London close: Stocks firmer ahead of PM's no-confidence vote

Mon 06 Jun 2022

LONDON (SHARECAST) - (Sharecast News) - London stocks managed a positive finish on Monday, having taken their cue from a strong showing on Asia's markets earlier, and ahead of prime minister Boris Johnson facing a no-confidence vote from his MPs at 1800 BST.
The FTSE 100 ended the session up 1% at 7,608.22, and the FTSE 250 was 1.15% firmer at 20,506.80.

Sterling was also in the green, last trading 0.4% higher on the dollar at $1.2538, and advancing 0.59% against the euro to change hands at €1.1721.

"It looks like investors are having another go at extending the rally in equity markets on both sides of the Atlantic," said IG chief market analyst Chris Beauchamp.

"Such renewed strength after what was ultimately an indecisive end to May will provide some comfort for investors, but with oil surging again the spectre of inflation and rate hikes is never far away.

"Even with the ECB likely to be more hawkish this week, however, there seems space for a further squeeze to the upside for a while yet."

The vote of confidence - or lack thereof - in the prime minister will take between 1800 and 2000, with the results of the secret ballot set to be announced at 2100 BST.

Johnson had come under increasing pressure after breaking Covid rules on gatherings and became the first prime minister to be found guilty of an offence while in office, when he received a fine for illegally attending a party during pandemic restrictions.

Brady said he told Johnson on Sunday that the 15% threshold had been reached when at least 54 MPs submitted letters of no confidence in the PM.

The prime minister was said to be speaking to MPs at the end of the day in a last-ditch bid to rally as much support as possible.

"As the afternoon goes on, it seems that the steady flow of statements of confidence in Boris Johnson has dried up for now," Chris Beauchamp added.

"But the market view remains that the PM will survive the vote, at least for now, removing at least one major headache for sterling.

"That this still leaves the slowing economy and the Brexit-related export decline will be of little comfort for traders."

In economic news, new car registrations declined by more than a fifth in May, according to fresh industry data, making for the second-weakest May in three decades, as shortages of components continued to impact availability.

According to the Society of Motor Manufacturers and Traders (SMMT), new car registrations fell 20.6% in the month to 124,394 vehicles.

The decline, compared with the first full month of reopened showrooms in May last year, demonstrated the impact of continued global supply chain disruptions, the industry group said, with the market 32.3% below the 2019 pre-pandemic level despite "strong" order books.

"In yet another challenging month for the new car market, the industry continues to battle ongoing global parts shortages, with growing battery electric vehicle uptake one of the few bright spots," said SMMT chief executive Mike Hawes.

"To continue this momentum and drive a robust mass market for these vehicles, we need to ensure every buyer has the confidence to go electric."

Further afield, activity in China's services sector picked up in May but remained in contractionary territory as Covid restrictions weighed, according to data released earlier.

The Caixin services purchasing managers' index rose to 41.4 from 37.2 in April, coming in well below consensus expectations for a reading of 47.3.

A reading above 50 signals expansion, while a reading below indicates contraction.

"May's reading was the second-lowest since February 2020 as China's Covid-19 epidemic still weighed heavily on services activities," said Wang Zhe, senior economist at Caixin Insight Group.

"Both supply and demand in the services sector shrank further.

"The services PMI and the gauge for total new business in May both rose from April's recent lows, but the May readings were still well below 50."

On London's equity markets, oil giants BP and Shell gushed a respective 2.12% and 1.42% higher as oil prices rose, with Brent crude pushing above $120 a barrel to its highest level in three months earlier.

Futures for the thick black stuff were last 0.06% weaker on ICE, however, at $119.65.

"The latest trigger to push up prices appears to have been Saudi Arabia's decision to increase prices for its crude sales next month, despite the pledge by OPEC the oil cartel to increase production by 50% in July and August," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown.

"With Western powers sending long range missiles to Ukraine, it underlines the entrenched state of the war which is adding to supply concerns in the market, particularly given the compromise deal which has been reached by the EU on a Russian oil embargo.

"Demand for energy is expected to rebound in China with more Covid restrictions being lifted particularly in Beijing, and although a dramatic snap back in economic growth isn't forecast, the recovery from lockdowns is likely to fuel worries about whether there will be enough oil supplies to meet appetite in the world economy."

Miners also gained as metals prices advanced, with Glencore up 3.4%, Antofagasta rising 2.81%, and Anglo American ahead 3.03%.

Asia-focused insurer Prudential jumped 4.47% by the close, with the surge likely due to the end of Covid restrictions in China.

Melrose Industries advanced 3.3% after saying it had sold its Ergotron business to funds managed by the Sterling Group for $650m (520m) in cash.

Building materials group CRH was also on the front foot by 2.32%, after agreeing to buy North American fencing and railing solutions provider Barrette in a $1.9bn deal.

John Wood Group rocketed 7.12% after selling its environment and infrastructure business to WSP, a Montreal-headquartered design and engineering consulting firm, for $2.31bn.,

On the downside, AstraZeneca was 3.54% weaker by the close, even after the pharmaceuticals group said that a breast cancer treatment developed by it and Daiichi Sankyo had been shown to double the progression-free survival rates of patients compared with chemotherapy.

Easten Europe-focussed budget airline Wizz Air descended 2.66% as well, despite the company reporting surging passenger numbers last month as travel started to return to post-Covid pandemic levels.

Wizz carried 4.1 million passengers - a 390% increase year-on-year, at a load factor of 84.2%.

Reporting by Josh White at Additional reporting by Michele Maatouk and Frank Prenesti.

Market Movers

FTSE 100 (UKX) 7,608.22 1.00%
FTSE 250 (MCX) 20,506.80 1.15%
techMARK (TASX) 4,398.84 0.35%

FTSE 100 - Risers

Rolls-Royce Holdings (RR.) 92.92p 4.72%
Ocado Group (OCDO) 951.40p 4.71%
Prudential (PRU) 1,063.50p 4.47%
Coca-Cola HBC AG (CDI) (CCH) 1,765.50p 4.26%
Endeavour Mining (EDV) 1,872.00p 3.94%
Royal Mail (RMG) 312.10p 3.93%
Ashtead Group (AHT) 4,168.00p 3.91%
Intermediate Capital Group (ICP) 1,599.00p 3.80%
Admiral Group (ADM) 2,277.00p 3.45%
Rio Tinto (RIO) 5,956.00p 3.44%

FTSE 100 - Fallers

AstraZeneca (AZN) 10,072.00p -3.54%
Entain (ENT) 1,437.00p -1.58%
Dechra Pharmaceuticals (DPH) 3,534.00p -1.51%
BT Group (BT.A) 184.90p -1.44%
Bunzl (BNZL) 2,779.00p -1.14%
Standard Chartered (STAN) 626.60p -0.98%
Flutter Entertainment (CDI) (FLTR) 9,192.00p -0.97%
GSK (GSK) 1,695.00p -0.75%
Associated British Foods (ABF) 1,694.00p -0.65%
Vodafone Group (VOD) 126.00p -0.55%

FTSE 250 - Risers

Wood Group (John) (WG.) 239.30p 7.12%
Bridgepoint Group (Reg S) (BPT) 337.00p 6.31%
Helios Towers (HTWS) 125.40p 6.27%
Network International Holdings (NETW) 222.40p 5.64%
HGCapital Trust (HGT) 394.00p 5.07%
Oxford Instruments (OXIG) 2,335.00p 4.94%
Dr. Martens (DOCS) 270.80p 4.64%
Renishaw (RSW) 4,234.00p 4.59%
Micro Focus International (MCRO) 385.00p 4.59%
Greencore Group (CDI) (GNC) 114.60p 4.47%

FTSE 250 - Fallers

Wizz Air Holdings (WIZZ) 2,778.00p -2.66%
easyJet (EZJ) 496.90p -2.07%
IntegraFin Holding (IHP) 303.80p -1.94%
Aston Martin Lagonda Global Holdings (AML) 694.40p -1.92%
Baillie Gifford US Growth Trust (USA) 162.80p -1.69%
SSP Group (SSPG) 266.30p -1.22%
Johnson Matthey (JMAT) 2,083.00p -1.05%
Mitchells & Butlers (MAB) 205.20p -0.96%
Hochschild Mining (HOC) 111.90p -0.89%
Grainger (GRI) 310.20p -0.83%
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