London open: FTSE, sterling gain ahead of Hunt statement

London stocks and sterling gained in early trade on Monday, with new Chancellor Jeremy Hunt expected to announce more mini-budget U-turns when he makes an emergency statement on tax and spending plans later in the day.

At 0835 BST, the FTSE 100 was 0.2% firmer at 6,871.24, while the pound was up 0.8% against the dollar at 1.1256. Meanwhile, gilt yields fell, with the yield on the 30-year down around 17 basis points and 10-year gilts down 15 bps.

Hunt is set to make an emergency statement later in an effort to calm markets, bringing forward measures from the medium-term fiscal plan that will support fiscal sustainability, with the full plan to be set out on 31 October.

As prime minister Liz Truss fights for survival, a delay to the reduction in cutting the basic income tax to 19p from 20p is likely to be announced as Hunt looks to plug a black hole in public finances that could be as high as £72bn.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said there could also be changes to the new VAT-free shopping scheme for tourists, and possibly a reversal of plans to relax the way tax is collected from self-employed people.

"We could even see a rise in VAT. But filling the black holes in the government’s finances will be far from easy so highly unpalatable spending cuts across government departments are also expected," she said.

"Jeremy Hunt had already been setting the scene for this bonfire of tax cuts over the weekend. Those pledges and speculation that Liz Truss’ days are numbered are likely to have been behind sterling’s rise of 0.5% during trade in Asia, which saw it nudge back above $1.12. Since the emergency budget statement was announced, it’s gained further ground. But sterling is still weaker than before Kwasi Kwarteng was ruthlessly axed, with the chief architect of the disastrous mini-budget still, for now, in place."

In equity markets, Standard Chartered was a high riser after an upgrade to ‘overweight’ at Morgan Stanley.

ITV surged to the top of the FTSE 250 following a report that bosses at the broadcaster are seeking to cast its production business in a more prominent light amid frustrations with the group’s stock market valuation. According to The Times, the company is reviewing the future of ITV Studios, its production arm, including the option of selling a stake, in an attempt to boost its lagging share price.

Hargreaves Lansdown was in the red after it reported a drop in first-quarter assets under administration and announced the departure of chief executive Chris Hill, amid reports the company has been hit by a lawsuit over the failure of Neil Woodford's equity income fund.

Market Movers

FTSE 100 (UKX) 6,871.24 0.18%
FTSE 250 (MCX) 17,117.50 0.50%
techMARK (TASX) 4,080.53 -0.03%

FTSE 100 - Risers

Severn Trent (SVT) 2,362.00p 2.74%
United Utilities Group (UU.) 875.40p 2.46%
Standard Chartered (STAN) 552.40p 1.99%
National Grid (NG.) 884.60p 1.54%
Centrica (CNA) 72.66p 1.45%
Persimmon (PSN) 1,228.50p 1.45%
SSE (SSE) 1,489.50p 1.33%
International Consolidated Airlines Group SA (CDI) (IAG) 111.30p 1.31%
Taylor Wimpey (TW.) 89.10p 1.30%
HSBC Holdings (HSBA) 464.50p 1.24%

FTSE 100 - Fallers

Halma (HLMA) 1,973.50p -3.40%
Hargreaves Lansdown (HL.) 785.40p -3.32%
BAE Systems (BA.) 779.60p -1.42%
Ashtead Group (AHT) 4,128.00p -1.41%
Experian (EXPN) 2,598.00p -1.33%
St James's Place (STJ) 957.60p -1.22%
London Stock Exchange Group (LSEG) 7,208.00p -1.15%
Auto Trader Group (AUTO) 518.40p -0.99%
CRH (CDI) (CRH) 2,841.50p -0.99%
Spirax-Sarco Engineering (SPX) 10,290.00p -0.96%

FTSE 250 - Risers

ITV (ITV) 65.78p 6.61%
Ferrexpo (FXPO) 118.20p 3.68%
Darktrace (DARK) 314.30p 3.59%
HGCapital Trust (HGT) 358.00p 3.47%
Petrofac Ltd. (PFC) 102.70p 3.16%
TUI AG Reg Shs (DI) (TUI) 121.15p 2.71%
Greencoat UK Wind (UKW) 145.10p 2.69%
Spectris (SXS) 2,783.00p 2.47%
UK Commercial Property Reit Limited (UKCM) 56.60p 2.35%
Wood Group (John) (WG.) 115.50p 2.35%

FTSE 250 - Fallers

ASOS (ASC) 489.00p -8.00%
IP Group (IPO) 53.35p -6.57%
Aston Martin Lagonda Global Holdings (AML) 93.14p -2.02%
W.A.G Payment Solutions (WPS) 77.90p -1.77%
NCC Group (NCC) 206.50p -1.67%
VinaCapital Vietnam Opportunity Fund Ltd. (VOF) 443.50p -1.44%
Alliance Trust (ATST) 910.00p -1.30%
Clarkson (CKN) 2,685.00p -1.29%
Virgin Money UK (VMUK) 127.25p -1.28%
Allianz Technology Trust (ATT) 213.50p -1.16%