FTSE 100 shoots higher as pound dives on no-deal Brexit fears
The London markets shot higher as the increased likelihood of a no-deal Brexit caused the value of the pound to plummet to a two-year low.
The FTSE 100 closed 45.48 points higher at 7,577.2 points at the end of trading on Wednesday.
Traders appear to find a no-deal Brexit scenario increasingly possible after Boris Johnson and Jeremy Hunt both hardened their stance on leaving the EU, and in particularly the Irish backstop.
David Madden, market analyst at CMC Markets UK, said: “The FTSE 100 has been lifted by the sell-off in the pound.
“Concerns over a no-deal Brexit has weighed on sterling, and in turn the FTSE 100 has been given a lift.
“The bullish sentiment that was doing the rounds on Tuesday and has continued on Wednesday.”
Sterling plunged deeper to hit its lowest figure against the dollar for 27 months after the Conservative leadership candidates failed to address concerns over the uncertain economic climate.
The pound was down 0.77% at 1.242 versus the US dollar, and down 0.38% at 1.107 against the euro.
The Dow Jones opened in a muted fashion in comparison, opening flat as brokers reminded investor over uncertainties in the current economic outlook.
The European markets however moved higher, as the German Dax increased by 0.35%, while the French Cac rose by 0.65%.
In stocks, Ryanair shares moved higher after the airline group said it is planning cuts and closures at some of its bases from this winter due to delays to aircraft deliveries amid the Boeing 737 MAX aircraft crisis.
The carrier said it is taking action to reduce its services after slashing its expected growth rate for the summer 2020 from 7% to 3%.
Shares in the company fell by 0.31 euros to 10.4 euros on Wednesday.
Burberry shares surged after the fashion house said it benefited from the weak pound bringing more tourists into its stores.
Huge protests in Hong Kong hit the British fashion label due to the disruption in the area, although this was offset by a boost in sales on mainland China, it said.
Shares in Burberry jumped by 286.5p to 2,277p at the end of trading.
Inr-Bru marker AG Barr saw shares dive after it warned that profits will collapse this year due to poor weather, particularly in its native Scotland, and customers turning away from its reduced-sugar drinks ranges.
AG Barr shares were down 246p to 623p at the close of trading on Wednesday.
Shares leapt higher at the owner of Franco Manca pizza, The Fulham Shore, after it notched a return to profit on the back of strong demand for food launches including a new vegan menu.
Shares in the company rose 11.3% to 12.8p at the close of trading.
The price of oil was slightly higher as the feelgood factor from Tuesday’s economic reports from China continued to do the rounds.
The price of a barrel of Brent crude oil rose by 0.35% to 66.4 US dollars.
The biggest risers on the FTSE 100 were Burberry, up 286.5p at 2,277p, Pearson, up 29.4p at 893.2p, Tui, up 21p at 791.8p, and Fresnillo, up 23.8p at 921.2p.
The biggest fallers on the FTSE 100 were Rightmove, down 13.7p at 518.3p, Auto Trader, down 10.2p at 550p, Smurfit Kappa, down 46p at 2,610p, and Vodafone, down 2.12p at 128.08p.