DAVID MYRDDIN-EVANS
UK equities rose on Monday, buoyed by the fall in sterling caused by Prime Minister Theresa May’s revelation that the UK would trigger Article 50 no later than March next year, signalling the start of the UK’s official exit from the EU.
The news sent the pound to a three-month low against the dollar, although by yesterday that had extended to a 31-year low.
Stock markets rallied as the weaker currency is seen as good news for many UK stocks; the FTSE-100 and FTSE-250 indices both saw significant increases, with the FTSE 100 up by 1.23% and the FTSE 250 by 1.72%.
In early trade yesterday, sterling’s continued weakness sent the FTSE 100 back over the 7,000 mark for the first time in 16 months, while the FTSE 250 hit a record high.
The pound was down to 1.277 against the US dollar and 1.14 against the euro.
Last week was a volatile one for UK shares, though overall the FTSE 100 was down just 0.2%.
Friday also marked the end of the third quarter in stock markets, with the blue-chip index up 6.7% in the three months since the Brexit vote. This strong performance took the FTSE 100’s total return into double digits for 2016 to date.
Thursday was the best day for the market last week, with an Opec agreement to curb production pushing the FTSE 100 up 1%. With oil prices climbing on the news, Royal Dutch Shell surged 6.7% and BP added 4.3%. However shares in Capita fell 26.8% on a profit warning.
Financial stocks were in focus dur- ing the week amid worries about Deutsche Bank’s financial strength. Lloyds Banking Group was downgraded to a ‘sell’ by Goldman Sachs.
Royal Mail was among the biggest blue-chip fallers, down 3.3% on Wednesday after Deutsche Post DHL agreed a takeover of UK Mail. J Sainsbury also dropped 3.9% after reporting a 1.1% drop in sales.