The FTSE 100 rose on Tuesday as investors reacted positively to the new prime minister’s decision, including the appointment of John Healey’s as chancellor and changes to household bills.
London’s leading index was 0.3% at the time of writing. Stocks would have also received a bost from US markets where AI stocks recovered.
“John Healey’s surprise appointment as chancellor hasn’t troubled the markets as he is seen as a safe pair of hands,” said Dan Coatsworth, head of markets at AJ Bell.
“His extensive parliamentary career including roles in the Treasury are seen as putting him in good stead.
“Bond markets reacted favourably, with gilt yields easing back after a jump yesterday afternoon when prime minister Andy Burnham made remarks about fiscal flexibility. While he has pledged to stick to existing rules, he implied there is some wriggle room within them.
“The comments initially caught the market off guard, but Burnham was quick to say he wouldn’t take any risks with the economy.
“Burnham has wasted no time in laying out initiatives to change the country and benefit the public, including the removal of VAT on household electricity bills. This will be funded by the cancellation of the digital ID programme.”
Babcock was the FTSE 100’s riser as investors cheered the appointment of John Healey as Chancellor. As an ex-defence secretary who quit because of a lack of funding for defence spending, one would expect more cash to start flowing into the coffers of defence stocks under his direction.
The general uptick in sentiment was reflected in gains for miners. Antofagasta rose 3% as Glencore added 2%.
UK-centric stocks were also higher as investors showed their approval of Burnham’s first moves as prime minister. Marks & Spencer jumped 3% as traders hoped consumers would spend more on higher-priced groceries.