LONDON MARKETS: FTSE 100 Drops, As Pound Moves Higher After Trump's Remarks
23 Januar 2017 - 10:18AM
Dow Jones News
By Carla Mozee, MarketWatch
Dollar sells off after new U.S. president's inauguration speech,
helping lift sterling
U.K. stocks fell Monday, losing ground while the British pound
strengthened, as investors digested Donald Trump's protectionist
tone at his inauguration as the 45th president of the United
States.
The FTSE 100 lost 0.9% to reach 7,136.76, with only the basic
materials group rising.
The benchmark on Friday was 0.1%
(http://www.marketwatch.com/story/ftse-100-slips-as-wait-and-see-mode-sets-in-before-trump-takes-office-2017-01-20)
lower. The index declined 1.9% for the week, after climbing for six
weeks in a row. Monday's open was the first opportunity for
investors to react to Trump's speech, as the inauguration came
after the close of Friday trading.
Equities on the London index moved into the red as a slip in the
dollar helped drive a rise in sterling. On Monday, the U.S. Dollar
Index fell 0.4% to 100.34, while the pound was pushed up to
$1.2446, from $1.2376 late Friday in New York.
There's been a "harmful [U.S. dollar] selloff since Friday,
inspired by President Trump's inauguration speech in which he
adopted a very nationalist, protectionist rhetoric that risks
rocking the globalization boat, and thus spurred safe-haven
demand," said Accendo Markets analysts Mike van Dulken and Henry
Croft in a note.
"The result is unwelcome strength in peer FX majors like GBP,
EUR and Yen, which hurts sentiment towards exporters, whose goods
are that little bit less competitively priced and international
profits now worth that little bit less," they said.
Among London-listed multinational companies, Dove soap maker
Unilever PLC (ULVR.LN) fell 1.5%. Drug makers GlaxoSmithKline PLC
(GSK.LN) and AstraZeneca PLC (AZN.LN) declined 1.3% and 1.2%,
respectively.
Mining, shares, however, outperformed the broader market,
benefitting from gains in dollar-denominated metals prices as the
greenback fell. Antofagasta PLC (ANTO.LN) rose 3.1%, Fresnillo PLC
(FRES.LN) picked up 1.6%, and Randgold Resources PLC (RRS.LN)
gained 1.2%.
Also on the radar will be Tuesday's expected decision from the
U.K. Supreme Court on whether the government will have to put the
terms of its Brexit deal to a vote in parliament.
"Many expect lawmakers to refuse a sharp divorce with the
European Union and invite [British Prime Minister] Theresa May to
adopt softer Brexit. Therefore, this could take some pressure off
the pound's shoulders," wrote Ipek Ozkardeskaya, senior market
analyst at London Capital Group.
(END) Dow Jones Newswires
January 23, 2017 04:03 ET (09:03 GMT)
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