Markets subdued as Boris Johnson’s victory fails to shock

The markets showed very little movement on Tuesday as the confirmation of Boris Johnson as the next prime minister came as no surprise to traders already braced for his victory.

The expectation that the MP would win the Conservative leadership race had already been priced into most markets. Sterling was down 0.27% to 1.244 US dollars, but up 0.23% on the euro to 1.116.

Fiona CIncotta, senior market analyst at City Index, said this was in line with the currency’s historic lows in recent weeks.

“Currency markets in particular have been positioning themselves for a Boris Johnson win for weeks now, fine combing every single of his political comments for views of where he will take the country over the next few months,” she said.

“His staunch Brexit-under-any-cost stance has spooked sterling traders and the currency has been gradually declining since he became the lead contender for the PM position.”

The FTSE 100 on the other hand gained 41.93 points to close 0.56% higher at 7,556.86.

It lagged behind the German Dax, up 1.64%, and the French Cac, up 0.92%.

Ms Cincotta said: “The FTSE powered higher as Boris Johnson was declared the new Conservative Party leader and Britain’s next prime minister, with investors mostly relieved that at least that the wait for the Tory vote was finally over.

“In his acceptance speech, Johnson mostly repeated the messages he had given before, that he plans to deliver Brexit on time but also adding that he plans to keep Jeremy Corbyn out of power.”

In London, De La Rue shares dived 47p to close at 251p after the Serious Fraud Office launched a corruption probe over the company’s business in South Sudan.

Beazley saw profits almost triple in the first half of the year after it was boosted by higher premiums. Shares jumped 28p to 564.5p.

Joules shares were down 6p at 249p despite a bumper performance in its overseas division as it reported full-year numbers.

Weak economic conditions in Nigeria and poor sales in Australia contributed to a slump in profits of more than 30% at consumer goods giant PZ Cussons as the company said it would refocus its attentions on core brands only. Shares dropped 2.5p to 224.5p.

McColl’s shares dipped 3.8p to 66.2p as the convenience store chain admitted it needs to focus on product availability in its shops and close under-performing sites, as profits were almost wiped out in the last six months.

Oil prices were in the red following the latest developments from the Middle East.

David Madden, market analyst at CMC Markets, said: “Dealers are treading lightly in relation to the political stand-off between Western governments and Iran, and even though things have simmered a little, the energy is likely to remain choppy.”

A barrel of Brent Crude oil was down 0.33%, trading at 63.1 US dollars.

The biggest risers on the FTSE 100 were Melrose Inudstries up 9.3p to 192.9p, NMC Health up 93p to 2,420p, Smurfit Kappa Group up 96p to 2,672p and DS Smith up 12.6p to 379.6p.

The biggest fallers on the FTSE 100 were Whitbread down 142p to 4,543p, Just Eat down 18.6p to 622.2p, Auto Trader down 12.6p to 531.4p and Tesco down 5.3p to 229.9p.