Speedy Hire Share News (SDY)

LONDON (Alliance News) - Stocks in London experienced a topsy-turvy day on Wednesday, opening lower before making back those losses, but then finishing the day down following late falls as markets await the interest rate decision from the Bank of England on Thursday and as the UK transitioned over to a new prime minister.

As the market cantered to a close, the departure of David Cameron and the appointment of Theresa May as the UK's prime minister continued apace. Cameron took part in his final Prime Minister's Questions on Wednesday and will tender his resignation to the Queen on Wednesday evening, after which May will be installed at 10 Downing Street.

Christopher Vecchio, currency analyst at DailyFX, said markets were "quite jolly" about May's ascension to PM, particularly given her statement that she will not invoke Article 50, which will fire the official starting pistol on a two-year negotiation for Britain to exit the EU. "It seems there is some growing hope that a Brexit may be avoided in time," Vecchio suggested.

On Thursday, the focus will turn to the Bank of England's interest rate decision at 1200 BST, which will be published alongside the minutes from the July meeting of the rate-setting Monetary Policy Committee.

The UK's surprise decision to vote for Brexit has derailed the Bank of England's policy-tightening path and now a 25 basis point cut to the UK bank rate is expected to be unveiled in the first policy decision since the referendum outcome was announced.

Connor Campbell, financial analyst at Spreadex, said sterling will likely decline on Thursday should the Bank of England cut interest rates, particularly given it has firmed somewhat since news Home Secretary Theresa May will be taking over as the UK's new prime minister.

IG market analyst Josh Mahony, however, said there is a "significant possibility" that Bank of England Governor Mark Carney will disappoint on Thursday and keep rates on hold, given the "precious little post-referendum data" as his disposal and the likelihood of a new chancellor of the exchequer being in place within days as May forms her cabinet.

Mahony said markets will be carefully watching May's appointments, particularly the chancellor, noting Foreign Secretary and "anti-Brexit hawk" Philip Hammond has been widely-touted for the job.

Given sterling has recently traded at 31-year lows against the dollar and interest rates are still at record lows, "there is arguably little benefit to acting tomorrow, other than to simply change market and household expectations," Mahony said.

The pound was trading at USD1.3187 at the London close on Wednesday, against USD1.3226 at Tuesday's close, while the euro was trading at USD1.1102, compared to USD1.1062 on Tuesday.

The FTSE 100 closed down 0.2%%, or 10.29 points, at 6,670.40, having been slightly higher until only the final minutes of trading. The FTSE 250 closed down 0.3%, or 56.05 points, at 16,751.02 and the AIM All-Share closed up 0.4%, or 3.17 points, at 724.56.

In Europe, the CAC 40 index in Paris closed up 0.1% and the DAX 30 in Frankfurt closed down 0.3%.

The speedy resolution to the leadership contest in the Conservative Party had helped to settle market nerves earlier this week, but some key stocks which had benefited from this stability were lower on Wednesday, with housebuilders among the biggest fallers in the FTSE 100. They were led by Berkeley Group Holdings, down 2.8%.

Barratt Developments was also a faller, closing down 0.5% despite saying it anticipates delivering a 20% rise in pretax profit for the year to the end of June. Barratt also said it will look to hire a larger proportion of UK workers and will look into alternative methods of construction due to an expected dearth of bricklaying talent in the industry after the Brexit vote.

Barratt also indicated it could slow down its investment plans should the UK's EU exit bruise sales momentum in the housing market.

The strongest performer in the FTSE 100 through the majority of the day was Burberry Group, which closed up 6.1%. The group, known for its trenchcoats and scarves, had risen earlier in the week when it appointed a new chief executive and moved Christopher Bailey, its CEO and chief creative officer, to the role of president and chief creative officer.

In his place, Burberry appointed Marco Gobbetti, head of French high-end fashion house Celine, as its new CEO. The move was welcomed by analysts who said it would improve confidence in Burberry's ability to successfully execute its restructuring and improvement programme. Bailey has come under scrutiny since taking the CEO role just over two years ago due to the perceived pressure of his dual role and concerns on his lack of experience for the top job.

Those gains were added to on Wednesday when Burberry said retail revenue grew in the first quarter to the end of June and upgraded its full year retail and wholesale profit guidance due to a translational benefit it will get from the plunge in sterling in the aftermath of the Brexit vote.

In the FTSE 250, gaming and financial technology firm Playtech ended among the best performers, up 3.6%. Playtech agreed a EUR138.0 million deal to acquire Vienna, an Austria-based sports betting software firm that provides technology to UK bookmakers like Ladbrokes, Paddy Power Betfair and William Hill.

Beyond the mid-cap index, single-price discount retailer Poundland Group saw its shares rise 13% after it agreed to be acquired by South Africa-based Steinhoff International Holdings for GBP597.0 million. Steinhoff, which has already seen bids for Argos-owner Home Retail Group and electronics retailer Darty fail, already owns just under a quarter of Poundland, having built up a stake in the company in recent weeks.

Poundland said it will benefit from being part of a larger diversified retail group when taking into consideration factors such as the uncertainty faced by the UK's decision to leave the EU, tough current market conditions, and the likely time required for Poundland to improve performance and achieve its strategy.

Also gaining was tool and equipment hire firm Speedy Hire, up 7.2%, after it said it anticipates results for the year to the end of March 2017 will be slightly ahead of expectations following positive trading in the first quarter and benefits from its cost-cutting efforts feeding through.

In AIM, mobile payments company Bango closed up 33% after it said 'Pokemon Go', the augmented reality mobile game which has already given a massive boost to the share price of Japanese maker Nintendo, has already delivered a rise in end-user spend.

Though "very early days", Bango said it has seen "noticeable increases in overall spend", with no sign as yet of any declines in sales of other top sellers. "Pokemon Go looks like it will be the next global mega-phenomenon, like a Hotmail, eBay, Google or Facebook," Bango added.

Gold was trading at USD1,340.50 at the London equities close, against USD1,337.86 at the close on Tuesday. Brent oil was trading at USD46.22 at the London close, against USD47.83 Tuesday

In the US, the Dow 30, S&P 500 and the Nasdaq Composite were all flat at the London close.

Beyond the Bank of England decision on Thursday, The Royal Institute of Chartered Surveyors will publish its Housing Price Balance numbers overnight, while US Producer Price Index and Initial Jobless Claims numbers will come at 1330 BST.

A busy UK corporate calendar Thursday sees data and analytics company Experian, bicycle and car part retailer Halfords Group, fund manager Ashmore Group, recruiter Hays and price comparison service MoneySupermarket.com Group release trading statements.

Fashion retailer SuperGroup publishes final results, as travel company Dart Group and software firm Micro Focus International report interim results. Trading statements are also expected from children's products retailer Mothercare, pharmaceutical firm BTG, flexible office space provider Workspace Group and equipment rental company Lavendon Group.

By Sam Unsted; samunsted@alliancenews.com; @SamUAtAlliance

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