FTSE 100 at five-month high as pound drops amid Brexit chaos

A worker shelters from the rain under a Union Flag umbrella as he passes the London Stock Exchange in London October 1, 2008. — Reuters pic
A worker shelters from the rain under a Union Flag umbrella as he passes the London Stock Exchange in London October 1, 2008. — Reuters pic

LONDON, March 19 — London’s exporter-heavy FTSE 100 surged to a five-month high on the back of a drop in sterling after Britain’s parliament speaker struck a fresh blow to Theresa May’s EU divorce deal, while a rally in miners and oil stocks also lent support.

The FTSE 100 added 1 per cent — its biggest one-day rise since early February — to mark a sixth straight session of gains while midcaps ended roughly flat as a weaker pound weighed.

Parliamentary speaker John Bercow said any proposal British Prime Minister Theresa May puts to lawmakers must be substantially different to the ones previously rejected by them.

“The government now faces the total ruin of its strategy, as a third ‘Meaningful Vote’ (a term that becomes less meaningful with each vote) is ruled out unless changes are made,” said Chris Beauchamp, analyst at IG.

Bercow’s comments aggravated Brexit jitters as May has just a few days to push her divorce deal through if she wants to go to an EU summit today with something to offer them in return for more time.

Sterling slipped in response to the chaotic turn of events, although that boded well for FTSE 100, which books a big chunk of its earnings in the greenback.

British American Tobacco jumped nearly 3 per cent while smaller peer Imperial Brands and pharmaceutical giants GlaxoSmithKline and AstraZeneca all rose.

On the main index, Shell and BP were among the top boosts on higher crude prices, while miners jumped 2.4 per cent on their best day in nearly two months, tracking gains in iron ore futures on supply concerns after Vale’s output cuts.

Both UK indexes enjoyed a strong run last week on hopes that a potentially disruptive no-deal Brexit would be averted, but the more domestically-focussed midcaps ended their winning streak on Monday.

News-related moves were scant but buyout bids boosted banks.

German giants Deutsche Bank and Commerzbank confirming that they were in talks about a merger boosted financial stocks to levels not seen since last October.

In the broader financial sector, London-listed shares in payment processor Worldpay also surged 9.3 per cent after the UK-based group agreed to be bought over by US fintech group Fidelity National Information Services for about US$35 billion (RM143 billion).

Bank stocks are also on a six-day winning streak with a no-deal Brexit on March 29 seemingly off the table.

Footasylum shot up 74.2 per cent to 81 pence, inching near the 82.5 pence a share offered by larger JD Sports for the sportswear retailer. JD Sports added 1.1 per cent.

Oilfield services provider Hunting rose 4 per cent on the FTSE 250 index after UBS hiked its rating on stock. — Reuters

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