FTSE subdued as strong pound weighs on London’s multinational firms

Investors sat on their hands during a tepid trading session as a strong pound weighed on London-based multinational firms.

The FTSE 100 nudged higher amid largely lacklustre sentiment ahead of the Jackson Hole Symposium on economic policy, which begins on Thursday.

London’s top flight closed 8.59 points higher at 6,045.6 at the end of trading on Wednesday.

David Madden, market analyst at CMC Markets UK, said: “European equity markets were largely in positive territory as the trading session drew to an end.

“The FTSE 100 was flat as internationally exposed stocks like British American Tobacco, Diageo, GlaxoSmithKline and AstraZeneca were some of the largest fallers in terms of index points.

“The firmer pound is holding back the stocks in question as they earn a large portion of their total revenue from outside the UK.”

The other major European markets were more positive, lifting after China pledged to buy a record amount of soybeans from the US in 2020 to renew hopes of improving trade relations.

The German Dax increased by 0.98%, while the French Cac moved 0.8% higher.

Across the Atlantic, the Dow Jones was broadly flat as traders cautiously wait for Fed chief Jerome Powell to say what the US central bank will do to help the economy at the event.

Meanwhile, sterling lifted higher for the second day running but has still yet to recoup its losses from a nightmare session on Friday.

The pound rose 0.34% versus the US dollar at 1.319 and was up 0.49% against the euro at 1.116.

Rail operators and firms linked to the train sector, such as Go-Ahead Group and Trainline, pushed higher after it was announced that rail services will be ramped up from next month as more schools reopen.

In company news, sub-prime lender Provident Financial surged in value after telling investors the hit from the pandemic was not as bad as first feared.

It said it performed better than expected, despite swinging to an underlying pre-tax loss of £32.6 million for the first six months of 2020.

As a result, shares closed 38.3p higher at 234p.

Polymetal also had a strong session, lifting after it was buoyed by a massive rise in the price of gold and a big jump in silver during the first six months of the year.

The miner, which extracts the precious metals in Russia and Kazakhstan, said that the gold it sold during the first half fetched 25% more on average than the same time last year.

Shares in the company finished the session 28p higher at 1,980p.

Elsewhere, Carnival edged lower after the company cancelled two cruises, blaming restrictions and limitations with border and port access. It closed down 8.2p at 969p.

The price of oil dipped slightly after the publication of the latest EIA report revealed US oil inventories fell by 4.68 million barrels.

The price of a barrel of Brent crude oil decreased by 0.3% to 45.82 US dollars.

The biggest risers on the FTSE 100 were Aveva, up 450p at 5,096p, JD Sports, up 26.4p at 717.8p, Melrose, up 3.85p at 105.6p, and Kingfisher, up 8.2p at 281.2p.

The biggest fallers of the day were ITV, down 1.26p at 59.38p, Diageo, down 52p at 2,548p, Rolls-Royce, down 4.2p at 253p, and Intercontinental Hotels Group, down 71p at 4,377p.