LONDON MARKETS: FTSE 100 At All-time High, With The Pound Knocked Below $1.29
May 26 2017 - 4:45AM
Dow Jones News
By Carla Mozee, MarketWatch
YouGov poll has Tories holding smaller lead over Labour
Party
The U.K.'s benchmark for blue-chip stocks was at an all-time
high Friday, as the pound dropped against major rivals after a poll
showed a further narrowing of the Conservative Party's lead before
the general election.
The FTSE 100 was up a modest 0.2% to 7,534.13, but losses for
financial and oil and gas shares limited the overall gain. Still,
the index notched an intraday high of 7,535.06, according to
FactSet data. For the week, the benchmark was on track for a gain
of 0.8%.
Friday's session kicked off with the pound under pressure and
oil prices flipping higher after an OPEC-related selloff.
The pound bought $1.2875, yanked below $1.29 for the first time
since May 18, according to FactSet data. That took place after a
YouGov poll for The Times newspaper
(https://www.thetimes.co.uk/article/tory-lead-cut-to-five-points-as-corbyn-closes-in-on-may-rgmckfnpp)
released Friday showed the lead for the ruling Conservative Party
has been cut to 5 percentage points over the Labour Party ahead of
the June 8 election.
A weaker sterling can benefit the FTSE 100, which is heavily
weighted by multinational companies that make the bulk of their
revenue and earnings in foreign-denominated currencies.
Among such companies, shares of Hikma Pharmaceuticals PLC
(HIK.LN) rose 1.2% and GlaxoSmithKline PLC (GSK.LN)picked up 1.1%
and consumer products heavyweight Unilever PLC (ULVR.LN) tacked on
0.9%.
"In our view, fresh polls showing that the gap between these two
parties continues to narrow could prove negative for sterling, on
concerns that [U.K. Prime Minister] Theresa May and the
Conservatives may not secure the strong majority they are seeking
in Parliament," wrote Marios Hadjikyriacos, analyst at IronFX, in a
note.
The "British pound could become increasingly more sensitive to
incoming polls as we approach Election Day, given that polls
released just a few days ahead of the event may capture voters'
sentiment more accurately and thereby, carry more importance for
investors," he said.
The pound was up roughly 1% against the Japanese yen , and the
euro advanced to 87.22 pence against sterling.
Meanwhile, shares of BP PLC (BP.LN) (BP.LN) and Royal Dutch
Shell PLC (RDSB.LN) (RDSB.LN) were each down 0.1%, but pared losses
as oil prices turned higher. Oil prices had dropped
(http://www.marketwatch.com/story/oil-reverses-some-losses-as-investors-get-ready-for-opec-meeting-2017-05-25)
after the Organization of the Petroleum Exporting Countries agreed
to extend their production cuts by nine months. However, they
stopped short of deepening the cuts.
The energy group has a roughly 14% weighting on the FTSE
100.
(END) Dow Jones Newswires
May 26, 2017 04:30 ET (08:30 GMT)
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