London midday: Stocks go green as pound hit by political woes
London stocks had moved into the green by midday on Monday as the pound was dented by political woes.
The FTSE 100 was up 0.4% at 7,534.96, while sterling was 0.3% lower against the dollar and the euro at 1.2470 and 1.1112, respectively, after Foreign Office minister Alan Duncan resigned ahead of Boris Johnson's expected appointment as Prime Minister this week.
David Cheetham, senior market analyst at XTB, said: "In a strong indication of what they expect is to come, two Tory MPs have already announced they will step down if Boris Johnson wins the leadership contest with Chancellor Philip Hammond and Justice Secretary David Gauke both going public yesterday with their resignations.
"Boris’s intention to deliver Brexit by the 31st October deadline even if that means leaving without a deal is proving very divisive and will likely mean that he will fill the new cabinet with yes-men who are hard Brexiteers.
"The deadline for voting amongst Conservative members is 5PM this afternoon with the result expected tomorrow. It would come as a huge surprise for the markets if Boris Johnson isn’t the winner of the contest and while his more hardline approach to Brexit is seen as less constructive for the pound, there’s already been quite a lot of bad news baked in."
Investors were also digesting a warning from the National Institute of Economic and Social Research, which said in its latest set of forecasts that the UK's exit from the European Union may have already pushed the nation into a technical recession. NIESR said it expects the UK to grow 1% this year and the next if a no-deal Brexit is avoided.
In the event of an orderly no-deal Brexit, the economy is forecast to stagnate, before starting to grow again in 2021.
"The outlook beyond October, when the United Kingdom is due to leave the European Union, is very murky indeed with the possibility of a severe downturn in the event of a disorderly no-deal Brexit," NIESR said.
In equity markets, travel company Tui was the standout gainer on the back of an upbeat note from Stifel.
Paper and packaging companies DS Smith, Mondi and Smurfit Kappa also racked up healthy gains as Finnish peer Stora Enso was upgraded by Nordea.
Embattled high street lender Metro Bank was trading higher as it confirmed it was in talks to sell a mortgage portfolio. Media reports over the weekend said Metro was in talks on a £500m deal to offload a mortgage portfolio back to a US hedge fund Cerberus Capital Management, from which it has bought more than £1bn of assets in recent years.
Fashion brand Ted Baker rallied after a report over the weekend that founder Ray Kelvin is considering plans to back a private-equity buyout of the company, four months after he quit following allegations of sexual harassment.
Oil majors BP and Shell gained amid heightened Middle East tensions, after Iran seized a British tanker last week.
JD Sports Fashion was boosted by an initiation at 'buy' at UBS, while Sainsbury was trading higher after an upgrade to 'overweight' at Barclays.
On the downside, Premier Inn owner Whitbread was on the back foot after The Telegraph reported that Manhattan-based specialist high-frequency trading firm Jane Street Global Trading was leading a £1.5bn bet by hedge funds against the company. Also on Monday, Whitbread said it had completed a programme to return £2.5bn to shareholders following the sale of Costa Coffee to Coca-Coca last year.
Elsewhere, British Gas owner Centrica fell following reports over the weekend that it's planning to slash its dividend for the second time in four years.
FTSE 100 - Risers
TUI AG Reg Shs (DI) (TUI) 838.00p 4.23%
Smith (DS) (SMDS) 367.40p 2.86%
Mondi (MNDI) 1,809.50p 2.67%
Smurfit Kappa Group (SKG) 2,598.36p 2.22%
Flutter Entertainment (FLTR) 7,090.00p 1.72%
JD Sports Fashion (JD.) 622.20p 1.57%
BP (BP.) 525.80p 1.56%
International Consolidated Airlines Group SA (CDI) (IAG) 457.10p 1.56%
Ocado Group (OCDO) 1,213.00p 1.55%
Auto Trader Group (AUTO) 551.60p 1.29%
FTSE 100 - Fallers
Whitbread (WTB) 4,722.00p -3.67%
ITV (ITV) 106.35p -3.49%
St James's Place (STJ) 1,078.50p -1.78%
Fresnillo (FRES) 780.76p -1.77%
Centrica (CNA) 88.76p -1.66%
British American Tobacco (BATS) 3,052.94p -1.30%
Imperial Brands (IMB) 2,120.50p -1.14%
Burberry Group (BRBY) 2,302.00p -1.12%
Morrison (Wm) Supermarkets (MRW) 207.40p -0.96%
Land Securities Group (LAND) 838.80p -0.78%
FTSE 250 - Risers
Ted Baker (TED) 960.90p 14.67%
Metro Bank (MTRO) 508.00p 7.58%
Premier Oil (PMO) 81.90p 5.05%
Hunting (HTG) 545.50p 3.41%
Ascential (ASCL) 390.40p 2.90%
Rank Group (RNK) 160.20p 2.69%
Hochschild Mining (HOC) 212.60p 2.61%
PZ Cussons (PZC) 222.00p 2.30%
Tullow Oil (TLW) 203.90p 2.21%
St. Modwen Properties (SMP) 423.50p 2.17%
FTSE 250 - Fallers
PPHE Hotel Group Ltd (PPH) 1,820.00p -4.21%
Woodford Patient Capital Trust (WPCT) 52.63p -2.53%
Galliford Try (GFRD) 626.65p -2.39%
Kainos Group (KNOS) 590.00p -1.99%
Greene King (GNK) 649.20p -1.90%
JPMorgan Indian Investment Trust (JII) 753.00p -1.83%
Funding Circle Holdings (FCH) 118.95p -1.69%
Shaftesbury (SHB) 807.50p -1.64%
IP Group (IPO) 68.42p -1.56%
Equiniti Group (EQN) 216.60p -1.55%