Markets in Europe shook off nerves on Monday, following Joe Biden leaving the US presidential race.
The FTSE 100 index was up 62.43 points, or 0.8%, at 8,218.22. The FTSE 250 was up 108.13 points, or 0.5%, at 21,175.81, and the AIM All-Share was up 0.93 of a point, or 0.1%, at 785.06.
The Cboe UK 100 was up 1.0% at 820.39, the Cboe UK 250 was up 0.8% at 18,494.63, but the Cboe Small Companies was down 0.1% at 17,347.00.
Stocks in New York were seen higher. The Dow Jones Industrial Average was called up 0.2%, the S&P 500 was expected to rise 0.5% while the Nasdaq Composite was seen 0.9% higher.
On Sunday, 81-year-old Biden, bowed to Democratic concerns over his age and capacity to beat Republican Donald Trump in November, withdrawing from the race to become US President.
The veteran Democrat said it had been the ‘greatest honour of my life’ to be president and promised to address the nation later this week.
Biden’s exit makes him the first president in 56 years not to seek a second term, and the first in US history to quit so late in the calendar.
But ING said the announcement has caused ‘barely a ripple’ in financial markets.
Biden’s announcement set off a scramble to confirm a new candidate at the Democratic convention in Chicago on August 19, with Vice President Kamala Harris a strong favourite.
Biden offered his ‘full support and endorsement’ for Harris, while leading Democrats and party elders, including Bill and Hillary Clinton, also rallied behind Harris.
Rabobank agreed Biden‘s ‘unprecedented’ decision does introduce a wild card into the campaign, possibly leading to market volatility.
‘If Harris can quickly rally widespread party support to challenge Trump, especially in some swing states, the momentum could be hers and the race would be wide open. If so, election-related volatility should increase,’ the bank suggested.
But if Trump continues to lead in the polls and investors remain viewing his win as inevitable, the ‘Trump trade’, which implies ‘deregulation, tax cuts, and increased fiscal spending, should then lead to a steeper yield curve, a firmer USD and a boost for bitcoin’, the bank believes.
European markets were also upbeat with the CAC 40 in Paris and the DAX 40 in Frankfurt both up 1.4%.
The pound was quoted at $1.2936 at midday on Monday, up from $1.2915 at the London equities close on Friday. The euro traded at $1.0890, higher than $1.0885. Against the yen, the dollar was quoted at JP¥156.88, down versus JP¥157.36.
In London’s FTSE 100, Rentokil Initial jumped 11%.
The former chief executive officer of BT Group is leading a possible takeover offer for the pest control firm, the Times reported on Sunday.
Philip Jansen is in talks with private equity firms over a plan that would see him become executive chair of the FTSE 100 company, the newspaper said without citing sources. The Times noted that Jansen is close to Bain Capital.
The Times said ‘it is understood’ that, if successful, Jansen and his backers would use Rentokil as a consolidation vehicle to buy other pest control companies in the US, before looking to re-list it in New York.
Airlines, however, sat at the other end of the large-cap index, with easyJet falling 8.2% and British Airways parent IAG giving back 4.1%. In the FTSE 250, Wizz Air lost 8.0%. In Dublin, Ryanair plunged 13%.
Ryanair said quarterly profit nearly halved, as revenue declined slightly due to lower ticket prices despite carrying more passengers. The weakness in fares is expected to continue throughout the summer, it warned.
‘While Q2 demand is strong, pricing remains softer than we expected, and we now expect Q2 fares to be materially lower than last summer (previously expected to be flat to modestly up),’ Chief Executive Officer Michael O’Leary said in a statement.
In Frankfurt, Lufthansa eased 1.3%, while in Paris Air-France KLM slipped 1.4%.
Ladbrokes owner Entain rose 4.4% after saying Gavin Isaacs would take over as chief executive, in September.
Isaacs, who is a non-executive director of game development company Games Global having previously served as chair for two years, takes over from Jette Nygaard-Andersen who stepped down in December.
In the FTSE 250, Ocado climbed 8.4% after Kroger placed an order for a range of new automated technologies.
The Hatfield, England-based online grocer and technology licensor called this a ‘significant’ development of its partnership with Kroger, a leading US grocery retailer.
Cincinnati, Ohio-based Kroger will roll out the technologies across multiple existing customer fulfilment centres across its network, as well as future CFCs.
Hammerson was also in demand, up 3.5%, after it agreed to sell its entire interest in a pan-European chain of luxury retail ’villages’ in order to focus on ‘core city centre urban destinations’.
Hammerson said it has sold its entire minority interest in Value Retail and associated companies to affiliates of L Catterton Partners, a Greenwich, Connecticut-based investor in consumer businesses.
The deal gives Value Retail an enterprise value of £1.5 billion and will generate €705 million, about £600 million, in cash for Hammerson.
Hammerson said it will return up to £140 million of this to shareholders in the form of share buybacks. The remainder will be used to pay down debt and to reinvest in its core urban retail market.
Positive broker comments boosted Travis Perkins, up 2.5%, and Raspberry Pi, up 1.6%.
JP Morgan ’double upgraded’ building materials outfit, Travis Perkins, to ’overweight’ from ’underweight’, while Jefferies started coverage of recently listed Raspberry Pi at ’buy’ with a 448 pence share price target.
On AIM, SpaceandPeople surged 9.4%, after sealing a new contract.
The provider of promotional and short-term retail space said UK Network Rail and Southeastern Trains have picked the firm for a five-year deal to provide exhibitions, events, promotions and sampling at their managed stations.
‘This is a continuation of SpaceandPeople’s relationship with NR and is a new relationship with SET,’ the firm explained.
‘The contract continues to provide significant coverage of major London and regional railway stations, giving the company access to many of the highest footfall venues across the United Kingdom.’
Brent oil was quoted at $82.31 a barrel at midday in London on Monday, lower than $84.04 late Friday.
Gold was quoted at $2,406.61 an ounce, higher than $2,404.10.
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