London open: Osborne to give economy fiscal boost

Stocks in London moved higher at the start of trading, with investors taking their cue from a positive session in Asia, although with US markets due to remain closed in observance of the 4 July holiday trading was expected to be subdued.

As of 08:27 BST the FTSE 100 was gaining 20.77 points or 0.23% to 6,599.39, while the Shanghai Stock Exchange´s Composite Index finished the session with gains of 1.91% to 2,988.60.

Also moving markets, Osborne told the Financial Times he would cut the corporation tax rate to below 15% from the current 20%, which would make it the lowest of any major economy. The chancellor also said Britain was facing a “very challenging time” and called on the Bank of England to do what it can to avoid “a contraction of credit in the economy”.

Michael Hewson, chief market analyst at CMC Markets, said; “With US markets closed today for the 4th July Independence Day holiday European markets may well be quieter than usual, though they will be no less driven by the expectations of lower for longer interest rates in light of the events of recent days.

“The main focus this week away from Brexit concerns given that the triggering of article 50 seems some way off is likely to be on the latest US economic data towards the end of the week, the latest FOMC minutes and the latest US payrolls report, given the shocker of a report we saw in May.”

Stocks got a boost at the end of last week after Bank of England governor Mark Carney said the central bank was likely to cut interest rates over the summer.

On the macroeconomic front on Monday, UK construction PMI for June is at 0930 BST. Hewson expects to see a decline to 50.6 from 51.2 mainly on the back of pre-Brexit uncertainty. “The recent weakness in this sector in recent months could also account for why investors sold off the housebuilders so aggressively in the wake of last month’s Brexit vote,” he said.

In corporate news, HSBC confirmed the completion of the sale of its Brazil business on Monday, after announcing on 8 June that it had received all necessary regulatory approvals for the transaction. The bank had put HSBC Brazil on the market as part of its efforts to streamline the global business, accepting an offer from Banco Bradesco. “The sale of HSBC Brazil represents a significant step in HSBC's stated goal to optimise its global network and reduce complexity,” the board said in the announcement. HSBC previously confirmed the deal was worth $5.2bn in an all-cash transaction.

Capita announced the appointment of Ian Powell as a non-executive director and chairman designate on Monday, taking effect from 1 September. The FTSE 100 firm said Powell would officially succeed Martin Bolland as non-executive chairman on 1 January 2017. Until the end of June, Ian Powell was chairman and senior partner of PricewaterhouseCoopers UK.

Conditions in the offshore industry remain depressed, reflecting global economic uncertainty, which will see profits for 2016 come in "materially lower" than in the full-year 2015, Clarkson said in a trading update. However, overall transaction volumes within the broking division continued to grow, albeit alongside declining activity in the financial division. The shipbroker referenced the sharp fall seen in the Baltic Dry Index to all-time lows during the first quarter of the year.

Property investment company Kennedy Wilson Europe said it has achieved a major milestone at its Baggot Plaza, Dublin project, reaching practical completion and handing the building over to the governor and company of the Bank of Ireland. The FTSE 250 firm entered into an agreement for lease with the Bank of Ireland in May 2015, for a 25-year lease of the entire building at a headline rent of €47.50 per square foot.

Trading at Kier Group was positive, with the company having met its target for reducing its gearing one-year ahead of schedule and successfully completed the integration of the operations of recently acquired Mouchel. Improved cash performance allowed the property, construction and residential services group to cut net debt below £140m as of 30 June 2016, including the £44m in cash expenditures related to the Mouchel integration and another £25m on new systems and upgrades. Net debt as a proportion of earnings before interest, taxes, depreciation and amortisation fell below one, a year ahead of schedule.