown with Brexit rebels, while Indivior rocketed after a US court blocked the sale of a rival generic of its bestselling opioid addiction treatment.
At 0830 BST, the FTSE 100 was up 0.1% to 7,665.96, while the pound was 0.2% higher against the dollar at 1.3249 and flat versus the euro at 1.1326.
Chinese data released earlier showed that the economy slowed modestly in the second quarter, with GDP growth of 6.7%, down from 6.8% in the first quarter but in line with expectations.
Meanwhile, fixed asset investment slowed to 6% in June from 6.1% in May and industrial production slid to 6% last month from 6.8% in May, missing expectations for 6.5% growth. However, retail sales rebounded from multi-year lows of 8.5% in May to come in at 9%, meeting expectations.
Back in the UK, the Taxation Bill returns to the House of Commons later on Monday, while the Trade Bill returns on Tuesday amid calls from former education secretary Justine Greening for a second referendum.
Lee Hardman, currency analyst at MUFG Bank, said: “The hard Brexiteers have offered amendments to the Bill, which would restrict the government’s ability to follow through with their plan. However, the amendments are not expected to win sufficient support to pass but could still send a signal to May over a lack support within her party.”
Writing in The Times, Greening said the plans put forward by Theresa May represent “the worst of both worlds” and that the final decision on Brexit should be given back to the people. According to Greening, there are three options: May’s deal, remaining in the EU or a clean break with no deal.
In corporate news, Indivior surged after a US court granted a preliminary injunction to prevent Dr Reddy’s Laboratories from selling a generic version of the company’s Suboxone Film for treating opioid addiction until a decision is made on patent litigation.
Aerospace, defence and energy components and systems company Meggitt was on the front foot as it announced a $21m contract with the Defense Logistics Agency in Richmond, Virginia, to supply fuel cell equipment for the UH-60 Black Hawk helicopter until 2022.
Meanwhile, there were more signs of trouble on the high street as Debenhams slumped after denying reports that it was facing a cash crisis following reports over the weekend that credit insurers have cut cover for suppliers to the department store chain.
Liberum said: “We have not managed to speak with the company at this stage, but note that instance of credit insurance withdrawals have been prevalent this year (House of Fraser, New Look and Poundland). If the news flow is true then it will heap more pressure on Debenhams, which has seen earnings per share downgrades of 54% since the beginning of the year.”
In broker note action, Micro Focus was hit by a downgrade to ‘underperform’ at Credit Suisse, but Countryside Properties was boosted by an initiation at ‘buy’ from Deutsche Bank, while Anglo American, ASOS and Ferrexpo were all upgraded by Citi.
AA was cut to ‘equalweight’ at Barclays while Go-Ahead was under the cosh following a downgrade to ‘hold’ at HSBC.
