12th Jul 2016 11:18
LONDON (Alliance News) - Blue-chip stocks in London fluctuated between mild gains and losses Tuesday, while the pound moved higher, as investors welcomed the restoration of some political certainty in the UK with Theresa May set to be prime minister on Wednesday.
May will take up office as Britain's second woman PM, after Cameron answers MPs' questions in the House of Commons for the last time and goes to Buckingham Palace to offer his resignation to the Queen.
"The confirmation of a new UK prime minister has offered some welcome certainty in uncertain times," said Jasper Lawler, market analyst at CMC Markets.
"The 'safe hands' of Mrs May at the helm has actually reduced distress signals. The pound has risen over 1% against the dollar today, adding to yesterday's gains when Andrea Leadsom ended her campaign to become the Tory party leader," Lawler added.
The pound reached its highest level in a week against the dollar at USD1.3187, compared to USD1.2985 at the London stock market close on Monday.
In the London stock market, housebuilders and financial stocks dominated the top gainers.
Mike van Dulken, head of research at Accendo Markets, said the housebuilding sector was rallying on "reduced political uncertainty regarding the next UK leader, optimism that the UK central bank will ride to the rescue of the nation's precious property market and a healthy dollop of momentum driven bargain-hunting."
At midday, however, the FTSE 100 was down 1.28 points at 6,681.58. The blue-chip index was underperforming its European and domestic peers, 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 FTSE 250 index was up 0.6% at 16,810.12 and the AIM All-Share was up 0.6% at 719.44.
In Europe, the CAC 40 index in Paris and the DAX 30 index in Frankfurt were both up 1.6%.
Futures pointed to a higher open on Wall Street. The Dow Jones Industrial Average was indicated up 0.4% and the S&P 500 and Nasdaq 100 were both up 0.5%.
Alcoa shares were pointed up 3.3% in pre-market trade after the aluminium producer reported earnings and revenues ahead of Wall Street expectations after the New York closing bell on Monday.
Alcoa's earnings are closely watched by investors as it is one of the first major US companies to report quarterly results and unofficially kick-starts the US earnings season.
Irish drugmaker Shire was one of the best performers in the FTSE 100, up 3.1%. The company late Monday said the US Food & Drug Administration has approved its Xiidra dry eye treatment.
Shire said Xiidra is the only prescription eye drop indicated for the treatment of both signs and symptoms of dry eye disease, and it anticipates it will launch in the US in the third quarter of 2016.
Shore Capital said the only competition Shire will face in this market is Allergan's Restasis. "Importantly, Restasis is approved for 'tear production increase' meaning Lifitegrast should have an advantage from its indication for treating both the signs and symptoms of the disease and hence having a competitive label".
Cantor Fitzgerald said the approval was "overtly positive" and also believes Shire's product is superior to Restasis.
Rathbone Brothers topped the FTSE 250 gainers list, up 9.9%, 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 6.0% 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 European Union.
"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.
Orchard Funding Group said it was "disappointed" its trading performance for its current financial year is now expected to be below market expectations, after it was unable to achieve the "material increases" in its revenue base it had been anticipating.
The AIM-listed finance provider said it expects its revenue for the year to end July 31 to be broadly level with the prior financial year, at GBP3.45 million, having previously said it was expecting "material increases" in revenue for the year, meaning its trading performance is now expected to be below market expectations.
Orchard said it remains well-positioned in its two core markets, and has invested in developing and expanding its senior sales team, as well as developing its software and technology platform. However, the process for recruiting senior sales individuals has taken longer than originally envisaged and this has delayed the company's ability to significantly increase its lending volumes, Orchard said.
The stock was down 22%, one of the worst performers in the London stock market.
Still to come in the economic calendar is the Redbook retail sales report in the US at 1355 BST.
By Neil Thakrar; [email protected]; @NeilThakrar1
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