Bittersweet trading day leaves FTSE shy of record
The FTSE 100 came close to an all-time closing high yesterday as shares were boosted by the fall in the pound.
A lower pound lifts the earnings potential of some of the UK’s biggest companies that count their revenue in dollars and dominate the FTSE 100.
When the closing bell rang at 4.30pm the blue-chip index stood above its previous highest close of 7,104. However, in closing auctions it lost points to end the day at 7,074.34.
The FTSE 250 did make history, however, hitting a record closing level of 18,342.07, significantly beating its previous high of 18,263.
Share gains were though bittersweet, as the sinking pound cast a pall over celebrations. Sterling dropped to its lowest level since June 1985, falling 0.9 per cent to $1.2721.
Against the euro, it hit a three-year low of €1.1365, down 0.8 per cent. The pound has been sold off throughout the week as senior government ministers signal a so-called hard Brexit is likely at the Tory party conference in Birmingham.
Investor enthusiasm was partly driven by a surprisingly strong reading in the construction sector’s latest purchasing managers’ index (PMI), with figures published yesterday morning showing it was pushed up by activity in the housebuilding sector in August.
“Fears over the economic implications of a Brexit have been brushed aside,” said IG’s Josh Mahony.
Not all were cheering the FTSE’s rise, however. David Buik, market commentator at Panmure Gordon, said the rally seemed “illogical” and warned he could see “little reason” for it.