UK shares pos­i­tive as pound tum­bled

Malta Independent - - BUSINESS & FINANCE -

Euro­pean stocks were head­ing for their fourth weekly de­cline in five, down 0.6 per­cent, af­ter a rally from a June low ran out of steam in early Sep­tem­ber.

U.K. shares got an ad­di­tional boost af­ter the pound tum­bled to a fresh 31-year low against the dol­lar. How­ever, the FTSE 100 man­aged to gain 0.6 per­cent, since the slump in ster­ling should ben­e­fit ex­porters and help the in­dex's in­ter­na­tional com­pa­nies. Ster­ling slid on new con­cern that Bri­tish Prime Min­is­ter Theresa May's gov­ern­ment will back a "hard Brexit" where Bri­tain leaves the Euro­pean Union's sin­gle mar­ket in or­der to im­pose con­trols on im­mi­gra­tion. That could hin­der in­ward and out­ward trade and con­strict the for­eign in­vest­ment needed to fund Bri­tain's cur­rent ac­count deficit, one of the big­gest in the de­vel­oped world.

While al­most all other Euro­pean mar­kets fell on grow­ing spec­u­la­tion that the Fed­eral Re­serve will in­crease bor­row­ing costs this year, the U.K. mea­sure ral­lied 2.1 per­cent this week, com­ing close to reach­ing a record. It closed 0.8 per­cent away from the April 2015 peak.

The main Asian stock gauge has nudged slightly higher this week, head­ing for a 0.3 per­cent ad­vance, as in­vestors awaited U.S. eco­nomic re­ports and watch for com­ments by Fed of­fi­cials to as­sess the path of in­ter­est rates. The mea­sure posted its best quar­ter since 2012 in the three months ended Sep­tem­ber.

The long-awaited U.S. jobs re­port did lit­tle to sway traders from bets the Fed­eral Re­serve will boost rates this year, leav­ing stocks, the dol­lar and bonds lit­tle changed as in­vestors turn their at­ten­tion to the start of the earn­ings sea­son and key data on the health of con­sumers. Stocks posted the first weekly de­cline in four as in­vestors spec­u­late whether the world’s big­gest econ­omy is ro­bust enough to cope with higher bor­row­ing costs.

Emerg­ing-mar­ket stocks trimmed their weekly ad­vance on spec­u­la­tion that a Fed hike will di­min­ish the flow of cap­i­tal into higher-yield­ing as­sets.

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