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London open: Stocks in the red as attention turns to Germany
London stocks fell in early trade on Monday, with sentiment undermined by developments in Germany.
At 0820 GMT, the FTSE 100 was down 0.4% to 7,351.40, with the pound up 0.3% against the euro and the dollar at 1.1251 and 1.3248, respectively.
Spreadex analyst Connor Campbell said: “Despite Theresa May being caught between a rock made out of the EU wanting the UK to cough up the money for its financial ‘obligations’, and a hard place constructed from Michael Gove and Boris Johnson-led Leavers seeking justification for the £40 billion divorce bill, the main driver this Monday came out of Germany.
“Angela Merkel and the CDU are yet to form a coalition government despite it being almost two months since the German federal elections, and with the Free Democratic Party walking out of talks last night the Chancellor’s hopes of doing so any time soon suffered a significant blow. If Merkel can’t get the FDP back on board she may have to form a minority government, or, worst-case scenario, send the German public back to the polls.”
In UK corporate news, Eastern Europe-focussed low cost airline Wizz Air flew a little lower despite announcing a massive expansion at its Luton base, with the addition of four Airbus A320 aircraft to its fleet there by June 2018.
Outsourcer Mitie was in the red after posting a drop in profit for the first half despite a rise in revenue, as it continues to invest in its cost-saving programme. Also on Monday, the Financial Reporting Council said it was opening an investigation under its accounting scheme in relation to the preparation and approval of Mitie’s accounts for the year ended 31 March 2016
Nex Group fell sharply as it reported a fall in first-half profit amid challenging market conditions, while William Hill slipped despite the bookmaker saying it was on track to deliver on its 2018 expectations.
Spire Healthcare slumped as FTSE 100-listed Mediclinic International said it won’t make another bid for the healthcare operator.
Shire was under the cosh after Switzerland’s Roche announced two trial wins, with successes for a lung cancer drug and a haemophilia drug.
On the upside, British Gas owner Centrica was on the front foot after saying it will replace its standard variable tariff with new fixed-term tariffs as it called on the government, energy regulator and industry to make several to “create a market that works for everyone”.
Tritax Big Box nudged up after announcing the acquisition of two logistics facilities, while Diploma advanced after posting a 19% jump in its full-year adjusted pre-tax profit.
ZPG racked up healthy gains after RBC Capital Markets initiated coverage of the stock at ‘outperform’, while Thomas Cook was up after HSBC started coverage of the stock at ‘buy’.
