Pound weakens over new war of words between Johnson and EU
London’s top-flight stocks rallied at the end of the week, benefiting from a weaker pound as tensions between new Prime Minister Boris Johnson and the EU emerged.
The FTSE 100 gained 60.01 points to close at 7,549.06, up 0.8%.
The index, which is made up of multinational companies, often benefits from a dip in the pound due to the amount of their income in other currencies.
It also makes shares “cheaper” to foreign investors who tend to trade in dollars, rather than pounds.
The market rode on the back of sterling’s decline on Friday, as the currency dipped 0.53% against the dollar to 1.239 and was down 0.3% on the euro to 1.114.
Sterling dipped as the first days of Boris Johnson’s premiership led to immediate tensions between the UK Government and the EU.
Connor Campbell, market analyst at Spreadex, said: “With Jean-Claude Juncker stating that the existing Withdrawal Agreement is the ‘best and only’ one available, and a Johnson spokesperson reaffirming the need for the Irish backstop to be scrapped or ‘we will be leaving’ without a deal, sterling came down with another case of the Brexit blues.”
It was also done no favours by the rising dollar, which was boosted by better-than-expected US GDP figures.
Elsewhere, the French Cac was up 0.57% and the German Dax rose 0.47% as European indices recovered following Thursday’s European Central Bank meeting.
In London, Vodafone led the risers as it revealed plans to spin off and potentially list its mobile towers business and saw first quarter revenues slide due to poor exchange rates.
Shares in the company were up 14p to 146p.
Mothercare dropped 2.75p to 17p as it told investors that profits will not grow this year, impacted by “fragile consumer confidence”.
Schools education business Pearson said its lengthy restructuring programme is on track to stabilise the firm this year, with underlying sales growth for the first time in six years, up 2% to £1.8 billion across its key regions over the first six months of the year. Shares closed up 51.6p to 927p
Foxtons’ shares fell 1.5p to 56.9p as the company blamed the downturn in London’s property market and Brexit uncertainty for its losses widening in the first half of the year.
Online property business Rightmove reported a decline in the number of houses it sold, but said revenues were up 10% to £143.9 million and underlying operating profits by 10% to £108.2 million.
Investors were pleased, with shares closing up 13.3p at 524.9p
The top risers on the FTSE 100 were Vodafone Group up 14p to 146p, Pearson up 51.6p to 927p, Relx up 67p to 1,934.5p, and Rightmove up 13.3p to 524.9p.
The biggest fallers on the FTSE 100 were Anglo American down 89p to 2,098p, Antofagasta down 21.6p to 938.4p, International Consolidated Airlines Group down 6.7p to 438p and NMC Health down 37p to 2,470p.