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Home>LONDON MARKETS: FTSE 100 Breaks 2-day Losing Run As Pound Slides

LONDON MARKETS: FTSE 100 Breaks 2-day Losing Run As Pound Slides

LONDON MARKETS: FTSE 100 Breaks 2-day Losing Run As Pound Slides

09/27/2017

By Sara Sjolin and Victor Reklaitis, MarketWatch

But SSE falls after profit warning

U.K. stocks finished higher for the first time this week on Wednesday, getting a boost from a weaker pound and a rally for miners.

The FTSE 100 climbed 0.4% to end at 7,313.51, breaking a two-day losing run.

The gain "can be derived from a hawkish Fed Chair Yellen (and colleague Bostic) supporting continued gradual rate hikes (market implied probability of Dec rate hike now 70%)," said analysts at Accendo Markets in a note. Federal Reserve Chairwoman Janet Yellen and Atlanta Fed President Raphael Bostic, nonvoting member of the Fed, both hinted that a further rate hike in 2017 was likely.

"This has firmed the USD to the detriment of [pound] and [euro], but to the benefit of the both benchmarks' internationals/exporters," they added.

Sterling was recently down at $1.3401 from $1.3460 on Tuesday, after trading as low as $1.3364. It has fallen further below the $1.36 level hit earlier in September. The recent rally--when the pound rose to the highest level against the dollar since the Brexit vote in June last year--came after hints from the Bank of England it was preparing to raise interest rates in coming months.

However, the U.S. Fed's policy update last Wednesday points at a further rate increase in December, based on projection of the policy setter's outlooks plotted on a chart, known as the dot-plot. That has helped strengthen the dollar against its rivals. On Tuesday, after European markets closed, Yellen said (http://www.marketwatch.com/story/yellen-says-fed-should-be-wary-of-raising-rates-too-gradually-2017-09-26) it would be "imprudent" to leave monetary policy on hold until inflation hits the central bank's target.

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