LONDON MARKETS: FTSE 100 Ends Higher As Starting Gun For Brexit Is Fired
March 29 2017 - 12:35PM
Dow Jones News
By Sara Sjolin and Victor Reklaitis, MarketWatch
London Stock Exchange Group, 3i Group among the day's
advancers
U.K. stocks ended in positive territory Wednesday, helped by the
pound's drop, as Britain triggered Article 50 and officially kicked
off its exit from the European Union, known as Brexit.
The FTSE 100 index rose 0.4% to end at 7,373.72, while the pound
(http://www.marketwatch.com/story/british-pound-under-pressure-ahead-of-brexit-trigger-2017-03-29)
changed hands at $1.2411, down from $1.2456 late Tuesday.
The moves came U.K. Prime Minister Theresa May's letter invoking
the Treaty of Lisbon was delivered to Donald Tusk
(http://www.marketwatch.com/story/eu-receives-uk-letter-officially-kicking-off-brexit-talks-2017-03-29),
president of the European Council.
"Although the pound initially rallied, it has since backed off
its highs," said Kathleen Brooks, research director at City Index,
in a note. "Essentially both sides were polite to each other, which
helped to keep volatility suppressed and price action fairly
muted."
Read:How to trade the pound as Theresa May pulls the Brexit
trigger
(http://www.marketwatch.com/story/avoid-being-short-with-the-crowd-how-to-trade-the-pound-as-may-pulls-brexit-trigger-2017-03-28)
And see:'We already miss you,' EU president Tusk tells U.K.
after Brexit letter
(http://www.marketwatch.com/story/we-already-miss-you-eu-president-tusk-tells-uk-after-brexit-letter-2017-03-29)
"The FTSE 100 reached its lows of the day as Brexit talks were
formally kicked off, however, after falling to a low of 7,313, it
has managed to claw back some losses," Brooks added. "We continue
to believe that UK stocks could be vulnerable during this next
phase of the Brexit process."
The big question now is whether Brexit has been fully factored
in, according to Neil Wilson, senior market analyst at ETX
Capital.
"A truly hard Brexit has not been priced into sterling. We could
see it move lower still if negotiations take a sour turn -- $1.10
is feasible," Wilson said in a note.
Read:Here's what happens now that the U.K. has triggered Article
50
(http://www.marketwatch.com/story/brexit-heres-what-happens-now-that-the-uk-has-triggered-article-50-2017-03-29)
Also read:Three ways today's triggering of Brexit will change
Britain and Europe
(http://www.marketwatch.com/story/three-ways-article-50-will-change-britain-and-europe-2017-03-29)
A "hard Brexit" refers to a scenario in which the U.K.
sacrifices trade deals with the EU in return for full control of
its borders. Balancing between this and less drastic changes will
be a challenge for the British prime minister, Wilson said.
"It's a fine line for May to tread, as she's in hock to the hard
Brexit camp in the Conservatives. She also doesn't want to be seen
to cave into demands from Scottish nationalists for a softer exit,"
he said.
"All this points to sustained risk for sterling--if an
acceptable deal isn't done in time, then the U.K. crashes out of
the bloc on WTO terms and all the tariffs that entails," he
added.
Scottish First Minister Nicola Sturgeon has called for the U.K.
to remain in the EU's single market and has criticized May for her
lack of compromise on Brexit. On Tuesday, Scotland's parliament
voted in favor of pursuing a second referendum on independence
(http://www.marketwatch.com/story/uk-government-snubs-scottish-parliament-vote-to-hold-new-independence-referendum-2017-03-28),
though May has signaled a ballot won't take place before the Brexit
is settled.
Stock movers: Shares of London Stock Exchange Group PLC (LSE.LN)
finished 2.7% higher after the European Union's antitrust dog
blocked the planned $28 billion merger
(http://www.marketwatch.com/story/eu-blocks-lse-deutsche-borse-merger-2017-03-29-54851952)
with Deutsche Börse AG .
Shares of 3i Group PLC (III.LN) jumped 5.7% after Morgan Stanley
lifted the venture capital company to overweight from equal
weight.
Shares of BHP Billiton PLC (BLT.LN) (BHP.AU) (BHP.AU) climbed
2.7% after the mining giant said it's considering a new iron-ore
investment
(http://www.marketwatch.com/story/bhp-billiton-looks-at-aussie-iron-ore-investment-2017-03-29)
in Australia.
In other mining news, Glencore PLC (GLEN.LN) (GLEN.LN) tacked on
0.5% after saying its Australian coal mines weren't damaged by
Tropical Cyclone Debbie and that suspended work at mines should
restart soon.
Shares of TUI AG dropped 1.1% after the travel operator
reaffirmed its fiscal 2017 guidance
(http://www.marketwatch.com/story/tui-reaffirms-growth-target-as-bookings-meet-views-2017-03-29),
but said macroeconomic and geopolitical challenges had affected
certain destinations.
Economic news: Data from the Bank of England showed consumer
borrowing continued to rise rapidly in February
(http://www.marketwatch.com/story/uk-consumer-borrowing-continues-its-rapid-rise-2017-03-29),
highlighting that households are taking on more debt to finance
spending amid quickening inflation.
(END) Dow Jones Newswires
March 29, 2017 12:20 ET (16:20 GMT)
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