London midday: Stocks stay up; investors unfazed as BoJo bows out
London stocks were still firmly in the black by midday on Thursday as investors shrugged off news that Prime Minister Boris Johnson had finally thrown in the towel.
The FTSE 100 was up 1.1% at 7,185.95, while sterling was 0.7% higher versus the dollar at 1.2011 and 0.6% firmer against the euro at 1.1775.
The mood was upbeat despite political chaos, as Johnson agreed to resign after days of turmoil over a sexual harassment scandal and subsequent ministerial resignations engulfed his government. It was understood the PM was still trying to cling on until the autumn while a successor is chosen.
Neil Wilson, chief market analyst at Markets.com, said: "The immovable object finally gave way to the irresistible force of ministerial resignations. Sterling popped a touch higher on the first headlines but there has been no follow-through as yet, with GBPUSD hitting a wall at 1.20.
"Against the embattled euro sterling is faring better, rising to its best since mid-June and holding around that level. Gilt yields are higher, though this appears to be less about Boris than global debt markets as Treasury yields move up.
"Markets have not been massively perturbed by the political machinations - there is not a deep political risk to UK assets here. But I would stress that the outcome from the PM’s exit mean tax cuts are more likely to happen sooner, whoever is in Number 10 when autumn comes around. Looser fiscal policy is the likely result of political pressures - the ‘cost of living crisis’ looms large - which would only make it harder to tame inflation; all of which is likely weighing on the pound still."
Market participants were also digesting the latest survey from Halifax, which showed that house prices rose in June at their fastest monthly pace since early 2007 despite the cost-of-living crisis.
Prices rose 1.8% from May, when they increased 1.2%. On the year, meanwhile, house prices were up 13% in June, versus a 10.7% jump the month before. The average house price pushed up to another record high of £294,845. The annual growth rate was the highest since late 2004.
Russell Galley, managing director at Halifax, said the UK market had continued to defy any expectations of a slowdown.
"The supply-demand imbalance continues to be the reason house prices are rising so sharply," he said. "Demand is still strong - though activity levels have slowed to be in line with pre-Covid averages - while the stock of available properties for sale remains extremely low.
"Property prices so far appear to have been largely insulated from the cost-of-living squeeze. This is partly because, right now, the rise in the cost of living is being felt most by people on lower incomes, who are typically less active in buying and selling houses. In contrast, higher earners are likely to be able to use extra funds saved during the pandemic, with latest industry data showing that mortgage lending has increased by the highest amount since last September."
In equity markets, miners were on the rise as metals prices pushed up, with Glencore, Anglo American, Rio Tinto and Antofagasta all higher.
RS Group rose as it said full-year revenues and profit were set to be "slightly above" current consensus estimates following a strong first quarter.
Legal & General gained after saying it had had a good start to 2022, and that it expects to deliver double-digit growth in cash and capital generation for the first half.
Hospital group operator Mediclinic jumped to the top of the FTSE 250 after saying it had received a fresh takeover proposal from a consortium led by billionaire Johann Rupert’s Remgro that it was minded to recommend.
Currys surged even as the electricals retailer said it expects annual profits to be lower as consumers started to tighten their belts amid the cost-of-living crisis. Keith Bowman, investment analyst at Interactive Investor said Currys had reported "broadly encouraging annual results following what has been a tough few years".
"Group sales on a currency adjusted basis are flat, although up 10% on a two-year like-for-like basis, while both pre-tax profit and the dividend payment are ahead of City estimates."
Drax powered ahead after it said late on Wednesday that full-year adjusted EBITDA was set to be "slightly above" the top of the range of analyst expectations.
On the downside, housebuilder Persimmon slumped even as it said it expects half-year profits to be "modestly" higher than expectations, despite rising energy and raw materials prices and wage increases. Peers Barratt and Berkeley followed suit.
Entain fell after saying that online gaming revenue would be flat in the current year, as customers started to cut back on spending amid soaring inflation and prices.
FTSE 100 - Risers
Anglo American (AAL) 2,826.50p 7.51%
Glencore (GLEN) 437.50p 7.11%
Antofagasta (ANTO) 1,105.00p 6.25%
BP (BP.) 388.65p 5.43%
Rio Tinto (RIO) 4,910.00p 4.75%
Standard Chartered (STAN) 600.60p 3.87%
Legal & General Group (LGEN) 241.10p 3.39%
Prudential (PRU) 1,015.50p 3.22%
NATWEST GROUP PLC ORD 100P (NWG) 218.00p 3.22%
Shell (SHEL) 2,036.50p 3.16%
FTSE 100 - Fallers
Entain (ENT) 1,017.00p -10.79%
Flutter Entertainment (CDI) (FLTR) 8,006.00p -5.12%
Persimmon (PSN) 1,775.00p -4.83%
Aveva Group (AVV) 2,283.00p -3.39%
Coca-Cola HBC AG (CDI) (CCH) 1,778.50p -3.21%
British American Tobacco (BATS) 3,401.00p -2.51%
Smith & Nephew (SN.) 1,137.00p -2.40%
Diageo (DGE) 3,537.50p -2.04%
Reckitt Benckiser Group (RKT) 6,242.00p -1.89%
Croda International (CRDA) 6,710.00p -1.70%
FTSE 250 - Risers
Mediclinic International (MDC) 481.80p 8.96%
Currys (CURY) 70.95p 6.61%
Hochschild Mining (HOC) 84.95p 6.32%
Drax Group (DRX) 662.00p 6.00%
Aston Martin Lagonda Global Holdings (AML) 417.00p 5.95%
Wizz Air Holdings (WIZZ) 1,786.50p 4.14%
Centamin (DI) (CEY) 79.20p 4.10%
BlackRock World Mining Trust (BRWM) 564.00p 4.06%
Ferrexpo (FXPO) 124.20p 3.33%
LXI Reit (LXI) 144.80p 3.28%
FTSE 250 - Fallers
Baltic Classifieds Group (BCG) 128.20p -7.10%
888 Holdings (DI) (888) 159.00p -5.07%
Convatec Group (CTEC) 221.60p -2.38%
Polymetal International (POLY) 178.00p -2.20%
Helios Towers (HTWS) 128.20p -1.84%
Paragon Banking Group (PAG) 478.60p -1.68%
IntegraFin Holding (IHP) 218.40p -1.53%
Just Group (JUST) 65.35p -1.51%
Workspace Group (WKP) 543.50p -1.45%
Cranswick (CWK) 3,020.00p -1.44%