London pre-open: FTSE to rise as David Davis resigns
London stocks are expected to rise on Monday despite the pressure from a resurgent pound as Brexit Secretary David Davis sensationally resigned from the UK government.
The FTSE 100 index was being called 37 points higher by traders in the City, having finished the last week at 7,617.70.
Sterling continues to rise, up 0.25% to $1.3316 on Monday as investors continued to digest the softer Brexit stance pushed through by Theresa May at Friday's crunch cabinet meeting at Chequers.
The resignation of Davis and his two under-secretaries has cast some doubt on Prime Minister Theresa May’s ability to ride the storm out, said analyst Jasper Lawler at London Capital Group.
"Today and the next few days will be key for Theresa May’s survival and the buoyancy of the pound. The pound has fallen away from its opening high versus the US dollar, but not actually swung lower on the day, suggesting that investors believe she will keep hold of the reins."
Lawler said the trade war between US and China remained on the forefront of the market's hive-mind but that US jobs data had somewhat over-ridden some of the negative thoughts.
"Just because US equities didn’t experience a sell off on Friday, it doesn’t mean that a trade war is already fully priced in. The actual trade tariffs are nothing new, the market has been aware of them for over a month, and for now conditions are still supportive for financial growth, allowing markets to move higher."
Monday's should be quiet from data perspective but will pick up over the week.
In company news, Workspace Group said it had exchanged contracts for the disposal of three properties, Belgravia Workshops, N19, The Ivories, N1, and Spectrum House, NW5, for a total of £51.85m. The portfolio was sold at a premium of 23.2% (£9.75m) to the 31 March 2018 valuation, at a net initial yield of 4.0% and capital value per sq. ft. of £488, the company said on Monday.
Stobart Group revealed that chairman Iain Ferguson received enough votes at Friday's annual shareholder meeting to remain in his position. After totting up the votes from the AGM, the Southend airport owner also revealed that ex-director Andrew Tinkler had been voted back onto the board, but that the board had then taken it upon themselves to vote him back off.
Cairn Energy updated the market on its ongoing arbitration with the Government of India under the UK-India Bilateral Investment Treaty on Monday, reporting that all written submissions had now been made by both parties, with the final arbitration hearings scheduled for two weeks from 20 August in The Hague. The FTSE 250 company said those hearings would involve testimony by expert and fact witnesses, and would address Cairn's claims under the treaty, India's defences and issues of jurisdiction.