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Accumulator: FTSE delivers shocks, markets march on

Provident Financial's astonishing collapse grabbed headlines, overshadowing an otherwise positive week for markets.

 
Accumulator: FTSE delivers shocks, markets march on

It may not have felt like it, but it's been a decent week for markets. The astonishing near-70% fall in the shares of Provident Financial (PFG) dominated headlines, overshadowing Dixons Carphone's (DC) 23% tumble yesterday, and a big slump in the shares of WPP (WPP).

But while Provident's fall was breath-taking, it had a limited impact on the FTSE 100, which rose over the week, albeit lagging other major markets.

The doorstep lender was already set for relegation as the FTSE 100's smallest member, even before Tuesday's raft of bad news lopped two-thirds off its market cap.

Yet again, the pound's fall helped to lift the return from overseas markets in pound terms, as our exclusive Accumulator data table shows.

Emerging markets led the way this week, rising to their highest levels since September 2014, and extending their lead over other global markets so far this year.

Stock markets in the developing world have this year delivered more than three times the returns of the US and UK, and double the gains from Japan, as they build on 2016's strong showing.

Brad Tank of fund group Neuberger Berman said the 'long winning streak' for emerging markets was 'rooted in recovering fundamentals: better growth rates around the world, a progressive and pro-growth mix of policies in most countries, benign inflation, reasonable levels of government debt and more solid current account dynamics'.

The dollar's weakness this year has also helped, as has the US Federal Reserve's 'patient' approach to raising interest rates. Higher US interest rates and a strong dollar are seen as a threat to emerging markets because they make their dollar debts more expensive.

This week, no emerging market shone brighter than Brazil, whose stock market rallied 6% in pound terms, with the government's privatisation drive helping to buoy stocks.

You can access the Accumulator table here.

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