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FTSE shrugs off G7 split, manufacturing fall hits pound

(Update) FTSE 100 advances strongly as markets shake off concerns over G7 summit but weak manufacturing figures hit pound with prospect of interest rate rise receding.

 
FTSE shrugs off G7 split, manufacturing fall hits pound

The FTSE 100 shook off concerns about tense talks between the US and the rest of the G7 leaders at their weekend summit in Canada where they failed to agree on trade rules.

The blue-chip index advanced 66 points, or 0.9%, to 7,747, helped by gains in utilities, tobacco, and financial stocks.

The move shows the market is so far unconcerned by the disunity of the G7 summit leaders  and US president Donald Trump’s decision to remove his name from a joint communique over trade and criticise Canadian president Justin Trudeau who chaired the talks.

However, the political challenges remain in the foreground after Trump flew to meet North Korean leader Kim Jong Un for historic talks in Singapore tomorrow.

Fiona Cinotta, senior market analyst at City Index, said the positive start to markets ‘belied the tensions which will shape trading this week, with trade strife between the US and a number of other countries set to escalate ahead of a key political summit in North Korea which could shape future relations between countries in Asia’.

Accendo Markets analyst Mike van Dulken was more upbeat about the prospect for the historic meeting between North Korea and the US.

‘Potential for a meaningful discussion about de-nuclearisation of the Korean peninsula could diffuse some of the tensions between US and North Korea, improve the global mood and gain Trump some brownie points after this weekend’s events at the G7,’ he said.

Pound falls on poor manufacturing

By contrast to the FTSE, the pound fell 0.45% to $1.3349 against the dollar after UK manufacturing and construction figures disappointed.

XTB analyst David Cheetham said the April figures ‘paint a pretty bleak picture’, with manufacturing production falling 1.4% after a 0.1% decline in March, the worst monthly fall since 2012.

‘The fall in construction output is the largest in almost six years and, perhaps most worryingly of all, there is a clear lack of new work so far this year which suggests there won’t be a marked improvement anytime soon,’ said Cheetham.

The broader measure of industrial output measured by the Office for National Statistics fell 0.8% month on month, with a weaker-than-expected 1.8% annual rise.

The poor data mean the Bank of England is unlikely to raise interest rates, and keep sterling subdued.

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2 comments so far. Why not have your say?

Alan Anderson

Jun 11, 2018 at 13:41

Still 3 hours to go for the UK markets. An hour before the US markets open and here is the last email of the day from Citywire. Well it is a lovely day out there. :)

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SDRL

Jun 12, 2018 at 01:22

This is the time for the UK to make deals with the US and put the UK first. Angila Merkel is weak and will screw things up. The US economy is booming and it is time to put the UK first.

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