London close: FTSE holds on to gains as Boris becomes Tory leader

London stocks held on to most of their gains by the close on Tuesday, as markets digested the fact that Boris Johnson would be crowned Prime Minister after winning the Tory leadership contest.

The FTSE 100 ended the session up 0.56% at 7,556.86, while the pound was 0.26% weaker against the dollar at $1.2444, and 0.26% stronger on the euro at €1.1158.

Sterling had showed little reaction to the news of Johnson's victory when it was announced just after midday, which had been widely expected.

Johnson won 92,153 votes to the 46,656 polled by his rival Jeremy Hunt.

The new party leader does not formally take over in Downing Street until Wednesday, when Theresa May will face her final parliamentary prime minister’s question time before tendering her resignation to the Queen at Buckingham Palace.

Boris Johnson will then make the same journey to have his appointment confirmed and ask permission to form a government.

In a performance that belied the gravity of the situation in front of him with the Brexit crisis still unresolved and Cabinet ministers resigning rather then work with him, Johnson repeated his campaign slogan of: “Deliver Brexit, unite the country and defeat Jeremy Corbyn.”

He indicated to an audience of party faithful that the acronym for this was “dud”, and tacked on what he called the missing "e" for “energise”.

“I say to all the doubters: dude, we are going to energise the country!’”

Before the announcement was made, Spreadex analyst Connor Campbell predicted that the pound may not react to a Johnson win, given "how locked on" his premiership appeared to be.

Oanda analyst Craig Erlam added: "The question now is whether the pound can recover from its slump in the near term or whether the risk of no-deal is just too great and every passing week is seen to take us one week closer to the cliff-edge."

Earlier, the latest survey from the Confederation of British Industry showed that UK manufacturing orders fell at their fastest pace in the three months to July since the financial crisis.

The CBI's total orders balance fell to -34 this month from -15 in June, missing expectations for an unchanged reading.

Both new domestic and new export orders fell at their fastest respective paces since the financial crisis, while overall order books were below "normal" to the greatest extent since 2010.

Meanwhile, optimism among manufacturing firms fell to its lowest level since July 2016, just after the EU referendum.

“As the tailwind from stockpiling weakens, clouds are gathering above the manufacturing sector. It’s being hit by the double-blow of Brexit uncertainty and slower global growth,” said CBI chief economist Rain Newton-Smith.

“With orders, employment, investment, output and business optimism all deteriorating among manufacturers, it’s crucial for the new Prime Minister to secure a Brexit deal ahead of the October deadline.

“And get on with pressing domestic priorities from improving our infrastructure to fixing the apprenticeship levy.”

That, Newton-Smith explained, would allow firms to focus on investing in new technology and tackling the skill shortages that plagued the sector.

In equity markets, paper and packaging group Mondi gained 1.76% after saying that half-year underlying earnings would be higher than the €852m (£765m) reported in 2018, as it forecast a big jump in earnings per share.

Peers Smurfit Kappa and DS Smith also racked up healthy gains of 3.73% and 3.43%, respectively.

Smith & Nephew was ahead 0.6% after an upgrade to 'buy' at Berenberg, while insurer Beazley advanced 5.22% as it said first-half earnings nearly tripled compared to last year and it expects double-digit premium growth over the year.

On the downside, Premier Inn owner Whitbread was 3.03% weaker after a downgrade to 'underperform' at Bernstein.

Tesco, J Sainsbury and Wm Morrison were all in the red by 2.25%, 1.74% 0.53% respectively, as the latest data from market research firm Kantar showed that sales at Britain's big four supermarkets dipped 0.5% on the year over the last 12-week period, marking the first overall decline in the supermarket sector since June 2016.

Online trading platform IG Group finished flat, paring its earlier losses after it reported a drop in annual profit as it took a hit from the implementation of tougher regulations.

Market Movers

FTSE 100 (UKX) 7,556.86 0.56%
FTSE 250 (MCX) 19,752.34 0.53%
techMARK (TASX) 3,697.87 0.69%

FTSE 100 - Risers

Melrose Industries (MRO) 192.90p 5.07%
NMC Health (NMC) 2,420.10p 4.00%
Smurfit Kappa Group (SKG) 2,682.00p 3.73%
Smith (DS) (SMDS) 379.60p 3.43%
Johnson Matthey (JMAT) 3,184.00p 3.14%
Carnival (CCL) 3,565.00p 2.92%
Barclays (BARC) 160.10p 2.23%
Evraz (EVR) 671.60p 2.10%
Ashtead Group (AHT) 2,248.00p 1.95%
Vodafone Group (VOD) 130.80p 1.92%

FTSE 100 - Fallers

Whitbread (WTB) 4,543.00p -3.03%
Just Eat (JE.) 622.20p -2.90%
Auto Trader Group (AUTO) 531.40p -2.32%
Tesco (TSCO) 229.90p -2.25%
Sainsbury (J) (SBRY) 203.30p -1.74%
Aveva Group (AVV) 3,942.00p -1.55%
Rightmove (RMV) 512.60p -1.54%
London Stock Exchange Group (LSE) 5,638.00p -1.36%
Ocado Group (OCDO) 1,203.50p -1.35%
JD Sports Fashion (JD.) 610.80p -1.29%

FTSE 250 - Risers

Beazley (BEZ) 562.00p 5.22%
Apax Global Alpha Limited (APAX) 159.00p 4.95%
Energean Oil & Gas (ENOG) 1,032.00p 4.77%
Wood Group (John) (WG.) 543.20p 4.22%
Aston Martin Lagonda Global Holdings (AML) 1,035.00p 4.06%
Hays (HAS) 152.30p 3.54%
Victrex plc (VCT) 2,016.00p 3.44%
Weir Group (WEIR) 1,531.50p 3.34%
IWG (IWG) 374.00p 3.29%
Unite Group (UTG) 1,076.00p 3.07%

FTSE 250 - Fallers

Ted Baker (TED) 897.50p -5.52%
Funding Circle Holdings (FCH) 116.00p -4.76%
Amigo Holdings (AMGO) 158.20p -4.24%
Kainos Group (KNOS) 572.00p -4.03%
FDM Group (Holdings) (FDM) 862.00p -3.79%
Rank Group (RNK) 158.40p -3.35%
Sophos Group (SOPH) 440.70p -3.14%
NewRiver REIT (NRR) 170.20p -2.96%
Moneysupermarket.com Group (MONY) 359.80p -2.76%
Bank of Georgia Group (BGEO) 1,559.00p -2.50%