London midday: Stocks waver on Brexit woes, political instability

UK stocks wavered on Thursday as contenders for Prime Minister came forward in the wake of Brexit.

Justice Secretary Michael Gove and Home Secretary Theresa May will be in the race to succeed David Cameron who stepped down after Britain voted to leave the European Union. Former London Mayor Boris Johnson announced it would not be standing to the surprise of markets.

Other contenders are Work & Pensions Secretary Stephen Crabb, former Cabinet minister Liam Fox and Energy and Climate change junior minister Andrea Leadsom.

The Conservative Party had until midday on Thursday to submit nominations for the party leadership, and the new leader will be in place by 9 September.

“Close attention will be paid to the leadership contest in the coming months with the next Prime Minister being tasked with the huge job of negotiating the UKs future with relationship with the EU,” said Craig Erlam, senior market analyst at Oanda.

“The lack of progress since last week’s vote is probably partially what has stabilised the markets for now but the longer this persists, the more uncertain the future is going to look. Until article 50 is triggered, there remains a chance, albeit small, that new negotiations and even another referendum could take place.”

Next up, Bank of England governor Mark Carney is due to speak at 1600 BST with the focus on any remarks on his plans to cushion to blow of Brexit. He is likely to once again reassure markets that the central bank will take necessarily steps to address future risks.

In economic data, the final release of first-quarter UK gross domestic product from the Office for National Statistics confirmed growth at 0.4%, in line with expectations.

Growth on the year was confirmed at 2%, also in line with expectations.

Dennis de Jong, managing director of UFX.com, said: “Despite Brexit fears looming over the UK economy throughout June, GDP figures for the month look pretty solid. Now that the UK has voted to leave the European Union, however, uncertainty is rife and Q2’s figures will go further in gauging the health of the economy.”

The ONS also released data on the UK’s current account which came in at £32.6bn in the three months to March, down slightly from the upwardly revised £33.96bn in the fourth quarter. Economists had expected a deficit of £28bn.

UK consumer confidence remained in negative territory in June, GfK said, with the index unchanged at -1. Analysts expected a reading of -2. Confidence was hit by concerns that economic growth could be affected following a Brexit vote.

In the eurozone, the consumer price index rose 0.1% year-on-year as energy prices improved, beating estimates of 0% and marking an improvement on the -0.1% fall the previous month. However, it remains well below the European Central Bank’s inflation target of just below 2%.

Elsewhere, initial jobless claims are due at 1330 BST.

Meanwhile, oil prices reversed the previous day’s rally with Brent crude down 0.65% to $50.28 per barrel and West Texas Intermediate down 0.89% to $49.44 per barrel at 1206 BST.

On the company front, Weir Group shares gained after it announced that following discussions with chief operating officer Dean Jenkins, it has been agreed that he will step down from the board on 30 September.

3i rallied after the private equity firm said it had no plans to sell its investment in Dutch discount retailer Action despite a number of approaches.

Rio Tinto edged higher as it said it was ending its involvement with Papua New Guinea by giving up ownership of the Panguna copper mine on Bougainville island.

Housebuilders were back in the red on renewed Brexit worries. Travis Perkins, Taylor Wimpey, Persimmon, Berkeley Group and Barratt Developments led the declines.

Dixons Carphone declined a day after reporting full year revenue that missed expectations and saying it plans to expand in the US through a joint venture with Sprint mobile network.

Market Movers

FTSE 100 (UKX) 6,366.05 0.09%
FTSE 250 (MCX) 16,004.61 0.01%
techMARK (TASX) 3,146.40 0.00%

FTSE 100 - Risers

3i Group (III) 537.00p 6.44%
Glencore (GLEN) 154.70p 5.45%
Antofagasta (ANTO) 464.70p 4.90%
Anglo American (AAL) 729.60p 4.69%
International Consolidated Airlines Group SA (CDI) (IAG) 370.00p 2.98%
Randgold Resources Ltd. (RRS) 8,305.00p 2.98%
BHP Billiton (BLT) 935.50p 2.76%
Schroders (SDR) 2,313.00p 2.62%
Rio Tinto (RIO) 2,273.00p 2.55%
Informa (INF) 704.50p 1.81%

FTSE 100 - Fallers

Royal Bank of Scotland Group (RBS) 171.50p -4.83%
Dixons Carphone (DC.) 319.50p -4.74%
Royal Mail (RMG) 485.00p -4.34%
Taylor Wimpey (TW.) 127.80p -3.84%
Travis Perkins (TPK) 1,442.00p -3.67%
Persimmon (PSN) 1,393.00p -3.53%
Berkeley Group Holdings (The) (BKG) 2,477.00p -2.86%
Lloyds Banking Group (LLOY) 53.96p -2.81%
Barratt Developments (BDEV) 397.70p -2.69%
Babcock International Group (BAB) 893.50p -2.62%

FTSE 250 - Risers

esure Group (ESUR) 291.30p 11.82%
Softcat (SCT) 321.80p 7.27%
Sophos Group (SOPH) 209.40p 6.19%
CLS Holdings (CLI) 1,405.00p 6.04%
Tullow Oil (TLW) 266.40p 5.34%
Weir Group (WEIR) 1,470.00p 5.00%
Amec Foster Wheeler (AMFW) 478.00p 4.99%
Wizz Air Holdings (WIZZ) 1,585.00p 4.97%
Kaz Minerals (KAZ) 131.30p 4.70%
JD Sports Fashion (JD.) 1,142.00p 4.58%

FTSE 250 - Fallers

Allied Minds (ALM) 341.50p -8.37%
PayPoint (PAY) 888.50p -8.31%
Zoopla Property Group (WI) (ZPLA) 251.00p -6.27%
Paragon Group Of Companies (PAG) 236.70p -5.32%
AO World (AO.) 138.00p -4.83%
Brown (N.) Group (BWNG) 172.80p -4.74%
Rightmove (RMV) 3,549.00p -4.47%
Ibstock (IBST) 133.00p -4.11%
Crest Nicholson Holdings (CRST) 349.50p -4.06%
Aldermore Group (ALD) 116.30p -3.88%