The FTSE 100 index closed down 75.61 points, or 0.7%, at 10,524.76 on Monday, as gilt yields rose following Prime Minister Andy Burnham's first speech and the start of his Cabinet reshuffle. The FTSE 250 ended 64.12 points lower, down 0.3%, at 23,540.71, while the AIM all-share index fell 1.42 points, or 0.2%, to 757.89.
Market Movers and Cabinet Changes
In European markets, the CAC 40 in Paris closed slightly higher, and the DAX 40 in Frankfurt gained 0.1%. The pound weakened to $1.3418 from $1.3453 at Friday's close. Against the euro, sterling was nearly unchanged at €1.1755, and the euro held steady at $1.1441. The dollar rose to 162.56 yen from 162.37 yen.
David Lammy, Rachel Reeves, and Steve Reed were among the first high-profile Cabinet ministers to leave their posts. Lammy, who served as deputy prime minister and foreign secretary, announced his departure on social media. Reed, a key ally of former Prime Minister Sir Keir Starmer, expressed disappointment in a letter to Burnham. Reeves posted on X: "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."
Burnham's First Promises and Fiscal Impact
In his inaugural speech, Burnham vowed to win over voters "fed up with politics" and restore the UK's image as a source of stability. He outlined plans for a 10-year strategy and immediate measures to address the cost-of-living crisis, starting Tuesday. His first promise as PM was to "end rough sleeping in our country." On fiscal rules, he said: "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."
The UK 10-year gilt yield rose to 5.04% from 4.97% late Friday. In the US, the Dow Jones Industrial Average fell 0.2%, the S&P 500 gained 0.4%, and the Nasdaq Composite rose 0.7%. The US 10-year Treasury yield widened to 4.59% from 4.53%, and the 30-year yield rose to 5.11% from 5.06%.
Individual Stock Movements
Computacenter led the FTSE 100, rising 5.6% after Berenberg upgraded the stock to 'buy'. Berenberg noted: "While the shares have already performed outstandingly since the H125 results in September, we think Computacenter can still meaningfully beat current consensus profit estimates." Ryanair shares fell 4.6% after warning of ongoing headwinds from the Middle East conflict, higher fuel costs, and softer pricing. The airline reported a 34% drop in profit after tax to €538 million for the quarter ended June 30, below consensus estimates. Revenue edged up 0.9% to €4.38 billion, with traffic growth of 6% offset by a 6% fall in average fares. CEO Michael O'Leary said fares required "stimulation" due to "consumer hesitancy, concerns about EU jet-fuel shortages, economic uncertainty and later bookings."
On the FTSE 250, Big Yellow Group shares closed 0.3% lower despite a "resilient performance" in the first quarter. Revenue rose 3.3% to £53.2 million. CEO Jim Gibson said: "We recognise that the operating environment may continue to be challenging in the months ahead, given the current fiscal and budgetary uncertainties." On AIM, Sunrise Resources shares jumped 11% after announcing a new copper-silver-gold project in Nevada.
Commodities and Outlook
Brent oil rose to $88.07 a barrel from $86.53. Gold edged down to $4,011.08 an ounce from $4,014.29. The biggest FTSE 100 risers included Computacenter, Diploma, Experian, JD Sports Fashion, and Polar Capital Technology Trust. The biggest fallers were Persimmon, Airtel Africa, Barratt Redrow, and Kingfisher. On Tuesday, UK unemployment figures and US ADP jobs data are due, with trading statements from Compass Group and Mitie, and half-year results from Mony and Kier.
