Belfast Telegraph

UK Website Of The Year

Home News UK

FTSE 100 rises but pound suffers after shock election result

The slump in sterling is a boon for multinational companies listed on the FTSE 100.

The FTSE 100 climbed higher following the shock General Election result as the pound suffered losses against both the dollar and euro.

London’s top flight index ended the day up by more than 1% or 77.35 points at 7,527.33 as investors digested news that Theresa May’s Conservatives had fallen short of an overall Commons majority, resulting in a hung parliament.

Sterling also plummeted off the back of the result, having dropped 1.7% against the US dollar since Thursday evening to trade at 1.27 – its lowest level since mid-April.

Related content

Versus the euro, the pound also fell more than 1.1% to 1.13 euros, to levels not seen since January.

The slump in sterling is a boon for multinational companies listed on the FTSE 100, as many of these firms tend to benefit from earnings in currencies that are stronger than the pound.

The FTSE 250 – which is considered a better barometer of UK sentiment as it hosts more domestically-focused firms – rose modestly by 0.1% or 26.55 points to 19,769.96.

Michael Metcalfe, global head of macro strategy at State Street Global Markets, said: “Markets were poorly prepared for this surprise result in the UK.

“The approach to the potentially larger and more dangerous hurdle of Brexit will now surely be delayed. It is a shock that markets were not well prepared for, and in response sterling is likely to remain under pressure.”

Markets had priced in a healthy Conservative majority, giving Mrs May free rein to take charge of Brexit negotiations unhindered.

However, others believe that a hung parliament increases the likelihood of a softer Brexit, which could be supporting the pound and preventing it going into freefall.

The FTSE 100’s European counterparts also ended the day higher, with the French Cac 40 up nearly 0.7% and the German Dax up 0.8%.

Popular

From Belfast Telegraph