12th Jul 2016 16:04
LONDON (Alliance News) - A calmer day on the UK political scene with Theresa May set to become Prime Minister supported the pound Tuesday, but stocks ended mixed with the rally in the FTSE 100 losing steam.
May is set to replace the Prime Minister David Cameron on Wednesday, ending political uncertainty over the Tory leadership race.
May was officially named Conservative Party leader and successor to Cameron on Monday, after Energy Minister Andrea Leadsom withdrew from the race.
The greater clarity helped support the pound which reached its highest level in a week. At the London stock market close, sterling traded the dollar at USD1.3226, much higher than the USD1.2985 seen at the same time on Monday.
"Theresa May's confirmation as the country's new leader may not have had the expected effect on stock markets today, for the appreciation seen in sterling has effectively suppressed the FTSE 100 today," said Joshua Mahony, market analyst at IG.
The FTSE 100 closed down 2.17 points, at 6,680.69, ending a run of three consecutive sessions of gains. It was held back by heavy-weight defensive stocks as investors moved to riskier positions. Amongst the heaviest fallers were gold miners, pharmaceutical companies and utility firms.
The price of gold receded as investors exited the safe haven. At the European equities close, the metal was quoted at USD1,337.86 an ounce versus USD1,358.46 at the close on Monday.
Brent oil rebounded from hitting its lowest level since May on Monday. At the London close on Tuesday it was quoted at USD47.83 a barrel, against USD46.58 at the same time on Monday.
The FTSE 250 ended up 0.6%, or 100.68 points, at 16,807.07, and the AIM All-Share up 0.8%, or 5.99 points at 721.39.
In mainland Europe, the French CAC 40 index ended up 1.6% and the German DAX 30 up 1.3%.
The euro traded at USD1.1062 at the London close against USD1.1043 at the close on Monday.
On Wall Street at the London stock market close, the Dow Jones Industrial Average was up 0.6% and the S&P 500 was up 0.7%, both having reached new record highs early in the New York trading session. The Nasdaq Composite was up 0.7%.
Qatar's state-owned Qatar Airways Tuesday clarified that it currently holds a 15.67% stake in International Consolidated Airlines Group, and reiterated it would consider increasing its stake further "within the allowable limits".
Qatar Airways noted that as a non-European Union shareholder of IAG, it is subject to an overall cap on non-EU ownership, as a result of a requirement for EU airlines to be majority owned by EU shareholders.
IAG, which owns the British Airways, Vueling, and Aer Lingus brands ended as one of the best performers in the FTSE 100, up 3.0%.
Peer easyJet closed up 4.3%. Jasper Lawler, market analyst at CMC Markets, said the stocks were also boosted by a positive read-across from US carriers.
"Airlines Easyjet and IAG were some of the top risers on the FTSE 100 in a positive read-across from strong gains in American Airlines and United Continental after a broker upgrade and strong Q2 revenues respectively," Lawler said.
ITV shares ended up 2.7% at 190.70 pence after UBS raised the broadcaster to Neutral from Sell. The Swiss bank said the sharp fall in the company's share price following the referendum put it in-line with UBS's revised price target of 170.00p.
However, UBS said given the macroeconomic uncertainties surrounding the UK following the Brexit vote, ITV's advertising revenue will decline in the current and following year.
Shire ended the day up 2.2% after its key dry eye disease treatment lifitegrast received approval from the US Food & Drug Administration.
The eye drop treatment, branded Xiidra, is expected to be launched in the US in the third quarter of 2016.
Dry eye disease is a chronic disease of the tears and ocular surface which can cause inflammation that could eventually result in damage to the surface of the eye. An estimated 16 million adults in the US are diagnosed with the disease, according to Shire.
Shire said Xiidra is the only prescription eye drop indicated for the treatment of both signs and symptoms of dry eye disease.
The approval marks a positive step in Shire's plan to reach product sales of USD20 billion by 2020, along with its recently completed acquisition of Baxalta Inc, as it looks to replace some of its maturing portfolio with new drugs in an effort to avoid a so-called "patent cliff".
Rathbone Brothers topped the FTSE 250 gainers list, up 11%, after Numis upgraded the wealth manager to Buy from Add. Numis believes the company should be able to pull through any Brexit-related challenges due to its conservative operating model.
Construction and housebuilding company Galliford Try was up 8.5% after it said it expects to post full-year results in line with management's expectations.
Within its Linden Homes housebuilding arm, the company said it made 3,078 completions during the year, compared to the 2,769 recorded a year earlier, and noted its average private sales price rose to GBP335,000 from GBP327,000. Its forward sales position grew 27% at the year-end to GBP380.0 million, up from GBP300.0 million a year earlier, Galliford Try said.
Galliford Try noted that it was well positioned in the wake of the UK's vote to leave the EU.
"Recent political events create a backdrop of uncertainty for the new financial year. It is too early to predict specific effects on our markets, but the strength of underlying demand for new homes and the continuing availability of mortgage finance and Help-to-Buy give grounds for confidence in both Linden Homes and Galliford Try Partnerships," said Chief Executive Peter Truscott.
In the economic calendar Wednesday, Chinese trade balancing data is due before the London open at 0400 BST, followed by Japanese industrial production at 0530 BST. There are then consumer price index readings from France at 0745 BST, Spain at 0800 BST, and Italy at 0900 BST.
The Bank of England's credit conditions survey is released at 0930 BST, eurozone industrial production is at 1000 BST and US MBA mortgage applications are at 1200 BST. The Energy Information Administration's crude oil stocks is at 1530 BST and the Beige book on the US economic situation is at 1900 BST.
In the UK corporate calendar, the highlights will be trading statements from housebuilder Barratt Developments, which has seen heavy falls in its share price in the aftermath of the UK's vote to leave the European Union, and luxury fashion retailer Burberry Group, which appointed a new chief executive officer and chief operating and financial officer on Monday.
Interdealer broker ICAP reports first quarter results, while pub operator JD Wetherspoon, engineer Fenner and inkjet printing technology company Xaar all release trading statements.
By Neil Thakrar; [email protected]; @NeilThakrar1
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