London open: Stocks edge higher as pound hit by May's Brexit comments

London stocks were a little higher in early trade, taking their cue from a strong close in the US at the end of last week and getting some support from a weaker pound, amid worries about a ‘hard Brexit’ following comments from Prime Minister Theresa May.

At 0825 GMT, the FTSE 100 was up 0.3% to 7,232.34. Meanwhile, oil prices retreated, with West Texas Intermediate and Brent crude down 0.7% at $53.61 a barrel and $56.71, respectively.

On Friday, the S&P 500 and the Nasdaq set new record closing highs, while the Dow was just shy of the 20,000 mark.

Spreadex’s Connor Campbell said: “A lethally dull economic calendar couldn’t prevent the FTSE from finding its way to fresh all-time highs this Monday morning.

“The main driver of the index’s growth seemed to be the latest plunge from the pound, which dropped by 0.8% against both the dollar and the euro following Theresa May’s Sky News interview at the weekend. The Prime Minister’s comments were read as falling decidedly on the ‘hard’ end of the Brexit spectrum, with ‘control of [the UK’s] borders’ likely to be prioritised over continued access to the single market.

“This left sterling at a rough two-month low against both the dollar and the euro, something that in turn spurred the FTSE on by another 30 points.That means the UK index is hovering around the 7230 mark, around 10 points shy of the intraday peak it struck soon after the bell.”

In overnight trading, sterling fell to just below $1.22, which was its lowest level since the end of October, as May told Sky that Britain could not hang on to certain “bits of EU membership”.

In corporate news, Lloyds Banking Group nudged higher as the UK government announced that its stake in the bank has fallen below 6% after it sold 700m shares late on Friday. UK Financial Investments Limited, the government vehicle set up to control stakes in the banks bailed out during the credit crunch in 2008, now holds a 5.95% stake in Lloyds, down from 43% at its peak.

William Hill slid after it warned that its a full-year operating profit for 2016 will be at the bottom end of its guided range due to unfavourable football and horseracing results in December. While it was good news for punters, the bookmaker said it meant gross win margins since mid-November were below expectations.

Barclays rallied as Deutsche Bank upped its stance on the stock to ‘buy’ from ‘hold’, saying it is well placed for earnings growth this year.

FTSE 250 oil and gas facility builder Petrofac pushed higher after it signed a contract worth about $600m with Salalah LPG SFZCO, a wholly-owned subsidiary of Oman Oil Facilities Development Company, to undertake the engineering, procurement and construction of its Salalah LPG extraction project in the southern part of Oman.

Swiss iron ore miner Ferrexpo gained as it said it achieved record sales volumes in 2016, but produced lower pellets as it focused on reducing its debt.

Housebuilder Bovis Homes rose after the company announced that its chief executive, David Ritchie, will step down with immediate effect but will stay on until February to help with the transition process.

RSA Insurance was weaker after UBS downgraded the stock to ‘sell’ from ‘neutral’, Wm Morrison was in the red as Bank of America Merrill Lynch cut it to ‘underperform’ and Babcock fell after Deutsche Bank downgraded it to ‘hold’ from ‘buy’.

Ashmore tumbled following a downbeat note by Barclays.

Market Movers

FTSE 100 (UKX) 7,232.34 0.31%
FTSE 250 (MCX) 18,404.88 0.35%
techMARK (TASX) 3,433.88 0.27%

FTSE 100 - Risers

Glencore (GLEN) 295.80p 2.55%
Anglo American (AAL) 1,157.50p 1.98%
BHP Billiton (BLT) 1,337.50p 1.56%
Antofagasta (ANTO) 703.50p 1.37%
Rio Tinto (RIO) 3,128.50p 1.08%
ITV (ITV) 207.60p 1.02%
Barclays (BARC) 237.60p 1.00%
Persimmon (PSN) 1,952.00p 0.93%
Smith & Nephew (SN.) 1,223.00p 0.91%
Taylor Wimpey (TW.) 170.00p 0.89%

FTSE 100 - Fallers

Babcock International Group (BAB) 909.00p -3.25%
Capita (CPI) 509.50p -1.16%
RSA Insurance Group (RSA) 570.50p -1.04%
Vodafone Group (VOD) 209.30p -0.97%
Fresnillo (FRES) 1,337.00p -0.89%
Royal Bank of Scotland Group (RBS) 230.50p -0.82%
Paddy Power Betfair (PPB) 8,755.00p -0.68%
easyJet (EZJ) 1,052.00p -0.66%
Marks & Spencer Group (MKS) 331.70p -0.60%
BT Group (BT.A) 382.45p -0.55%

FTSE 250 - Risers

CMC Markets (CMCX) 126.30p 4.55%
Ferrexpo (FXPO) 133.20p 2.86%
Safestore Holdings (SAFE) 373.30p 2.84%
Tullow Oil (TLW) 333.40p 2.68%
Petrofac Ltd. (PFC) 923.00p 2.67%
Cairn Energy (CNE) 244.10p 2.56%
Bovis Homes Group (BVS) 831.00p 2.47%
Aveva Group (AVV) 1,967.00p 2.23%
QinetiQ Group (QQ.) 266.50p 2.11%
Vedanta Resources (VED) 937.00p 2.01%

FTSE 250 - Fallers

Ashmore Group (ASHM) 288.20p -3.71%
William Hill (WMH) 288.20p -3.19%
Fidessa Group (FDSA) 2,141.00p -2.73%
IP Group (IPO) 178.50p -2.57%
Homeserve (HSV) 601.00p -2.28%
Softcat (SCT) 289.00p -1.93%
Cranswick (CWK) 2,326.00p -1.77%
PayPoint (PAY) 953.50p -1.60%
National Express Group (NEX) 344.40p -1.46%
McCarthy & Stone (MCS) 169.30p -1.40%