The FTSE 100 Index trod water on Tuesday as the novelty of a new UK prime minister wore off and markets refocused on the implications of 'Brexit'.
The Footsie fell 0.18 points to 6682.68 in early trading despite news that Theresa May was likely to be installed in Number 10 by Wednesday evening.
But traders were already looking elsewhere, with Bank of England governor Mark Carney set to emphasise the limits of monetary policy in tackling the potential economic damage from the UK referendum.
Carney is expected to outline to MPs on Parliament's Treasury Select Committee how the risks of leaving the EU could 'crystallise' in the wake of the vote.
Several investment banks and a string of blue-chip corporates have already warned of job losses and possible moves out of London and the UK.
Market economist at PhillipCapital UK, Ana Thaker, said: "We could see Carney urge the government to engage in structural and fiscal reforms to help the economy weather any slowdown, adding pressure to incoming PM May."
The pound was up against the dollar in early trading, but analysts warned of a potentially volatile day.
Orchard Funding Group PLC (LON:ORCH) lost nearly a quarter of its value to 84p as the finance company forecast flat annual revenues and full-year trading below market expectations.
Preview at 6.50am
Having rallied to an eleven month high yesterday, Tuesday promises a more tepid start for London’s FTSE 100.
The promise of a new Prime Minister sooner rather than later - as Theresa May emerged as the last one standing in the Conservative party’s leadership race - was a boost to equities following on from Bank of England’s latest supportive pledge and positive US employment stats.
Most stock benchmarks now measure recoveries from the worst of the Brexit shocks.
“With the political transition likely to be done and dusted by the middle of the week, we could well find out quite quickly what the next steps are with respect to time lines and intentions with respect to the UK’s relationship with the EU and article 50,” said Michael Hewson, analyst at CMC Markets.
“It would seem that for now financial markets like the idea of a known quantity at the head of government in the form of Theresa May as opposed to the unknown quantity that was Andrea Leadsom, that being said our new PM isn’t likely to get too much of a honeymoon period.”
Monday saw Wall Street advance, with the Dow Jones rising 80 points or 0.44% to 18,226. The S&P 500 added 0.34% to 2,137 while the Nasdaq gained 0.64% to 4,988.
In Asia, Japan’s Nikkei advanced 2.5% to 16,107. Hong Kong’s Hang Seng rose 0.7% to 21,028 and the Shanghai Composite gained 0.5% to 3,011.
Australia’s ASX 200 move 0.5% higher to 5,363.
In the commodities market crude oil lost just over 1% with Brent changing hands at around US$46.25 per barrel.
London’s FTSE 100 is expected to start Tuesday on the back foot, with CFD and spreadbetting group IG Markets seeing the benchmark almost 20 points lower at 6,660 to 6,665 about an hour before stock market trading begins.