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LONDON (Alliance News) - Stocks in London were lower Monday morning, with Friday's pattern repeating, as financial stocks were again in the red and gold miners benefited from a rise in the precious metal's price, as Thursday's vote by the UK to leave the European Union continues to dominate attention.
The FTSE 100 was down 0.4%, or 25.60 points, at 6,113.09. The FTSE 250 was off 1.0% at 15,921.04, and the AIM All-Share was down 0.2% at 702.35.
The negative open came alongside another fall in the pound. Sterling touched a low of USD1.3227 in early trade Friday, a level it hadn't seen since 1985, after the final results of the vote were announced. The pound rose off those lows, standing at USD1.3625 at the equities close Friday, but gave back some ground early Monday, quoted at USD1.3468 shortly after the London equities open.
Britain's economy is "fundamentally strong" and remains open for business, Chancellor of the Exchequer George Osborne said Monday in an attempt to calm markets and investors after the country's vote to leave the EU. Osborne had not spoken in public since the vote, which caused stock markets around the world to plummet on Friday.
In his comments, made before markets open, Osborne said it was inevitable that the economy would have to adjust. He warned that it "would not be plain sailing," but also assured that the country was "equipped for whatever happens". Britain is "ready to confront what the future holds for us from a position of strength," he said.
Osborne said further economic and budgetary actions won't be decided until a new UK primer minister is in place, noting that it is "perfectly sensible" to wait until that happens. Osborne said he will address his own role in the Conservative Party in "coming days".
Contingency plans were ready to be put into action in case of further volatility, Osborne said, after discussions over the weekend with Bank of England Governor Mark Carney.
Carney said on Friday the central bank was "well prepared". The BoE said in a statement that, "as a backstop, and to support the functioning of markets", it was ready to provide more than GBP250 billion of additional funds through the central bank's normal facilities.
The negative open in the UK comes despite a largely positive close in Asia, with the Japanese Nikkei 225 index up 2.4% and the Chinese Shanghai Composite up 1.4%. Meanwhile, the Hang Seng index in Hong Kong is down 0.3%.
London-listed financial stocks such as banks continued to suffer from the Leave vote, with Royal Bank of Scotland down 5.6% and Barclays down 5.4%.
easyJet was the biggest decliner in the FTSE 100, down 7.6%. The low-cost airline said pretax profit in its fiscal third quarter will be lower year-on-year following flight cancellations and the Egyptair tragedy, and said the outcome of the UK's EU referendum will hit revenue per seat in the second half of the year.
The group said it has experienced 1,061 cancellations so far in the third quarter to the end of June, due to a significant number of disruptive events including air traffic control strikes in France, runway and congestion issues at Gatwick airport and severe weather conditions.
Those incidents, together with the crash of an Egyptair plane heading for Cairo from Paris, have resulted in lower consumer demand and hit third-quarter pretax profit by around GBP28 million year-on-year, easyJet said, while also reducing revenue per seat by around 1.6 percentage points.
In addition, the UK's decision to leave the EU will contribute to further economic and consumer uncertainty this summer, easyJet said, leading to an expected mid-single digit fall in revenue per seat at constant currency in the second half of the financial year, year-on-year.
Gold was higher Monday morning, quoted at USD1,324.10 an ounce, compared to USD1,317.55 at the close Friday. The precious metal touched a high of USD1,358.19 earlier Friday, a level it hadn't seen since March 2014.
Gold miners Fresnillo and Randgold Resources continued to benefit from the rise in the gold price and were the best blue-chip performers, up 4.6% and 4.4%, respectively.
Also in the green, Anglo American was up 2.1%. The miner is thought to be close to concluding the sale of two coal mines in Australia, which would be a key component to the company's debt reduction plans, and fellow commodity giant BHP Billiton, up 0.9%, is expected to be one of the leading bidders, the Financial Times reported Sunday.
In a light economic calendar, in the US, the goods trade balance is at 1330 BST, while Markit's services and composite purchasing manager's indices readings are at 1445 BST.
By Daniel Ruiz; danielruiz@alliancenews.com
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