Sterling pull-back helps jumpstart FTSE 100 recovery
A slight pull-back in sterling has support a small recovery by the FTSE 100.
London’s blue chip index started to recover some of the losses it suffered last week, as the pound fell into the red and investor appetite for equities returned.
The FTSE 100 was up more than 0.3% or around 24.26 points at 7239.73, continuing the strong gains felt by US equities on Friday and a rise in Asian stocks in early Monday trading.
It was helped by a slight pull-back in the pound, which surged to 1.36 versus the US dollar – its highest level since the Brexit vote result – last week amid further signs that the Bank of England could raise interest rates from record lows as soon as November.
Sterling was down nearly 0.4% versus the greenback at 1.354 and fell 0.2% against the euro to 1.135 on Monday morning.
Connor Campbell, a financial analyst at Spreadex, said: “Having been battered in the wake of last week’s sterling super surge, the FTSE is using a quiet Monday morning to claw back some of its losses.”
He added: “At one point last Friday the UK index hit 7195, its worst price since the end of April. Now it’s trying to push on to 7250.
“As for the pound, it has had little reason to really move just yet, instead opening relatively flat against both the dollar and the euro. Not to worry though – that means cable is just below last week’s $1.36-crossing one-year peak, while against the euro sterling is sitting pretty at a two-month high.”
Renewed interest in equities was helping drive pick-up in continental stocks as well, with the French Cac 40 and German Dax up 0.4% and nearly 0.6% respectively.
Brent crude prices were up 0.4% at around 55.72 US dollars per barrel, marking its highest level since mid-August, as US refineries continued their recovery in the wake of major US hurricanes.
In UK stocks, BAE Systems was one of the biggest risers on the FTSE 100, climbing 15p to 611p, amid news that Qatar’s defence minister is planning to buy 24 Typhoon jets from the British defence group.
Away from the top tier, esure shares surged 17.4p to 280p following reports that the firm’s biggest stakeholder, Sir Peter Wood, has been in talks with would-be buyers in a move that could trigger a full-blown sale of the business.
Sir Peter owns a 30.7% position in the company.
Dairy Crest edged 1.5p higher to 611p as the cheese and butter maker said it was on track for double-digit volume growth for the six months ending in September, thanks to a strong customer appetite for the “UK’s leading cheese brand”.
Shares in insurer Hiscox fell 28p to 1,223p after the FTSE 250 firm said the impact of Hurricane Harvey on the US would cost it $150 million (£110 million) in claims.
However, it noted that the estimate was within the modelled range for a disaster of that scale and was based on an insured market loss of $25 billion (£18 billion).