MARKET REPORT
THE FTSE 100 backed down from Thursday’s record highs as the pound rebounded yesterday on reports that the EU was working on proposals for a post-Brexit trade deal with Britain.
London’s blue chip index ended the session down 0.28% or 20.8 points at 7,535.44, edging down from record highs of 7,556.24 a day earlier, having been spurred by a decline in the pound amid fears over stalled Brexit talks.
But sterling recovered after a leaked document seen by reporters in Brussels suggested that EU leaders meeting at the European Council summit next week could authorise “internal preparatory discussions” on the shape of a future trade relationship and a transition deal, in a move which could offer Prime Minister Theresa May hope for talks by the end of the year.
It helped prop the pound up 0.3% versus the US dollar to trade at 1.330, and up 0.3% against the euro to 1.123.
David Madden, a market analyst for CMC Markets UK, said: “GBP/USD drove higher today after reports came out that the EU are working on a proposal for a post-Brexit trade deal with the UK, this announcement reversed the dip in the pound yesterday.”
Across Europe, the French Cac 40 ended the day down 0.17% while the German Dax rose 0.07%.
Brent crude prices were up 1.5% at 57.24 as investors cheered data showing a rise in Chinese oil imports in September, signalling further rebalancing in the commodity market.
In the London equity market, mining stocks were at the top of the FTSE 100, with Rio Tinto up 107.5p at 3,688.5p and Glencore up 8.65p at 376.6p. It comes after Deutsche Bank raised its target price for a spate of mining companies amid a brighter outlook for copper, zinc and nickel prices.
Provident Financial shares surged 98p to 887p despite confirming it would book heavy losses at its consumer credit business this year.
However, the troubled subprime lender claimed it was making progress with its turnaround plan, and that a management shake-up in its consumer credit operations had “prevented any further deterioration in performance”.
The biggest risers on the FTSE 100 were Rio Tinto up 107.5p to 3,688.5p, Glencore up 8.65p to 376.6p, Johnson Matthey up 67p to 3,475p, and Pearson up 12p to 634p. The biggest fallers were GKN down 34.8p to 318p, Centrica down 4.4p to 174.6p, Smurfit Kappa Group down 50p to 2,180p, and Experian down 28p to 1,536p.