The FTSE 100 moved into the green on Wednesday afternoon, with sterling also rising, as investors in the UK were buoyed by Liz Truss calling an end to her disastrous six-week tenure.
Truss has announced her resignation after a chaotic 44 days in office during which she lost the confidence of Tory members of Parliament and the public and oversaw economic turbulence.
She is set to become the shortest serving prime minister in history after she battled an open revolt from Conservatives demanding her departure.
Speaking from a lectern in Downing Street, Truss said she had told the King she was resigning as the leader of the Conservative Party as she recognised she ‘cannot deliver the mandate’ which Tory members gave her little over six weeks ago.
‘To use a phrase that has no doubt been exhausted in the past few weeks, markets don‘t like uncertainty. And losing another prime minister in the midst of a cost-of-living crisis is far from ideal,’ AJ Bell analyst Danni Hewson said.
‘But Liz Truss’ credibility with markets was shattered when her former chancellor unveiled the mini-budget which effectively lit the touch paper on an explosive period for politics and demonstrated the importance of taking markets with you when it comes to fiscal policy.’
The FTSE 100 index closed up 18.92 points, 0.3%, at 6,943.91 on Thursday. The FTSE 250 added 141.38 points, 0.8%, at 17,388.93, and the AIM All-Share closed up just 0.47 of a point at 786.44.
The Cboe UK 100 closed up 0.1% at 693.59, the Cboe UK 250 closed 0.2% higher at 14,840.85, but the Cboe Small Companies lost 0.8% to 12,271.71.
Sterling got a boost from Truss calling it quits, peaking above $1.13 briefly. The pound was quoted at $1.1294 Thursday evening, higher than $1.1242 at the London equities close on Wednesday.
Hewson continued: ‘There are big questions to be answered and they need to be answered quickly. The Conservative party is promising a quick appointment within days, crucially ahead of the fiscal event scheduled for Halloween.
‘And for markets that’s really the key issue - that independent economic health check needs to be published and policy needs to stand. There can be no more vacillating, dithering or U-turns.’
Labour leader Keir Starmer demanded a general election ‘now’ so that the nation can have ‘a chance at a fresh start’.
Without a general election, the Conservatives will be on their third prime minister on the mandate won by Boris Johnson in December 2019.
Starmer said: ‘The Conservative party has shown it no longer has a mandate to govern.’
In European equities on Thursday, the CAC 40 in Paris advanced 0.8%, while the DAX 40 in Frankfurt was up 0.2%.
In London, Dechra Pharmaceuticals closed down 1.2%, staging a small fightback in the afternoon after being down about 4.5% earlier in the session.
Dechra said it is confident of delivering on market expectations for its financial year, as it looks ahead to its all-important second half.
The veterinary products firm said trading in its first quarter ended September 30 was below the prior year, as expected. This is due to a challenging comparator with higher demand levels during Covid-19 and the phasing of price increases.
‘As the market growth slows, analysts have become more bearish on Dechra and moderating near-term growth expectations while waiting to see how it normalises and how sticky companion animal healthcare expenditure may be in the midst of a cost-of-living crisis,’ analysts at Liberum commented.
Bunzl lost 2.0%.
It said it would be continuing with its annual guidance after reporting quarterly sales growth in its trading update.
For the third quarter beginning June 30, the London-based distribution services company reported revenue growth of 19% at actual exchange rates and 8.7% at constant exchange rates from the last quarter. This compared to growth rates of 7.8% and 13% respectively for the same period last year.
Underlying revenue growth was 6.1%, with one fewer trading day than the year prior, negatively impacting revenue by 1.3%.
Bunzl attributed this result to the base business, which benefited from inflation as expected and contributed 10% of growth.
Dunelm lost 2.0%, as it prepares itself for a ‘challenging winter’, as customers count their pennies like never before.
For the 13 weeks to October 1, the company's financial first quarter, total sales were £356.7 million, down 8.3% from £388.8 million a year before and by 7.8% from £386.7 million in the immediately previous quarter.
This was ‘as expected, given the very strong comparative period, with Q1 last year benefiting from pent-up demand and our rescheduled Summer Sale’, Dunelm explained. Compared to financial 2020, meaning before the Covid-19 pandemic, sales remained up 36%.
For the 13 weeks to October 1, total sales for the homewares retailer came in at £357 million, down 8% from the previous year.
Looking ahead, it noted a ‘challenging’ macroeconomic environment, including recent volatility in exchange rate movements. It reiterated annual guidance, however.
Stocks on Wall Street jumped at the open. The Dow Jones Industrial Average was 1.0% higher, the S&P 500 up 0.6% and the Nasdaq Composite was 1.1% higher. Strong quarterly figures from AT&T boosted the mood in New York.
AT&T, up 9.2%, as its third-quarter revenue topped consensus, as the telecommunications enjoyed ‘sustained’ growth in customer additions.
In the third quarter of 2022, revenue fell 4.1% to $30.04 billion from $31.33 billion a year earlier. Revenue came in ahead of a CNN-cited forecast of $29.8 billion.
Pretax profit, however, shot up 15% to $7.25 billion from $6.32 billion. Total operating expenses were 4.2% lower year-on-year at $24.03 billion. Net income improved 2.0% year-on-year to $6.40 billion from $6.27 billion.
The euro traded at $0.9822 Thursday evening, up from $0.9784 at the European equities close on Wednesday, Against the yen, the dollar was quoted at JP¥149.77, unchanged from the London equities close on Wednesday.
Gold was quoted at $1,641.90 an ounce late Thursday in London, higher than $1,631.50 late Wednesday. Brent oil was trading at $93.29 a barrel, sharply higher than $90.83.
In the international economic events calendar on Friday, there is Japan consumer prices overnight, followed by UK retail sales at 0700 BST and eurozone consumer confidence at 1500 BST.
In the local corporate calendar, there is a trading statement from food delivery platform Deliveroo, London Stock Exchange Group and InterContinental Hotels.
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