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London open: Stocks edge up ahead of Supreme Court ruling
London stocks edged higher in early trade on Tuesday as investors eyed the Supreme Court’s ruling on the prorogation of Parliament.
At 0840 BST, the FTSE 100 was 0.2% higher at 7,338.40, while the pound was up 0.1% against the dollar and the euro at 1.2437 and 1.1315, respectively.
The Supreme Court is due to announce at 1030 BST whether Prime Minister Boris Johnson acted unlawfully by suspending suspended Parliament.
Neil Wilson, chief market analyst at Markets.com, said: “Whilst there is significant headline risk from this event, it’s hard to see how it materially alters matters vis-a-vis getting a deal or not. However, the market and the algos will likely see a ruling against the government as sterling-positive, and one in its favour as sterling-negative. Any rally or drop is likely to be faded.”
In equity markets, travel operator TUI was on the front foot as it reiterated its forecast of a fall in full year profits and warned Brexit worries, Boeing 737 Max groundings and airline overcapacity would continue to pose challenges in the new fiscal year. The shares were likely still being propped up by the demise of Thomas Cook, having rallied sharply on Monday.
Richard Hunter, head of markets at Interactive Investor, said: “The update delivers proof, if it were needed, that these are tough times in the travel industry.
“The demise of Thomas Cook may well present TUI with unexpected opportunities, although it may be some time until such benefits wash through. TUI is a rather different animal from Thomas Cook, with its diversified business model and digital aspirations providing rather more of a defence than the one broken at its former rival.”
Elsewhere, Card Factory and Irn-Bru maker AG Barr were both higher following well-received interim results, while Galliford Try rose as the building group said its Highways business had won a series of UK road improvement contracts worth a total of £461m.
On the downside, Metro Bank slumped after announcing late on Monday that it was pulling its £200m bond sale, pinning the blame on “current market conditions”.
Neil Wilson said: “It shows the kind of mire Metro is in after the accounting error and now expanding FCA investigation. It’s crazy to think it was offering 7.5% on these notes and still couldn’t get the demand. This is a worrying sign that the bank is not able to raise fresh debt and/or capital when the going gets tough.”
Merchant bank Close Brothers lost ground as it reported a fall in full-year profit, with a solid performance from the banking division offset by weaker trading in its securities arm, as it announced the departure of chief executive Preben Prebensen.
Royal Mail was in the red after a downgrade to ‘sell’ at Liberum, while Pets at Home was knocked lower by a downgrade to ‘underweight’ at Morgan Stanley.
