London open: Stocks brush-off Italian referendum vote
Stocks in London reversed early losses following the unexpectedly poor showing for Italy's Prime Minister, Matteo Renzi, in the country´s referendum on constitutional reform overnight.
As of 0838 GMT, the Footsie was up by 0.84% or 56.80 points and trading at 6,787.52.
In a speech early on Monday morning, Renzi said he would tender his resignation after roughly 60% of voters rejected his proposals.
Not only was that a much weaker outcome than expected - although polls carried out several weeks beforehand had hinted at such a possibility - it came amid an unexpectedly high voter turnout of nearly 70%.
“In Italian politics, no one ever wins,” Renzi told his supporters.
The European single currency was initially sent sharply lower, falling to 1.0506 against the US dollar, its March 2015 lows, but had since completely recovered its losses after Renzi announced he would be stepping down.
In the very short-term, some analysts believed that a new government might be in place even before Christmas, helping to forestall any risk of instability for the time being.
However, other pointed out how the medium-term implications of the referendum result were yet to be determined.
"The actual outcome of the referendum goes beyond what the polls anticipated and keeps uncertainty high. Investors will need to assess the medium-term implications of the referendum outcome for politics, growth, banks, ratings, etc. Moreover, this outcome weakens Renzi's political strength significantly," analysts at UniCredit said in a research note sent to clients.
Commenting on the immediate impact the vote might have on those Italian banks which were looking to raise fresh capital, Morgan Stanley said: "Political uncertainty post the 'No' vote in the referendum reduces visibility on economic growth and the run down of NPL portfolios. A low take-up of Monte Paschi's LME raises the chances of it needing state aid. We stay cautious on Italian banks and expect volatility."
On the data front, the UK services purchasing managers’ index is scheduled for release at 0930 GMT, while in the US, the ISM's own non-manufacturing gauge is expected at 1500 GMT.
In corporate news, AstraZeneca has completed the sale of rights to its nasal spray outside of the US with Swiss pharmaceutical Cilag for $330m.
The FTSE 100 company sold the rights for Rhinocort Aqua, a nasal spray to treat allergic and nonallergic rhinitis and polyps, for use outside of the US to a subsidiary of Johnson & Johnson.
Global specialist healthcare company BTG announced the inclusion of treatment with its PneumRx Coils product in guidelines for the management of chronic obstructive pulmonary disease on Monday, as published by the Global Initiative for Chronic Obstructive Lung Disease (GOLD).
The FTSE 250 firm also said that at the same time, the French Ministry of Health published its positive recommendations regarding PneumRx Coils on its website.
Royal Bank of Scotland said it had agreed payouts to some shareholders to settle allegations that it misled them ahead of a £12bn rescue rights issue in 2008 at the outbreak of the financial crisis.
RBS said it had concluded “a full and final settlement with three out of the five shareholder groups representing 77% of the claims by value”.
“In total, RBS is willing to make available settlement sums of up to £800m assuming settlement of all claims, to be split among all five shareholder groups, subject to agreement and claim validation,” RBS said in a statement.
Market Movers
FTSE 100 (UKX) 6,793.33 0.93%
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BHP Billiton (BLT) 1,341.00p 2.84%
Antofagasta (ANTO) 713.00p 2.81%
Rio Tinto (RIO) 3,083.00p 2.58%
Anglo American (AAL) 1,240.00p 2.56%
Burberry Group (BRBY) 1,447.00p 2.48%
Glencore (GLEN) 284.45p 2.36%
Rolls-Royce Holdings (RR.) 676.00p 2.27%
Wolseley (WOS) 4,781.00p 2.18%
Barclays (BARC) 217.35p 2.07%
Tesco (TSCO) 210.85p 1.98%
FTSE 100 - Fallers
Randgold Resources Ltd. (RRS) 5,630.00p -3.35%
Fresnillo (FRES) 1,169.00p -2.42%
Polymetal International (POLY) 738.50p -1.07%
Babcock International Group (BAB) 944.50p -0.58%
Standard Chartered (STAN) 642.00p -0.47%
Centrica (CNA) 207.60p -0.29%
BT Group (BT.A) 357.70p -0.25%
Intertek Group (ITRK) 3,244.00p -0.09%
HSBC Holdings (HSBA) 627.20p 0.02%
United Utilities Group (UU.) 883.00p 0.06%
FTSE 250 - Risers
CMC Markets (CMCX) 188.10p 3.98%
Polypipe Group (PLP) 314.80p 3.72%
Rotork (ROR) 247.20p 3.52%
Vedanta Resources (VED) 872.00p 3.07%
Countrywide (CWD) 175.60p 3.05%
Cobham (COB) 171.70p 2.94%
Kaz Minerals (KAZ) 386.10p 2.88%
Paysafe Group (PAYS) 370.00p 2.81%
Laird (LRD) 141.90p 2.75%
Bodycote (BOY) 590.50p 2.61%
FTSE 250 - Fallers
Acacia Mining (ACA) 388.40p -3.07%
Grafton Group Units (GFTU) 516.00p -3.01%
Hastings Group Holdings (HSTG) 211.00p -2.99%
Allied Minds (ALM) 363.30p -2.34%
Sports Direct International (SPD) 301.80p -2.24%
Hochschild Mining (HOC) 219.10p -2.14%
CYBG (CYBG) 276.10p -2.13%
Henderson Group (HGG) 227.30p -1.86%
G4S (GFS) 238.80p -1.77%
Ashmore Group (ASHM) 276.60p -1.53%