London stock market hits record high on slumping pound

 09 Jan 2017 - 14:36

London stock market hits record high on slumping pound


London: The London stock market reached another record high Monday as the pound slumped to the lowest level in three months on Brexit concerns.

Eurozone indices were meanwhile down across the board approaching midday deals, while the euro was steady against the dollar.

London's benchmark FTSE 100 index reached an intra-day high of 7,239.26 points in morning deals, extending a record run higher that began ahead of the new year.

The pound tumbled Monday after British Prime Minister Theresa May insisted at the weekend that Britain would have control over its borders after Brexit, suggesting she would be prepared to quit Europe's trading zone to achieve it.

"The pound has fallen against all its major peers in light of this news and currently trades below the 1.22 handle against the US dollar -- the lowest level since late October," said XTB market analyst David Cheetham.

May's comments come as London prepares to invoke Article 50, which starts a two-year countdown to Britain exiting the European Union.

"Sterling is on the back foot on Monday after Theresa May's comments were taken as a sign the UK government would prioritise immigration controls over single market access," said Neil Wilson, senior market analyst at ETX Capital trading group. 

"Domestic populist politics trumps the trade card for now, it seems and that is weighing on the pound, whilst simultaneously giving another boost to the FTSE 100" and its listed multi-nationals including oil giants BP and Shell.

Elsewhere Monday, Asian stock markets climbed after a strong pre-weekend lead from New York where two of the three main indices closed at record highs.

Investors are upbeat that US President-elect Donald Trump will introduce measures that will fire the world's top economy.

But Friday's US jobs report provided mixed signals as it showed fewer than expected posts created last month alongside upgraded figures for November. 

On Wall Street the Dow moved to within 0.4 points of the 20,000 mark before easing back slightly but the Nasdaq and S&P 500 each ended at all-time highs.

Investors were looking ahead to a speech by Federal Reserve boss Janet Yellen on Friday, which would be pored over for clues about the bank's outlook for its next interest rate hike.

With Trump's promises of big spending and tax cuts expected to fuel inflation, bets are on the Fed to hike rates at least three times this year, after December's increase.