London open: FTSE gains as sterling slides to all-time low vs dollar
London stocks rose in early trade on Monday, while sterling fell to an all-time low against the greenback amid concerns the swathe of tax cuts announced by chancellor Kwasi Kwarteng last week will do little to boost growth and will instead add to inflation.
At 0830 BST, the FTSE 100 was up 0.5% at 7,056.18, while the pound was down 1.4% against the dollar at 1.0705, having plunged to as low as 1.0327 in Asian trading - levels not since Britain went decimal in 1971.
A weaker pound tends to benefit the top-flight index as around 70% of its constituents derive their earnings from overseas.
Sterling was being battered by concerns that the so-called mini-budget announced on Friday will pile further pressure on an already-heavily indebted economy.
Richard Hunter, head of markets at Interactive Investor, said this "has led to accusations of fiscal indiscipline, and has also resulted in speculation that the Bank of England may have to make an emergency announcement in response".
"Sterling weakness has provided something of a floor for the FTSE 100, where the majority of earnings come from overseas and are therefore more valuable in repatriation," he noted.
Investors were also mulling over the latest survey from Rightmove, which showed that house prices continued to push higher in September, despite the cost-of-living crisis and interest rates at 14-year highs.
According to the latest Rightmove House Price Index, the average asking price of a property coming to market was £367,760 in September, up 0.7% on August and 8.7% year-on-year.
The increase was largely in line with the average September rise of 0.6% seen over the last 10 years.
The Bank of England last week upped interest rates for the seventh consecutive time, leaving the cost of borrowing at its highest since 2008. According to Rightmove, the average monthly mortgage payment for first-time buyers putting down a 10% deposit has now reached £1,057 per month, or 40% of an average gross salary, for the first time since November 2012.
Inflation also remains at near-40 year highs at 9.9%.
But Tim Bannister, director of property science at Rightmove, said: "The end of the summer break and the start of the new school term is usually a time when we see renewed focus from buyers, as those with plans to move see an autumn window of opportunity ahead.
"Price growth this month in the middle and high-end sectors highlights that even when finances are more stretched, many of the reason for looking to move up the ladder remain."
In equity markets, Unilever rallied as the consumer goods giant said chief executive Alan Jope will retire from the company at the end of 2023, after five years in the role.
GSK was also in the black as it named Burberry’s Julie Brown as its new chief financial officer. Brown, who is currently chief operating and financial officer of the luxury fashion brand, will join GSK in April 2023.
On the downside, retailers and housebuilders slumped, with Next, B&M, Marks and Spencer, Persimmon, Berkeley, Taylor Wimpey and Barratt among the worst performers. Housebuilders were likely dented by concerns the Bank of England will have to ramp up interest rates further, increasing the cost of borrowing.
Outside the FTSE 350, Pendragon shares surged 20% after the car dealership got a £400m takeover offer from its largest shareholder, Hedin Group.
FTSE 100 - Risers
Unilever (ULVR) 4,176.00p 3.71%
BAE Systems (BA.) 820.40p 3.09%
Reckitt Benckiser Group (RKT) 6,148.00p 2.47%
Diageo (DGE) 3,860.50p 2.37%
Endeavour Mining (EDV) 1,619.00p 2.27%
Scottish Mortgage Inv Trust (SMT) 808.40p 2.17%
GSK (GSK) 1,340.00p 2.04%
Flutter Entertainment (CDI) (FLTR) 9,950.00p 1.84%
Melrose Industries (MRO) 101.60p 1.78%
Ashtead Group (AHT) 3,894.00p 1.70%
FTSE 100 - Fallers
Persimmon (PSN) 1,303.00p -3.48%
Taylor Wimpey (TW.) 100.25p -2.81%
Next (NXT) 5,334.00p -2.77%
Berkeley Group Holdings (The) (BKG) 3,393.00p -2.61%
JD Sports Fashion (JD.) 103.35p -2.41%
Barratt Developments (BDEV) 396.40p -2.36%
Anglo American (AAL) 2,612.00p -2.17%
Harbour Energy (HBR) 443.10p -2.10%
B&M European Value Retail S.A. (DI) (BME) 311.70p -2.01%
Aviva (AV.) 414.70p -1.94%
FTSE 250 - Risers
Monks Inv Trust (MNKS) 1,016.00p 2.16%
Fidelity European Trust (FEV) 280.00p 1.82%
Templeton Emerging Markets Inv Trust (TEM) 149.80p 1.77%
Syncona Limited NPV (SYNC) 172.00p 1.65%
Schroder Asia Pacific Fund (SDP) 517.00p 1.57%
Hikma Pharmaceuticals (HIK) 1,228.00p 1.57%
Allianz Technology Trust (ATT) 226.50p 1.57%
Schroder Oriental Income Fund Ltd. (SOI) 263.00p 1.54%
JTC (JTC) 710.00p 1.43%
Smithson Investment Trust (SSON) 1,223.00p 1.41%
FTSE 250 - Fallers
Playtech (PTEC) 366.00p -6.35%
Petershill Partners (PHLL) 182.80p -6.26%
Ferrexpo (FXPO) 129.80p -4.84%
Moonpig Group (MOON) 161.10p -4.62%
Polymetal International (POLY) 186.00p -4.12%
Marks & Spencer Group (MKS) 102.65p -3.66%
Balanced Commercial Property Trust Limited (BCPT) 82.80p -3.50%
Bellway (BWY) 1,851.00p -3.49%
Urban Logistics Reit (SHED) 139.00p -3.47%
Vistry Group (VTY) 685.50p -3.31%