FTSE 100 hits record high as pound weakens below $1.23
- Author: Fernando Stephens Oct 12, 2016,
Oct 12, 2016, 2:12
The FTSE 100 index of leading British shares has struck a record high amid hopes that many of its constituent companies will benefit from the pound's slide in currency markets.
Wall Street was expected to start in the red too but with the dollar running things and little data to get stuck into, the focus stayed on Europe and the record-high FTSE as the pound's tumble improved the look of its Global firms' profits. The UK benchmark index rose as much as 0.5 percent to a record intraday high of 7,129.83 points, before settling back a touch to stand 0.05 percent higher at 7,101.12 as of 13:50 BST.
It finished the day at 7,070, just shy of its highest recorded market close level of 7,103.
Sterling dropped more than 0.5% to trade as low as 1.228 against the United States dollar on Tuesday morning.
The FTSE 100 touched an intraday high of 7,121.98 this morning, one point below its all-time peak set in April a year ago.
"Leaked Treasury documents argue that the cost Brexit could be £66bn per year, due to a slump in GDP of up to 9.5% compared with staying in the European Union". Exporters have also gained, as a fall in sterling makes their goods cheaper for foreign buyers and increases their profits.
The FTSE 100's strong recovery since the Brexit vote has come at the expense of the pound, which is down more than 18% against the United States dollar since June 23.
"Uncertainty as to whether the lower pound really is a net positive for the United Kingdom economy meant the new record was unsustainable".
The report helped put further pressure on the pound.
Across Europe, the French Cac 40 was trading higher by about 0.2% while the German Dax was relatively flat.
Stocks in London were set for a weaker open on Tuesday following gains in the previous session, with oil prices still in focus after Russian President Vladimir Putin told an energy congress in Turkey that the nation was ready to join OPEC in a proposed curb on production.
In UK stocks, BP closed 1.6% lower after scrapping a controversial project to drill in the Great Australian Bight, citing a "review and refresh" of the company's strategy.
Among top movers, Burberry Group PLC was up 2.4%, rising alongside other European luxury shares after France's LVMH Moët Hennessy Louis Vuitton SE said strength in its Asia business contributed to a rise in nine-month revenue.