FTSE plunges on May’s snap election news

Market report Emma Newlands

More than £45 billion was wiped off the FTSE 100 in the biggest one-day drop since the Brexit vote, as the pound surged to a six-month high after Prime Minister Theresa May announced plans for a general election on 8 June.

London’s blue-chip index tumbled 2.5 per cent or 180.09 points, ending the day at 7,147.5 in the first day’s trading after the Easter break. The index’s previous biggest drop over the course of one session was 3.1 per cent on 24 June last year.

The FTSE 100 was hurt by the strength of the pound, which surged more than 1.5 per cent against the US dollar to trade at $1.275, which was its highest level since early October. Multinational stocks on the blue-chip index tend to benefit when foreign currencies are stronger. Versus the euro, sterling rose more than 1 per cent to a four-month high at €1.192.

Laith Khalaf, senior analyst at Hargreaves Lansdown, said: “Currency markets have roared their approval for a snap UK election, with the pound enjoying strong gains against the dollar and the euro.

“The fall in the stock market is not a negative response to the UK election per se, rather it is a knock-on effect of a surging pound, combined with price falls in some key commodity markets, all of which has taken its toll on the heavyweights of the FTSE 100 index.”

The biggest risers on the FTSE 100 included Marks & Spencer Group, up 6.7p to 353.5p, Persimmon, up 21p to 2,242p, and Taylor Wimpey, up 1.7p to 198.6p.

The biggest fallers included Glencore, down 17.25p to 291.8p, Anglo American, down 60p to 1,110p, and BP, down 18.5p to 452.6p. The housebuilder, set to issue its next trading update next month, was in the ascendancy after having its “buy” rating reiterated by Jefferies. The firm suffered as London’s bluechip index was hit by a drop in iron ore prices, which sent mining stocks to the bottom of the chart.