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FTSE races towards record high as pound drops

FTSE races towards record high as pound drops

The FTSE 100 is racing towards its record high, spurred by a big fall in the pound following last night's 'flash crash'.

The UK blue-chip index rose 73 points, or 1%, to 7,073, approaching its closing high of 7,104 set last year, and 50 points away from its all-time intraday high.

The index was given a boost by a fall in the pound, down 2.2% on the day at $1.233, although up from the $1.149 level reached in last night's flash crash, with a 'fat finger' trade or algorithms thought to be behind the fall.

A fall in the pound tends to help the FTSE 100, whose members relay on overseas markets for around three-quarters of their earnings. Stocks with heavy overseas earnings dominated the FTSE 100 leaderboard, with miners among the risers, including:

  • Anglo American (AAL) +3.6% at £10.34;
  • BHP Billiton (BLT) +3.5% at £12.44;
  • Rio Tinto (RIO) +2.5% at £26.85;
  • Glencore (GLEN) +2.5% at 219.8p.

Domestic-facing UK stocks meanwhile fell to the bottom of the index. Capita (CPI) fell 3.7% to 609.1p while house builders also came under pressure, with Taylor Wimpey (TW) down 3.7% at 147.8p, Barratt Developments (BDEV) dropping 3.5% to 487.4p and Persimmon (PSN) falling 2.6% to £17.75.

Retailers also felt the strain. Sainsbury's (SBRY) fell 3% to 237.5p, Marks and Spencer (MKS) was down 2.7% at £24.88 and Dixons Carphone (DC) traded 2.3% lower at 354.4p.

The more domestically-focused FTSE 250 index of 'mid cap' stocks, where overseas markets account for around half of earnings, couldn't keep up with the blue chips, rising just 0.2%.

Resources stocks made the running, with Evraz (EVRE) up 5.6% at 195.3p and Acacia Mining (ACAA) rising 4.8% to 482p. As with the FTSE 100, retailers and house builders were firmly in the red.

Sports Direct (SPD) was the biggest faller, down 5.8% at 283p, followed by a host of builders, including:

  • McCarthy & Stone (MCS) -4.7% at 162.3p;
  • Crest Nicholson (CRST) -3.6% at 436.7p;
  • Berkeley (BKGH) -3.5% at £24.77.

Among 'small cap' stocks, shares in industrial parts distributor Brammer (BRAM) tumbled 31% to 87.5p after delivering another profit warning, saying it did not expect to report a profit for 2016. The shares are down around 67% over the last 12 months, having scrapped its dividend in June.

The news will be a blow to Nigel Thomas, among the biggest investors in the stock through his AXA Framlington UK Select Opportunities fund, according to Thomson Reuters. Citywire A-rated David Horner and David Taylor, managers of the Chelverton UK Equity Income fund, are also big backers.

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Nigel Thomas
Nigel Thomas
123/151 in Equity - UK (All Companies) (Performance over 3 years) Average Total Return: 9.64%
David Taylor
David Taylor
1/47 in Equity - UK Smaller Companies (Performance over 3 years) Average Total Return: 90.05%
David Horner
David Horner
1/88 in Equity - UK Equity Income (Performance over 3 years) Average Total Return: 36.10%
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