Pound Magic Is Back as FTSE 100 Climbs Most in Europe After Vote

09/06/2017
A slump in the pound after U.K. Prime Minister Theresa May’s election gamble backfired provided a boost to the nation’s equity benchmark, helping it rise the most among European peers.

The FTSE 100 Index of the largest British companies, which get more than two-thirds of their sales from abroad, rose 0.7 percent at 11:17 a.m. in London as sterling headed for its worst plunge since October. While 70 of its members rose, domestic firms such as homebuilder Taylor Wimpey Plc and Royal Bank of Scotland Group Plc slid at least 2.5 percent. The FTSE 250 Index of midcaps dropped 0.3 percent, and another gauge of smaller companies fell 0.5 percent.

“The overnight discount on the pound has proved to be too tempting for investors in British companies that export goods or services overseas,” said Ken Odeluga, a market analyst at City Index in London. “Domestically focused shares are those for which a surprise result is least welcome. We see scope for the index to slide in the second half of the year as sentiment on its many Britain-dependent businesses weakens.”

The U.K.’s government’s leadership has been thrown into doubt just 10 days before Brexit negotiations are due to start, as May not only failed to get the broad majority she had bet on when calling the snap election but also lost parliamentary seats held at the start of the campaign. While the political uncertainty was reflected in the pound, the currency weakness has been a boon for U.K. megacaps in the past year, with the FTSE 100 rallying 18 percent since the Brexit vote.

by Cecile Vannucci

Fonte:https://www.bloomberg.com/news/articles/2017-06-09/pound-magic-back-as-u-k-stock-gains-lead-europe-after-vote

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