Late market roundup: Burnham's fiscal remarks unsettle gilt market

London stocks slipped on Monday as investors digested Andy Burnham's first day as UK prime minister, with rising gilt yields reflecting caution over the new government's fiscal plans.

The FTSE 100 index closed down 75.61 points, 0.7%, at 10,524.76. The FTSE 250 ended down 64.12 points, 0.3%, at 23,540.71, and the AIM all-share closed down 1.42 points, 0.2%, at 757.89.

The Cboe UK 100 was down 0.4% at 1,047.97, the Cboe UK 250 was down 0.4% at 20,384.43, and the Cboe small companies was slightly lower at 18,396.01.

In European equities on Monday, the CAC 40 in Paris closed slightly higher, while the DAX 40 in Frankfurt ended up 0.1%.

The pound fell to USD1.3418 on Monday afternoon from USD1.3453 at the equities close on Friday. Against the euro, sterling was little changed at EUR1.1755 from EUR1.1753 a day prior.

The euro stood was unchanged at USD1.1441. Against the yen, the dollar was trading higher at JPY162.56 compared to JPY162.37.

David Lammy, Rachel Reeves and Steve Reed are among the first high profile cabinet ministers to be shown the door by new Prime Minister Andy Burnham.

Lammy, until now the deputy prime minister and foreign secretary, announced he was leaving government on social media, while Reed, seen as an arch-loyalist to Keir Starmer, said he was "disappointed to be leaving government now" in a letter to Burnham.

In a post on X, Reeves wrote: "It has been the privilege of my life to serve as the Chancellor of the Exchequer.

"The economy today is stronger, fairer and more resilient because of the choices we have taken as a Labour government over the past two years.

The new prime minister's cabinet reshuffle was continuing to unfold during the afternoon.

Earlier in the day, Burnham promised to win over voters "fed up with politics" and show the world that the UK can once again be a source of stability.

Speaking without the lectern used by his predecessors, Burnham said he would set out a ten-year plan later this year, and, starting on Tuesday, measures to address the cost-of-living squeeze and give people "breathing space now".

In his first promise as prime minister, he said he would "end rough sleeping in our country".

Burnham told reporters: "I've said we'll stick to the fiscal rules, and by that I mean the existing fiscal rules, and use obviously any flexibility within them."

In response, the UK 10-year gilt widened to 5.04% on Monday afternoon from 4.97% late on Friday.

Stocks in New York were mixed. The Dow Jones Industrial Average was down 0.2%, the S&P 500 index was 0.4% higher, and the Nasdaq Composite gained 0.7%.

The yield on the US 10-year Treasury widened to 4.59% on Monday from 4.53% on Friday. The yield on the US 30-year Treasury stretched to 5.11% from 5.06%.

Back in London, Computacenter led the FTSE 100 and ended the day 5.6% higher, after Berenberg raised its rating on the stock to 'buy'.

"While the shares have already performed outstandingly since the H125 results in September, we think Computacenter can still meaningfully beat current consensus profit estimates," Berenberg said.

"While our gross profit growth estimates in financial 2027 and financial 2028 remain more conservative for now, we think there is potential for the strong momentum in North America and the UK, alongside improving performance in Germany, to drive faster growth, which will also drop through at higher rates than seen in recent years."

Ryanair shares were 4.6% lower as it warned that the conflict in the Middle East, higher fuel costs and softer pricing will continue to cloud its outlook.

The Dublin-based budget carrier reported a 34% decline in profit after tax to EUR538 million in the three months to June 30 from EUR820 million a year earlier. The result was below company consensus of EUR579 million and Deutsche Bank's EUR617 million forecast.

Revenue edged up 0.9% to EUR4.38 billion from EUR4.34 billion, as 6% traffic growth to 61.3 million passengers was offset by a 6% fall in average fares. Revenue per passenger declined 5%, while ancillary revenue rose 5% in line with passenger growth to EUR1.47 billion.

Chief Executive Michael O'Leary said fares required "stimulation" during the quarter as the conflict led to "consumer hesitancy, concerns about EU jet-fuel shortages, economic uncertainty and later bookings."

O'Leary said booking windows remain shorter than last year, reducing visibility into the key summer season.

"Despite a recent, slight, uptick in volumes, and less price stimulation, Q2 pricing is trending modestly down (year-on-year)... As is normal this early in the year, we have zero H2 visibility so it remains far too early to provide any meaningful financial 2027 PAT guidance."

On the FTSE 250 index, Big Yellow Group shares finished 0.3% lower as it reported a "resilient performance" in the first quarter, but said it expects the operating environment may continue to be challenging.

The Bagshot, England-based self-storage group said total revenue increased 3.3% to £53.2 million in the three months to the end of June from £51.5 million a year prior.

"We recognise that the operating environment may continue to be challenging in the months ahead, given the current fiscal and budgetary uncertainties, which will likely not be clarified until the autumn," said Chief Executive Officer Jim Gibson.

On the AIM market, Sunrise Resources shares ended 11% higher.

The industrial mineral projects developer said it has established a new copper-silver-gold project in Nevada, named the Lake Copper-Silver-Gold Project after its location in the Lake Mining District in Churchill County.

It said Lake is at the south-west end of the prospective Humboldt Range, which is host to numerous large-scale current, planned and past producing gold and silver deposits.

Brent oil was higher at USD88.07 a barrel on Monday afternoon, from USD86.53 late Friday.

Gold fell slightly to USD4,011.08 an ounce on Monday from USD4,014.29 at Friday's close.

The biggest risers on the FTSE 100 were Computacenter, up 254.00p at 4,834.00p, Diploma, up 130.00p at 7,370.00p, Experian, up 43.00p at 2,762.00p, JD Sports Fashion, up 1.20p at 88.14p, and Polar Capital Technology Trust, up 8.50p at 636.00p.

The biggest fallers on the FTSE 100 were Persimmon, down 41.00p at 1,046.50p, Airtel Africa, down 11.40p at 334.60p, Barratt Redrow, down 9.30p at 284.00p, Metlen Energy & Metals, down EUR1.40 at EUR42.96, and Kingfisher, down 9.60p at 294.60p.

On Tuesday's economic calendar, unemployment figures are due for the UK, along with Worldpanel grocery market share data, while the US ADP jobs report will follow in the afternoon.

On Tuesday's UK corporate calendar, trading statements are due from Compass Group and Mitie, with half year results for Mony and Kier.

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