U.K.’s FTSE 100 closes higher, boosted by fresh drop for Brexit-battered pound
The U.K.’s main stock index finished with a solid gain Monday, getting a lift from the pound’s tumble, which came as a key European Union official criticized Britain’s Brexit plan.
A softer pound can boost the FTSE 100, as the index’s multinational companies generate most of their sales in other currencies.
How markets are performing
The FTSE 100 UKX, +0.97% rose 1% to end at 7,504.60, after Friday’s fall of 1.1% that left it down 4.1% for August.
The British blue-chip gauge is showing a drop of more than 2% for the year to date.
The pound GBPUSD, -0.0932% was buying $1.2887, down from $1.2959 late Friday in New York.
Trading seemed somewhat quiet in the U.K. on Monday, as U.S. investors have the day off for Labor Day.
What’s moving markets
The political maneuvering around the U.K.’s plan for leaving the EU in March continued to grab the attention of traders.
Michel Barnier, the EU’s top Brexit negotiator, blasted U.K. Prime Minister Theresa May’s proposals in an interview with a German newspaper that was published over the weekend. Barnier reportedly said they could mean “the end of the single market and the European project,” with his criticism coming after he appeared to offer an olive branch last week.
What are strategists saying?
“Progress in the Brexit negotiations is not encouraging,” said Konstantinos Anthis, head of research at ADS Securities, in a note.
“Theresa May ruled out a second referendum on Brexit, and the EU’s chief negotiator Michel Barnier said he’s opposed to a divorce blueprint that would keep economic ties with the union in place. The momentum for the pound is pointing lower, and even though we saw a relief rally over the past couple of weeks, these gains are now under threat.”
Stocks in focus
WPP PLC’s stock WPP, -0.16% finished down 0.2%, giving up a modest morning gain that came after the advertising giant picked Mark Read as its new CEO, placing a company veteran at the helm following the departure of founder Martin Sorrell.
Off the FTSE 100, shares in Dechra Pharmaceuticals PLC DPH, -21.41% dived 21% after the company said its pretax profit rose modestly as increased costs largely balanced out revenue growth. Dechra produces pharmaceutical products for animals.