FTSE 100 climbs as pound tumbles on political worries

FTSE 100 climbs as pound tumbles on political worries

Rally for Chinese stocks also boosts mining names

London stocks were in the green on Monday, with banks moving higher and miners getting a lift after China stocks had their best day in more than two years.

Sterling weakness was helped out as investors watched for Brexit updates with Prime Minister Theresa May is due to make a statement to the House of Commons on Monday.

How markets are performing

The FTSE 100 UKX, +0.42% rose 0.6% to 7,093.58, after closing out last week with a gain of 0.8%.

The British pound GBPUSD, -0.7347% soared to three-year highs, buying $1.2968, from $1.3066 in New York on Friday.

What’s moving markets

China’s Shanghai Composite Index SHCOMP, +4.09% saw its biggest one-day gain in more than 2 years as officials continued to make comments aimed at lifting investor confidence in financial markets. Investors got rattled last week by news of weaker-than-expected growth for the country in the third quarter. China is a big user of natural resources, and upbeat news from that country can be positive for mining shares, of which the FTSE 100 has many.

Politics were in the spotlight Monday, with the pound driven lower as U.K. leader May appeared to be fighting for her job and a Brexit deal. She is expected to make a statement to the House of Commons on Tuesday, in which she will reportedly say the vast majority of a trade deal with the European Union for when the U.K. exits is done.

May has also come under pressure from inside her own party, with some upset over her plan to extend the Brexit transition period in order to secure a deal with the EU.

A weaker pound can boost the FTSE 100, as the index’s multinational companies generate most of their sales in other currencies.

What are strategists saying?

“The greatest threat to an agreement is now perceived to reside within the British camp, where not everybody is prepared to accept an extension of transition period to post-March 2019,” said Ricardo Evangelista, senior analyst at ActivTrad, in a note to clients.

Stocks in focus

Lloyds Banking Group PLC LLOY, +1.43% LLOY, +1.43% rose 1.4% after the Financial Times reported the bank is getting ready for 2 billion pound ($2.6 billion) share buyback next year.

Heavily weighted British American Tobacco PLC BATS, +2.11% jumped 1.8%.

Glencore PLC GLEN, +0.88% GLEN, +0.88% gained 1.5%, Antofagasta PLC ANTO, +0.60% rose 1% and Anglo American PLC AAL, +1.59% climbed 1.7%.

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