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London open: Markets rise after PBoC rate cut, but airline stocks fall
UK stocks edged higher on Monday morning as markets reacted to a surprise interest-rate cut in China, while investors digested the latest political drama across the Pond.
The FTSE 100 was up 0.5% at 8,197.09 after 30 minutes of trade.
The economic data calendar for Monday looked relatively light, with markets likely to focus on the surprise easing of monetary policy by the People’s Bank of China. The central bank cut its one-year loan prime rate by 10 basis points to 3.35% and reduced its five-year loan prime rate by 10bp to 3.85%.
“This is the first rate cut for a year, and a rare move by the government to support the economy, after repeatedly refusing to add stimulus to the economy to boost growth,” said Kathleen Brooks, research director at XTB.
Meanwhile, this weekend’s exit of Joe Biden from the US presidential race has the potential to introduce market volatility, given that a Donald Trump victory had been widely predicted by market participants. Vice president Kamala Harris is now the frontrunner to replace Biden as the Democrat nominee, though it remains to be seen whether her standings in the polls will improve over the coming months.
“The early polls show that Harris is a favourite to become the new Democrat nominee, but that Donald Trump is still expected to win the November’s presidential election. The Trump trade could lose some steam but will probably not get reversed if Harris doesn’t make a material difference in the polls quickly,” said Ipek Ozkardeskaya, senior analyst at Swissquote Bank.
Airline stocks drop
The travel and leisure sector was still reeling from this weekend’s CrowdStrike IT outages which caused thousands of flight cancellations, with the US cyber company warning that a full recovery of its systems could take weeks. easyJet and IAG were nursing heavy losses early on.
Meanwhile, shares in Ryanair plummeted 11% in Dublin after the group posted a sharp fall in quarterly profits and warned fares would likely be “materially” lower than last summer.
Heading the other way was pest-control firm Rentokil on the back of M&A speculation, with former BT boss Philip Jansen rumoured to be circling the company.
Entain announced the appointment of Gavin Isaacs as its new chief executive officer, effective from 2 September, helping the stock 4% higher. The FTSE 100 gambling giant said Isaacs would bring more than 25 years of experience in the sports betting, gaming, and lottery industries, having held leadership roles in prominent companies like Scientific Games Corporation and DraftKings.
US grocery giant Kroger ordered two of Ocado‘s newest technology solutions for its existing and future customer fulfilment centres, causing shares in the UK-listed food fulfilment group to jump 6%.
Shopping centre owner Hammerson surged 7% after offloading its interest in Value Retail to consumer-focused investment firm L Catterton for an enterprise value of £1.5bn and announcing a £140m share buyback along with a one-for-10 share consolidation.
Top 10 FTSE 100 Risers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Rentokil Initial Plc | +10.82% | +48.50 | 496.60 |
| 2 |  |
Ocado Group Plc | +6.98% | +26.40 | 404.50 |
| 3 |  |
Burberry Group Plc | +2.52% | +17.60 | 715.20 |
| 4 |  |
Croda International Plc | +1.84% | +74.00 | 4,101.00 |
| 5 |  |
Spirax Group Plc | +1.83% | +155.00 | 8,605.00 |
| 6 |  |
Intertek Group Plc | +1.72% | +80.00 | 4,718.00 |
| 7 |  |
Diageo Plc | +1.69% | +42.00 | 2,532.50 |
| 8 |  |
Experian Plc | +1.57% | +55.00 | 3,552.00 |
| 9 |  |
Smith & Nephew Plc | +1.56% | +17.00 | 1,108.50 |
| 10 |  |
National Grid Plc | +1.46% | +13.60 | 948.20 |
Top 10 FTSE 100 Fallers
| Sponsored by Plus500 |
|
| # | Name | Change Pct | Change | Cur Price | |
|---|---|---|---|---|---|
| 1 |  |
Easyjet Plc | -7.43% | -34.10 | 424.90 |
| 2 |  |
International Consolidated Airlines Group S.a. | -3.71% | -6.30 | 163.70 |
| 3 |  |
Rolls-royce Holdings Plc | -1.10% | -4.90 | 441.20 |
| 4 |  |
Bt Group Plc | -0.99% | -1.40 | 140.45 |
| 5 |  |
Hiscox Ltd | -0.65% | -8.00 | 1,229.00 |
| 6 |  |
Intercontinental Hotels Group Plc | -0.58% | -48.00 | 8,168.00 |
| 7 |  |
Fresnillo Plc | -0.49% | -3.00 | 613.00 |
| 8 |  |
Whitbread Plc | -0.38% | -11.00 | 2,886.00 |
| 9 |  |
Bhp Group Limited | -0.37% | -8.00 | 2,142.00 |
| 10 |  |
Vodafone Group Plc | -0.34% | -0.24 | 70.26 |
Monday newspaper round-up: Biden, gambling levy, UK economy…
Kamala Harris, the vice-president, has emerged as the frontrunner to replace President Biden as the Democratic nominee for the election against Donald Trump in November. Biden, 81, announced yesterday afternoon that he would drop out of the race. In the hours that followed, Harris, 59, was endorsed by leading Democrats, prospective rivals and the chairs of all 50 state parties. – The Times
Keir Starmer has been urged to follow through on the previous government’s plan for a £100m-a-year levy on gambling companies. In an open letter to the prime minister, “deeply concerned” advocates of the proposal issued a warning that a delay could cost lives. The Conservatives published a white paper on reform of gambling regulation last year but many of its proposals have been left up in the air by Labour’s election victory. One significant measure yet to be finalised is a statutory levy on gambling companies’ revenues to fund research into problem gambling, education and treatment. – The Guardian
The UK economy will need to grow at three times this year’s expected rate if the new Labour government is to avoid a hole in the public finances, the IMF has warned, in a stark illustration of the challenges facing chancellor Rachel Reeves as she prepares for a landmark Budget this autumn. GDP growth would need to be around 2.6 per cent every fiscal year from 2025-26 if Labour is to stabilise public debt by 2028-29 without extra tax rises or spending cuts, according to IMF staff estimates provided to the FT. – Financial Times
Britain’s least punctual railway line will be among the last to fall into public hands under Labour’s nationalisation plans, Telegraph analysis suggests. Labour has vowed to bring Britain’s railways under state control but has indicated that it will allow contracts to reach their agreed conclusion before returning them to the public sector, rather than intervening early to seize back those networks with the poorest record of delays and cancellations. – The Telegraph
NHS patients have been warned GP services “cannot be resumed immediately”, and stranded holidaymakers told it could take “days” to get them to their destinations, as the effects of Friday’s global IT outage continue. CrowdStrike, the cybersecurity company at the heart of the crisis, said on Sunday that it had deployed a fix for the “defect” with its software, which has caused chaos around the world for businesses that use Microsoft operating systems. But the outage has caused a backlog to crucial services, including the NHS, which will take time to clear, the British Medical Association (BMA) said. – The Guardian
About 2,500 former Northern Rock customers who complain they became “mortgage prisoners” after the UK lender collapsed will confront the bank that took on their loans, TSB, in court to demand compensation. The High Court in London is due on Tuesday to hear a case brought against TSB by mortgage holders who argue they were exploited by the high street bank. They claim they were left trapped, paying well over market interest rates, after their loans were transferred from Northern Rock in the wake of its nationalisation at the beginning of the financial crisis. – Financial Times
