20 September, Friday, 2024
No menu items!
HomeBusinessPlunging pound helps FTSE avoid sea of red

Plunging pound helps FTSE avoid sea of red

A plummeting pound sparked in part by the hawkish comments from central bankers in the US helped rescue London’s top share index from the crashes seen elsewhere in Europe on Thursday.Sterling fell by more than 2% at one point, giving back some of its recent recovery from all-time lows.It came amid news from central bankers on both sides of the pond.Stateside, the Federal Reserve took a hawkish position on inflation on Wednesday evening. Boss Jerome Powell said there is ‘some way to go’ to get on top of runaway prices, and that interest rates might need to go higher than anticipated.In the UK, Bank of England Governor Andrew Bailey sounded a slightly different message, even saying that he believes the market is pricing in an unrealistically high interest rate.But the Bank also warned that the UK economy is headed for a recession – it could even be the longest-running recession in a century.The bank hiked its base interest rate from 2.25% to 3% – a rise of 75 basis points (bps).Sterling was already trading down after Mr Powell’s comments, but collapsed further when the Bank of England’s report came out.’The pound had been trading in the middle of the pack against the US dollar for most of this morning, until the Bank of England announced it was raising rates by 75 bps, and then spent the next hour undermining that move in what can only be described as ‘Operation Protect the Housing Market’, CMC Markets analyst Michael Hewson said.’The pound slipped to its lowest levels in almost three weeks against the US dollar and posted its biggest fall against the euro since late September.’He added: ‘Of course, if the bank hadn’t kept rates low for so long and even flirted with the idea of negative rates as recently as two years ago, they wouldn’t be in the unholy mess they are in now.’By the time stock markets had closed in London a pound could buy a little under 1.12 dollars, down more than two cents on the day. It could also buy 1.14 euros, down 1.5 cents.In New York the Dow Jones was down 0.1% and the S&P 500 down 0.4% at around the same time. The Dax in Germany lost 1% while the Cac 40 closed down 0.5%.In London the FTSE 100 gained 0.6%, buoyed by the falling pound, as the 44.5-point drop took it to 7,188.63.In company news BT said it needs to save an extra £500 million in costs as inflation soars.It will ‘inevitably’ lead to job cuts, boss Philip Jansen said, and prices for customers are bound to go up. Alongside previous cost-cutting it means BT plans to tighten its belt by £4 billion by the end of the financial year starting in 2024.Shares in BT dropped by 8.3%.Meanwhile, Sainsbury’s saw its shares up 3.6% after revealing a drop in pre-tax profit of 8% to £340 million in the six months to the end of September.Revenue rose by 4.4% to £16.4 billion, the supermarket business said, adding shoppers have increasingly opted for its own-brand products.The biggest risers on the FTSE 100 were J Sainsbury, up 13.75p to 211.6p, Harbour Energy, up 18.4p to 402.9p, Smith & Nephew, up 29p to 1,034.5p, Tesco, up 6.2p to 223p, and Haleon, up 7.4p to 274.45p.The biggest fallers on the FTSE 100 were BT Group, down 11.35p to 116.4p, RS Group, down 69.5p to 885p, Endeavor Mining, down 70p to 1,462p, Flutter Entertainment, down 465p to 11,225p, and Rolls-Royce Holdings, down 2.9p to 80.16p.

RELATED ARTICLES

Most Popular

Recent Comments