London midday: Stocks rise as Theresa May prepares to take over as PM

London stocks rose on Wednesday as Theresa May prepared to take over as Prime Minister and as investors awaited the Bank of England’s policy decision.

David Cameron stepped down as the leader of the Conservative Party at midday. He had planned to resign in September but decided to leave sooner after a clear backing for May by Conservative members.

The pound was up 0.33% against the dollar to $1.3291 at 1127 BST as May’s appointment removed political uncertainty.

“Make no mistake, we are not out of woods yet and investors will pay attention to Theresa May's choice of ministers who will be tasked with the responsibility of helping her to sail the boat out of the storm,” said Naeem Aslam, chief market analyst at Think Markets.

Traders are also looking ahead to the BoE’s policy decision on Thursday, with many analysts expecting an interest rate cut to address the impact of the Brexit vote. There is an 83% chance of an interest rate cut, according to overnight indexed swaps.

“With the UK economic outlook weakened by the Brexit vote, there can be very little doubt – if any – that the Bank of England will enact some stimulus on Thursday following the July MPC meeting. The only question really seems to be exactly what action will the MPC take?,” said Howard Archer, chief UK and European economist at IHS Global Insight.

In economic data, China’s trade surplus narrowed to $48.11bn in June from $49.98bn a month earlier as exports fell. Exports dropped 4.8% in June compared to a year ago following a 4.1% drop in May, according to the General Administration of Customs. Economists had expected a 5% decline. Imports decreased 8.4% year-on-year in June, more than the 6.2% slide expected by analysts, following a 0.4% fall in May.

The yuan fell 0.13% against the dollar to $0.14947

“The inability to boost exports is likely to increase the pressure on the yuan in the short term, which in turn could well see it decline further towards 6.80 against the US dollar,” said Michael Hewson, chief market analyst at CMC Markets.

Eurozone industrial production dropped 1.2% from April versus expectations of a 0.8% decline, according to Eurostat. Figures for April were revised up to show a 1.4% increase from a previous estimate of 1.1%.

On the company front, Burberry rallied after reporting a 3% like-for-like drop in retail sales in the first quarter, beating the 5% fall that had been forecast by market.

Housebuilder Barratt Developments was one of the big fallers, caught up in a sector-wide retreat, as it told Reuters it could reduce the rate at which it builds houses due to a possible slowdown from Brexit.

Playtech gained as it said it was buying 90% of sports betting software maker Best Gaming Technology for €138m in cash.

Market Movers

FTSE 100 (UKX) 6,693.23 0.19%
FTSE 250 (MCX) 16,835.66 0.17%
techMARK (TASX) 3,305.37 0.24%

FTSE 100 - Risers

Burberry Group (BRBY) 1,286.00p 6.90%
Antofagasta (ANTO) 513.50p 5.66%
Rolls-Royce Holdings (RR.) 744.50p 2.83%
Glencore (GLEN) 190.80p 2.58%
Aviva (AV.) 390.40p 2.25%
CRH (CRH) 2,232.00p 2.15%
BHP Billiton (BLT) 1,023.50p 1.99%
St James's Place (STJ) 841.50p 1.94%
Fresnillo (FRES) 1,962.00p 1.71%
Rio Tinto (RIO) 2,524.50p 1.53%

FTSE 100 - Fallers

Berkeley Group Holdings (The) (BKG) 2,617.00p -2.79%
Barratt Developments (BDEV) 406.00p -1.77%
Diageo (DGE) 2,101.00p -1.55%
Persimmon (PSN) 1,527.00p -1.36%
BT Group (BT.A) 401.40p -1.33%
ITV (ITV) 188.20p -1.31%
Barclays (BARC) 146.80p -1.18%
Taylor Wimpey (TW.) 143.60p -1.17%
Schroders (SDR) 2,545.00p -1.17%
Royal Bank of Scotland Group (RBS) 180.20p -0.99%

FTSE 250 - Risers

NMC Health (NMC) 1,180.00p 5.36%
Playtech (PTEC) 855.50p 4.84%
OneSavings Bank (OSB) 228.90p 4.76%
Evraz (EVR) 165.70p 4.67%
Shawbrook Group (SHAW) 170.70p 3.71%
Allied Minds (ALM) 370.40p 3.26%
Ocado Group (OCDO) 262.30p 3.06%
Kaz Minerals (KAZ) 148.60p 2.91%
Hochschild Mining (HOC) 239.70p 2.88%
Ibstock (IBST) 144.20p 2.63%

FTSE 250 - Fallers

CLS Holdings (CLI) 1,389.00p -3.54%
IP Group (IPO) 162.30p -3.28%
CYBG (CYBG) 236.90p -2.51%
Kier Group (KIE) 1,040.00p -2.44%
Man Group (EMG) 120.90p -2.34%
Entertainment One Limited (ETO) 197.10p -2.18%
Card Factory (CARD) 312.60p -2.10%
Paragon Group Of Companies (PAG) 254.20p -1.82%
National Express Group (NEX) 319.70p -1.75%
JPMorgan American Inv Trust (JAM) 324.40p -1.67%