London open: FTSE gains as sterling slumps after hawkish Powell speech

London stocks rose in early trade on Tuesday, helped along by a weaker pound, as traders returned to their desks after the bank holiday.

At 0840 BST, the FTSE 100 was up 0.7% at 7,475.45.

Meanwhile, sterling fell to its lowest level against the dollar since March 2020, hitting $1.1700 amid growing concerns about the UK economy and following a hawkish speech from US Federal Reserve chair Jerome Powell.

Speaking at Jackson Hole on Friday, Powell said that getting back to price stability would "likely require maintaining a restrictive policy stance for some time".

Oanda market analyst Edward Moya said: "Powell sent a short and direct message that there won’t be a Fed pivot anytime soon and that has markets positioned for further equity weakness.

"Investors were expecting that once the US got some ugly data, perhaps a couple negative NFP reports, that the Fed would come to the rescue, but that might not be the case. Premature loosening won’t be happening on the first signs that the economy is slowing down quickly and that raising doubts for anyone who bought stocks earlier this month."

A weaker pound tends to boost the top-flight index, as around 70% of its constituents derive their earnings from overseas.

On the macro front, net lending, consumer credit and mortgage approvals data for July are due out at 0930 BST.

In equity markets, banks were among the top performers amid the prospect of higher rates, with Barclays, Lloyds, HSBC and Standard Chartered all up.

Dechra Pharmaceuticals ticked a touch higher as it announced the acquisition of California -based veterinary pharmaceutical manufacturer Med-Pharmex for $260m (£221.5m).

Bunzl slid even as it lifted its full-year margin outlook and posted a jump in first-half profit and revenue as product cost inflation and volume growth more than offset an expected decline in Covid-related sales.

AstraZeneca was also in the red even as clinical trial results showed that its Farxiga treatment against Type II diabetes significantly reduced the risk of cardiovascular death or worsening of heart failure in patients with mildly reduced or preserved ejection fraction.

Market Movers

FTSE 100 (UKX) 7,475.45 0.65%
FTSE 250 (MCX) 19,214.85 0.24%
techMARK (TASX) 4,379.41 0.22%

FTSE 100 - Risers

Barclays (BARC) 167.00p 3.02%
Coca-Cola HBC AG (CDI) (CCH) 2,037.00p 2.88%
Shell (SHEL) 2,388.50p 2.34%
Lloyds Banking Group (LLOY) 44.63p 2.20%
HSBC Holdings (HSBA) 534.30p 2.16%
BP (BP.) 467.65p 2.15%
Next (NXT) 5,850.00p 2.06%
Standard Chartered (STAN) 601.00p 1.93%
Kingfisher (KGF) 234.20p 1.74%
British Land Company (BLND) 439.20p 1.74%

FTSE 100 - Fallers

NATWEST GROUP (NWG) 256.90p -4.92%
Endeavour Mining (EDV) 1,715.00p -3.76%
Bunzl (BNZL) 3,006.00p -3.50%
Antofagasta (ANTO) 1,133.50p -3.45%
Haleon (HLN) 258.20p -3.04%
Anglo American (AAL) 2,873.50p -1.68%
Fresnillo (FRES) 716.40p -1.62%
Glencore (GLEN) 491.00p -1.58%
Rio Tinto (RIO) 4,901.50p -1.58%
Scottish Mortgage Inv Trust (SMT) 821.20p -1.37%

FTSE 250 - Risers

NCC Group (NCC) 210.50p 4.73%
Aston Martin Lagonda Global Holdings (AML) 446.90p 4.27%
IP Group (IPO) 71.25p 3.49%
Virgin Money UK (VMUK) 149.45p 3.03%
4Imprint Group (FOUR) 3,920.00p 3.02%
Quilter (QLT) 106.60p 2.65%
Royal Mail (RMG) 273.80p 2.55%
Wood Group (John) (WG.) 130.80p 2.43%
Volution Group (FAN) 359.00p 2.43%
Apax Global Alpha Limited (APAX) 184.00p 2.22%

FTSE 250 - Fallers

Ferrexpo (FXPO) 149.70p -3.54%
TBC Bank Group (TBCG) 1,676.00p -3.46%
Darktrace (DARK) 509.20p -2.94%
Future (FUTR) 1,521.00p -2.56%
Polymetal International (POLY) 195.00p -2.50%
Monks Inv Trust (MNKS) 1,032.00p -2.18%
Bank of Georgia Group (BGEO) 1,998.00p -1.82%
Carnival (CCL) 737.00p -1.76%
Allianz Technology Trust (ATT) 233.50p -1.48%
Centamin (DI) (CEY) 91.40p -1.42%