Pound’s slump boosts FTSE 100 amid rise in airline and home builder stocks
London’s blue chip index rose 0.9% to end the day at 7438.84.
The FTSE 100 outperformed its European peers on Monday thanks to rising airline and house builder stocks and a notable drop in the pound.
London’s blue chip index jumped 0.9% or 66.08 points to end the day at 7438.84, outrunning the French Cac 40 and German Dax which rose 0.39% and 0.58% respectively.
It was supported by rising airline stocks including easyJet – which topped the index after rising 63p to 1,280p – as the collapse of Monarch Airlines was seen as a boon for the failed carrier’s rivals.
IAG shares also jumped 14p to 607.5p.
Home builders – including Barratt Developments which rose 26p to 640.5p, and Persimmon which climbed 108p to 2,690p – were close behind as investors celebrated Government plans to expand its Help to Buy scheme by £10 billion.
But one of the biggest lifts for the index came from the pound, which fell 0.4% versus the euro to 1.129, and dropped more than 0.9% against the US dollar to 1.326.
Connor Campbell, a financial analyst at SpreadEx, said: “The pound’s October has started in the worst way possible, with the currency posting its largest decline against the dollar since the day after June’s general election.”
He noted that the euro and dollar were both making gains on the back of strong US and Spanish manufacturing data, while fresh figures showed output in Britain’s manufacturing sector slipping in September amid a surge in costs linked to higher commodity prices and the weak pound.
The closely-watched Markit/CIPS UK Manufacturing purchasing managers’ index (PMI) showed a reading of 55.9 last month, down from 56.7 in August and coming in below economists’ expectations of 56.2.
The news compounded worries about the health of the UK economy, following an unexpected downward revision to annual gross domestic product (GDP) growth for the second quarter last week.
“There’s also concerns over the fractious Tory conference, the perception that Theresa May has lost control of her party, and what this means for the already stalling Brexit talks between David Davis and Michel Barnier,” Mr Campbell said.
In oil markets, Brent crude prices dropped 1.7% to $55.72. The commodity was impacted not only by profit-taking following a strong rally in September, but higher rig count data in the US, and reports of rising crude exports from Iraq.
In UK stocks, Hiscox shares rose 17p to 1,297p. The company laid bare the impact of hurricanes Harvey and Irma, revealing the natural disasters will cost the firm approximately $225 million (£168 million) in claims.
Time Out Group shares edged higher by 0.5p to 144.5p after the group announced it had signed a lease that will bring its popular food market to Boston.
Stanley Gibbons shares tumbled 1.5p to 7.88p after the stamp and coin specialist reported trading losses of £8.8 million in the year to March, and confirmed that it was in default on its loans and is now “dependent on the bank’s ongoing support”.
The biggest risers on the FTSE 100 were easyJet up 63p to 1,280p, Barratt Developments up 26p to 640.5p, Persimmon up 108p to 2,690p, and Centrica up 6p at 193p.
The biggest fallers on the FTSE 100 were Mediclinic International down 7p to 643p, CRH down 26p at 2,811p, ITV down 1.4p to 173.3p, and Paddy Power Betfair down 55p to 7,355p.