London open: Stocks rise, sterling drops as Johnson set to become next PM

London stocks rose in early trade on Tuesday, with sterling under pressure ahead of the announcement of the new UK prime minister.

At 0840 BST, the FTSE 100 was up 0.6% at 7,557.53, while the pound was down 0.3% against the dollar at 1.2443 and 0.1% lower versus the euro at 1.1120, with hard-line Brexiteer Boris Johnson widely expected to be crowned PM this week.

Neil Wilson, chief market analyst at Markets.com, said: "Boris to become PM - what does it mean for sterling and UK assets? Not a lot for the now as so much is priced in. However we are yet to find out what all shakes out in terms of the regime shift. Remember this is not just a new leader, but an entire new regime.

"The content, tone and emphasis from Number 10 will be very different to what we had under May. We would reiterate that there is a heightened prospect of no-deal under BoJo, yet when faced with the realpolitik of it all, a compromise may well be found. The worry for sterling bulls is that faced with an existential threat to the Tory party, the only option is to leave on October 31, come what may. Who dares wins."

Wilson noted that the pound has come under a real bout of pressure overnight. "GBPUSD was driven below yesterday’s lows and was last trying to hold support at 1.2450. The broad downtrend since March remains very much the dominant force, although we are a little above the two-year lows hit last week."

In equity markets, paper and packaging group Mondi was the standout gainer 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.

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

Mortgage specialist Paragon Banking was on the front foot as it maintained full-year lending guidance, adding that it expected its net interest margin for 2019 to be above the 2.24% reported at the half-year results.

On the downside, Tesco, Sainsbury and Morrisons were all in the red as the latest data from market research firm Kantar showed that sales at Britain's big four supermarkets dropped over the last 12-week period.

Imperial Leather maker PZ Cussons was in the red after it posted a drop in full-year profit as solid performances in Asia Pacific, Europe and the Americas were offset by weakness in Africa.

Online trading platform IG Group also lost ground after it reported a drop in annual profit as it took a hit from the implementation of tougher regulations.

Elsewhere, Premier owner Whitbread was weaker after a downgrade to 'underperform' at Bernstein.

Market Movers

FTSE 100 (UKX) 7,557.53 0.57%
FTSE 250 (MCX) 19,710.20 0.32%
techMARK (TASX) 3,690.61 0.50%

FTSE 100 - Risers

Mondi (MNDI) 1,831.50p 2.35%
Smurfit Kappa Group (SKG) 2,624.00p 1.86%
Smith & Nephew (SN.) 1,778.50p 1.86%
Melrose Industries (MRO) 186.90p 1.80%
Smith (DS) (SMDS) 372.00p 1.36%
Ashtead Group (AHT) 2,233.00p 1.36%
Evraz (EVR) 666.60p 1.34%
Prudential (PRU) 1,735.00p 1.31%
Glencore (GLEN) 275.60p 1.21%
British American Tobacco (BATS) 3,100.50p 1.17%

FTSE 100 - Fallers

Tesco (TSCO) 229.00p -2.64%
Whitbread (WTB) 4,567.00p -2.52%
Sainsbury (J) (SBRY) 203.90p -1.45%
Berkeley Group Holdings (The) (BKG) 3,773.00p -0.89%
Ocado Group (OCDO) 1,210.00p -0.82%
Royal Bank of Scotland Group (RBS) 226.70p -0.79%
Morrison (Wm) Supermarkets (MRW) 204.20p -0.73%
Micro Focus International (MCRO) 1,678.20p -0.65%
Auto Trader Group (AUTO) 540.80p -0.59%
Just Eat (JE.) 637.80p -0.47%

FTSE 250 - Risers

Daejan Holdings (DJAN) 5,876.41p 3.09%
CYBG (CYBG) 205.30p 3.09%
Beazley (BEZ) 548.50p 2.24%
Grafton Group Units (GFTU) 767.50p 1.39%
Renishaw (RSW) 3,749.60p 1.34%
Fidelity Special Values (FSV) 261.81p 1.28%
Spirent Communications (SPT) 163.80p 1.24%
Baillie Gifford Japan Trust (BGFD) 808.76p 1.22%
Jupiter European Opportunities Trust (JEO) 844.00p 1.20%
Stagecoach Group (SGC) 139.60p 1.16%

FTSE 250 - Fallers

IG Group Holdings (IGG) 565.00p -2.59%
Funding Circle Holdings (FCH) 119.29p -2.06%
FDM Group (Holdings) (FDM) 881.00p -1.67%
Inmarsat (ISAT) 553.80p -1.53%
Plus500 Ltd (DI) (PLUS) 643.40p -1.44%
Metro Bank (MTRO) 492.98p -1.40%
Charter Court Financial Services Group (CCFS) 302.00p -1.31%
Contour Global (GLO) 173.13p -1.07%
Acacia Mining (ACA) 223.00p -0.80%
Serco Group (SRP) 142.74p -0.74%