The FTSE 100 surged on Monday after President Joe Biden withdrew as the Democratic candidate for November’s general election.
Biden had been under pressure to withdraw after a series of blunders raised questions about his ability to carry out his duties in a second term. There were also major concerns he would even make it through the election campaign without further embarrassment, effectively handing the job to Donald Trump.
London’s leading index was 0.8% higher at the time of writing as investors cheered the removal of the ‘will he, won’t he’ uncertainty surrounding Biden continuing the election campaign.
“The market appears to have welcomed Joe Biden’s withdrawal from the presidential race, given how futures prices imply a decent opening for Wall Street. However, there is still a lot of uncertainty until the new Democratic candidate is confirmed. That means we could see heightened volatility over the next few weeks, with assets quickly changing direction depending on the latest comments from Washington,” Dan Coatsworth, investment analyst at AJ Bell said.
“Vice President Kamala Harris being endorsed by Biden helps to avoid any panic on markets for now, given she provides continuity and experience supporting the current President. That means the focus for markets in the near-term is likely to be investors reassessing any previous trades they made when it looked like Donald Trump would get back into power.”
The FTSE 100’s gains were broad, with 87 constituents trading higher at the time of writing.
Rentokil Initial was the top gainer after the pest control company became the latest UK-listed company to be targeted for a takeover by a private equity group. Rentokil Initial shares were 9% at the time of writing.
The bottom of the leaderboard was dominated by falling airlines after Ryanair reported a surprise miss in earnings estimates. Airlines and the rest of the travel sector have been enjoying a wave of optimism around the resilience of holiday makers during the cost of living crisis. Ryanair cast doubt over this today and sent a shock wave through the entire sector, sending Easyjet down 8% and IAG off by 3%.
“Ryanair disappoints as the outlook over the key summer period looks weak,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
“First quarter profit after tax of €360mn was well below what markets expected as ticket prices plummeted. The outlook was poor, too, with Ryanair expecting lower prices as peak summer travel kicks in. There will be knock-on effects to the wider sector from this, though it’s a little unclear whether the likes of easyJet are facing issues at quite this scale.”