FTSE makes hay as pound fails to shine
News of a potential new stumbling block on the UK’S road to negotiating a deal with the European Union before the end of the year sent the FTSE 100 soaring in London.
The FTSE jumped by nearly 2.4 per cent, closing up 138.32 points to 5,937.4, as it benefited from a weak pound. It had been reported on Sunday that ministers were preparing a new bill that would overrule parts of the withdrawal agreement that was signed by the UK and the EU.
It sent sterling tumbling by 0.9 per cent against the dollar to $1.3159, and by 0.7 per cent against the euro to €1.1136.
The FTSE is populated by many exporters whose products become cheaper for foreign buyers when the pound falls. CMC Markets analyst David Madden said: “The fall in the pound is helping the FTSE 100 outperform versus its eurozone equivalents.
“Firms that have a large international presence, such as Astrazeneca, Reckitt Benckiser, Diageo, Ashtead, Unilever, and Glaxo - Smithkline, are all benefiting from the drop in the pound. Sterling is under pressure over fears the UK and the EU might not strike a deal, and that would result in business being conducted on World Trade Organization (WTO) terms in January.
“Yesterday, Prime Minister [Boris] Johnson said that if a free trade deal has not been agreed upon by 15 October, it would be time to walk away from the trade talks and peruse a basic Wto-style trading relationship with the EU, which would commence in 2021.”
Other European markets also had a strong day with the Dax in Germany up 2 per cent, and the Cac 40 rising 1.8 per cent.
US markets were closed for Labor Day, so remained unchanged.
In company news, shares in media company Future closed up by more than 18 per cent at 1,722p after it revealed that a surge in online readers will boost its profit.
The owner of Fourfourtwo and Techradar now expects full-year profit to be ahead of market after it saw a 25 per cent jump in unique visitors in the UK.
Primark- owner AB Fo ods rose 0.5 per cent to 2,038p after saying it would top profit forecasts as sales surged over the summer.
Sales at the clothes shop were “reassuring and encouraging” since they reopened in June, the company said.