FTSE saved from heavy drop by faltering pound

A dropping pound caused by souring UK-EU relations helped save the FTSE 100 from a hole dug by its own miners on Wednesday.

London’s top index closed the day down slightly in the red, down 14 points, or 0.2%, to 7,081, but this only came after a recovery from the morning when the index struggled.

It was the steadily dropping pound that lent some support to the FTSE. The index is full of companies which sell services in dollars, so it is often helped by a fall in the value of sterling, and equally harmed if the pound strengthens.

Sterling was trading down around 0.1% against two major currencies close to the end of play in London. One pound would buy 1.4121 dollars or 1.1588 euros.

Currency traders had one eye on the negotiations between the UK and the European Union.

Brussels has said it might take action if the UK Government does not stop breaking the section of the Brexit agreement the two sides struck over Northern Ireland.

The Northern Ireland Protocol of the Withdrawal Agreement aims to avoid a hard border between Northern Ireland and the Republic of Ireland.

Yet despite the falling pound, the FTSE was still lower. This was largely caused by some of the biggest and oldest mining companies in the world, and a new one formed earlier this week.

Evraz, Anglo American, Rio Tinto and BHP all notched up drops of more than 2%. Meanwhile Thungela Resources, which was spun out of Anglo on Monday, dipped 9.6%.

It has been a turbulent first week of trading for Thungela after it was hit by a short-seller before its shares started trading.

Markets in the US were fairly uneventful. Both major New York indexes, the S&P 500 and Dow Jones, were trading up around 0.1% when markets shut in Europe.

Traders in the US have been waiting for Thursday’s inflation figures, which are expected to show a drop in CPI, said Spreadex analyst Connor Campbell.

The Dax index in Frankfurt fell 0.4%, while Paris’s Cac rose 0.2%

Brent crude oil gained around 0.1% to 72.31 dollars per barrel.

There was little news out of London’s listed companies on Wednesday.

The biggest surprise of the morning came from the Competition and Markets Authority, which announced it was investigating Ryanair and British Airways over whether they broke consumer laws by not giving passengers refunds when they were unable to catch flights during the pandemic.

BA offered vouchers or rebookings, while Ryanair gave customers the chance to rebook, the CMA said. However following the announcement, shares in both companies rose.

Ryanair was up 1.5% while IAG, which owns British Airways, was top of the FTSE 100 after gaining 3.3%.

Upper Crust’s owner SSP saw its shares drop by 1.9% after warning that pre-pandemic trading is not expected to return for three years.

Rolls-Royce shares rose 1.1% after it named Anita Frew as its first chairwoman.

Shares in Simec Atlantis Energy fell 4.6% after it updated the market on problems at its biggest shareholder, which is linked to businessman Sanjeev Gupta’s family.

The biggest risers on the FTSE 100 were IAG, up 6.48p at 204.5p; AstraZeneca, up 195p at 8,130p; Smith & Nephew, up 33.5p at 1,506p; GlaxoSmithKline, up 28.6p at 1,380.5p; and Informa, up 11.4p at 564.8p.

The biggest fallers on the FTSE 100 were Thungela Resources, down 13.86p at 130.18p; Persimmon, down 111p at 3,113p; Renishaw, down 170p at 5,380p; 3i Group, down 38p at 1,208p; and Evraz, down 18.8p at 624.8p.