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FTSE 100 up as Cabinet departures hit pound

London Stock ExchangeThe resignations in Cabinet sent the pound lower and the FTSE100 higher as its large number of companies making profits overseas stood to benefit.

The index closed 70.29 points higher at 7,687.99. It opened marginally higher on Tuesday morning.

Sterling traders were busy as the drama unfolded at Westminster. By mid-morning yesterday the pound had touched an intraday high of $1.336 (+0.60%) which was the strongest since mid-June.

However, those gains were quickly wiped out after the Johnson resignation as the market moved to the position that it could spark a confidence vote in Theresa May’s leadership.

By the European close the pound was trading below $1.32 before recovering in the US session as appetite for a leadership bid didn’t immediately seem high.

This morning the pound is slightly weaker at $1.3238, which represents a fall of  about 0.8% since Mr Johnson’s resignation.

European shares edged higher as global markets extended their recovery rally with investors putting trade war worries on the back burner for now as attention turned to a corporate earnings season expected to deliver solid results.

Asia markets are extending gains with the Nikkei (+1.03%), Kospi (+0.40%) and Hang Seng (+0.39%) all up, while Chinese bourses have reversed earlier losses to trade marginally higher.

In London, the FTSE 100 has been in a rising trend for most of July and now trades just below 7,700, notes Russ Mould, investment director at AJ Bell.

“While still some way off the 7,877 year-to-date high (on a market close basis), the blue chip index is currently displaying its strongest performance since May, helped by the US dollar strengthening against the pound which benefits the large number of FTSE 100 companies earnings in the foreign currency and reporting in sterling.”

Ocado shares fell 2.3% after the online supermarket company said its 2018 pre-tax loss would exceed current market consensus, reporting first-half earnings dented by bigger investment spending.


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