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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