Pound rallied, stocks declined

23 November, 2018

The U.K.’s main stock index closed lower Thursday, weighed down by weakness for resource stocks and banks and a strong pound as the outline of a key agreement over Brexit was reached. Investors were jittery after losses late in Wednesday’s session for U.S. equities. Those markets are closed Thursday for Thanksgiving, and will also close early on Friday, which could mean thin trading to finish the week for London.

The FTSE 100 UKX, -1.28% dropped 1.3% to 6,960.32, after closing up 1.19% on Wednesday — the best one-day percentage gain close for the FTSE 100 since Sept. 21, according to Dow Jones Market Data. The British pound GBPUSD, +0.8219% rallied to $1.2875, after closing at $1.2776 late Wednesday in New York. Pound climbs as U.K., EU reach Brexit deal.

Sterling leaped higher on news that European Union and U.K. negotiators reached a deal on the outlines of future U.K.-EU ties, a feat that U.K. Prime Minister Theresa May hopes to use to rally much-needed domestic support for her Brexit deal. The announcement comes ahead of an official EU summit on Sunday in which leaders are expected to sign off on that draft text. But a stronger pound can weigh on the FTSE 100, as the index’s multinational companies generate most of their sales in other currencies. Wall Street trading on Wednesday saw energy and tech stocks rebound, but equities shed some gains just before the close. The three-day runup to Thanksgiving marked the worst pre-Thanksgiving performance in 7 years for all three big U.S. indexes. Stock futures indicated a jittery start when traders return on Friday, with oil prices wobbling after rising on Wednesday.


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