Brexit fears hit pound while FTSE 100 shakes off US tech rout
The pound has tumbled against the US dollar as concerns ramped up over a no-deal Brexit, but London’s top tier shrugged off big falls on Wall Street amid America’s hefty tech sell-off.
Sterling tumbled 1.6% to just over 1.30 US dollars – the lowest level for nearly a month and the steepest fall since March – following the shock departure of the Government’s legal head.
The pound was also down heavily against the euro, falling 1.4% to 1.11 euros, after Sir Jonathan Jones resigned amid reported anger over suggestions Boris Johnson is planning to override elements of the Brexit Withdrawal Agreement.
London’s FTSE 100 Index clung to its opening mark, down 7.1 points or 0.1% at 5930.3, despite heavy opening declines in the United States.
Craig Erlam, senior market analyst at OANDA Europe, said: “The pound is once again coming under pressure on Tuesday as a no-deal Brexit comes back to the forefront of traders’ minds.”
He said further falls could be likely as the latest round of UK-EU negotiations play out.
“Traders are likely to continue to be very sensitive to anything that jeopardises an agreement and leaves the UK facing a global pandemic, high unemployment and no-deal all at the same time,” he added.
At the time of close in London, the Dow Jones Industrial Average had dropped 1.6%, resuming the tech rout seen last week as traders returned following the Labour Day holiday on Monday.
Tesla shares were among those plunging as the tech declines spanned a third day in a row, with increasing tensions between the US and China adding to the mix.
Indices across Europe fared worse, with the Cac 40 in France shedding 1.6% and Germany’s Dax closing 1% lower.
Among UK stocks, sterling’s fall gave a fillip to the likes of Guinness firm Diageo and tobacco giant Imperial Brands, as they make a large portion of their sales overseas and are therefore boosted by a weaker pound.
Diageo closed 2% higher, up 57p at 2,600.5p, while Imperial Brands lifted 3p to 1,326.5p.
Beleaguered airlines were back in the spotlight again after easyJet revealed it is to cut flights following the Government’s decision to impose quarantine restrictions for seven Greek islands.
The UK’s largest airline said it will reduce its schedule as “customer confidence to make travel plans has been negatively affected”, sending shares in the FTSE 250 firm down 5% or 31p to 597.4p.
British Airways owner IAG also sunk into the red, down 1.4p to 207.8p.
It capped a turbulent final day for IAG chief executive Willie Walsh, who was also at the centre of an investor protest over pay after nearly one in three shareholders failed to back his remuneration deal.
The group faced down the revolt, with 71.6% of investors approving the executive pay awards at its AGM, despite anger over Mr Walsh’s £3.2 million earnings for 2019.
Elsewhere, JD Sports topped the FTSE risers board – up 10% or 71.2p to 795.8p – after it reinstated its dividend, which offset results showing pre-tax profits for the six months to August 1 slipped by 68% to £41.5 million.
The biggest FTSE 100 risers were JD Sports ahead 71.2p at 795.8p, DS Smith up 21.9p at 294.8p, Experian 125p stronger at 2,924p and RSA Insurance 18.1p higher at 459p.
The biggest FTSE 100 fallers were Associated British Foods down 79p at 1,959p, Whitbread off 90p at 2,451p, M&G 5.35p lower at 160.1p and Royal Dutch Shell 32.8p weaker at 1,023.6p.