Stall in Brexit talks sends FTSE 100 to a new high

The Guardian - - FINANCIAL - An­gela Mon­aghan Graeme Wear­den

The FTSE 100 hit a new clos­ing high on Thurs­day af­ter a “dis­turb­ing dead­lock” in the lat­est round of Brexit talks trig­gered a sharp sell-off of the pound.

Bri­tain’s blue-chip stock mar­ket, which fea­tures the UK’s big­gest com­pa­nies, closed up 22 points, or 0.3%, at 7556.24 points. The rise in the UK’s lead­ing in­dex re­flected a weaker pound, which makes Bri­tish goods and ser­vices cheaper abroad and tends to boost the share price of multi­na­tional com­pa­nies with a large pro­por­tion of for­eign earn­ings.

At one point the pound was down as much as a cent against the dol­lar at $1.3123 af­ter the EU’s chief Brexit ne­go­tia­tor, Michel Barnier, said talks over Bri­tain’s di­vorce bill were in a “very dis­turb­ing state of dead­lock”.

Cur­rency traders re­acted swiftly to the lack of progress, also send­ing ster­ling down to a four-week low against the euro at €1.109, although the pound later re­cov­ered af­ter mar­kets closed. The Dow Jones also rose yes­ter­day.

Multi­na­tional ex­porters were among the FTSE 100’s big­gest ris­ers yes­ter­day, with lux­ury fash­ion chain Burberry gain­ing 2.7% and con­sumer goods group Unilever ris­ing by 2.1%.

En­ergy com­pa­nies also helped to push the in­dex to a record clos­ing high. SSE and Cen­trica, two of Bri­tain’s big­gest en­ergy providers, gained 2.5% and 1.9% re­spec­tively, af­ter it emerged that the gov­ern­ment’s new price cap is un­likely to come into ef­fect un­til 2019. An­a­lysts said the new clos­ing high was not a vote of con­fi­dence in the UK econ­omy. “The bullish move was achieved for the wrong rea­sons, as the dip in the pound on the back of the stalled Brexit talks helped the Bri­tish in­dex,” said David Mad­den, an­a­lyst at CMC Mar­kets.

Joshua Ma­hony, mar­ket an­a­lyst at IG, said: “The con­tin­ued as­cent of the FTSE has had much to do with the neg­a­tive ef­fect of the dis­jointed Brexit ne­go­ti­a­tions, with daily up­dates seem­ingly high­light­ing just how un­suc­cess­ful the ini­tial rounds of talks have been.”

Yes­ter­day’s per­for­mance beat the FTSE 100’s pre­vi­ous clos­ing high of 7,547 points set in June, but it was still below the record in­tra­day high of 7,598.99. “The UK stock mar­ket con­tin­ues its win­ning streak de­spite con­cerns over eco­nomic per­for­mance and the un­fold­ing Brexit process. The ques­tion is whether the mar­ket’s strong run means it’s fit to burst,” said Laith Kha­laf, se­nior an­a­lyst at fi­nan­cial ser­vices group Har­g­reaves Lans­down.

“Valu­a­tions in the UK stock mar­ket look rea­son­able, nei­ther par­tic­u­larly cheap, nor par­tic­u­larly ex­pen­sive. That means, in the short term, the stock mar­ket can turn in ei­ther di­rec­tion with­out de­fy­ing the laws of statis­tics.”

Pho­to­graph: Burberry

Shares in the lux­ury fash­ion chain Burberry rose 2.7% yes­ter­day as a fall­ing pound boosted ex­porters

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