London stocks slide as pound tops $1.35 on latest rate hike hint

AFP, LONDON:  The London stock market slid yesterday as investors shrugged off news of an apparent terror attack in the British capital and instead took their cue from the surging pound. Sterling shot above $1.35 after a Bank of England policymaker signalled a rate hike for “the coming months”, after UK borrowing costs were this week left on hold at a record-low 0.25 percent.

Markets reacted little meanwhile to an attack on a London Underground train at Parsons Green, southwest London, which police are treating as a terrorist incident after a number of people were injured.

“Londoners and markets alike take these sorts of incidents in their stride,” ETX Capital analyst Neil Wilson told the news agency.

“The FTSE’s drop today is by and large about the pound’s rally, as that depresses the foreign earnings of lots of the big blue chips.”

Rampant pound

In late morning deals, the British capital’s FTSE 100 index of top companies slid 1.1 per cent as sterling rebounded to $1.3551 -- the highest level since June 2016.

“The FTSE is suffering at the hands of a rampant pound,” added IG analyst Joshua Mahony.

Eurozone trading was muted yesterday with Frankfurt and Paris stocks holding steady ahead of the weekend pause.

The pound was catapulted higher after the Bank of England’s most dovish rate-setter revealed that he may back a hike “as early as in the coming months”.

Gertjan Vlieghe, a member of the BoE’s Monetary Policy Committee (MPC), said he has been “struck” by a series of developments in the British economy, including high inflation, employment growth, slight wage increases and stronger spending growth.

“Until recently, I thought the appropriate response of monetary policy was to be patient, given modest growth and subdued underlying inflationary pressure. But the evolution of the data is increasingly suggesting that we are approaching the moment when bank rate may need to rise,” Vlieghe said.

“If these data trends of reducing slack, rising pay pressure, strengthening household spending and robust global growth continue, the appropriate time for a rise in bank rate might be as early as in the coming months.”

The possibility of a hike as early as the next BoE policy meeting in November comes as other central banks consider similar moves with world growth slowly improving.

North Korea missile

Investors meanwhile brushed off concerns over North Korea’s latest missile launch.

Pyongyang fired its second rocket over Japan’s Hokkaido in less than a month, just days after the UN Security Council imposed sanctions in response to its nuclear test.

Analysts said the rocket travelled further than any other it has fired, adding to fears about the North’s ability to strike the US mainland with an atomic bomb.

The news rattled Asian markets but by the end of the day the losses had either been sharply cut back or reversed.

 

London stocks slide as pound tops $1.35 on latest rate hike hint

AFP, LONDON: The London stock market slid yesterday as investors shrugged off news of an apparent terror attack in the British capital and instead took their cue from the surging pound. Sterling shot above $1.35 after a Bank of England policymaker signalled a rate hike for the coming months, after UK borrowing costs were this week left on hold at a record-low 0.25 percent. Markets reacted little meanwhile to an attack on a London Underground train at Parsons Green, southwest London, which police are treating as a terrorist incident after a number of people were injured. Londoners and markets alike take these sorts of incidents in their stride, ETX Capital analyst Neil Wilson told the news agency. The FTSEs drop today is by and large about the pounds rally, as that depresses the foreign earnings of lots of the big blue chips. Rampant pound In late morning deals, the British capitals FTSE 100 index of top companies slid 1.1 per cent as sterling rebounded to $1.3551 -- the highest level since June 2016. The FTSE is suffering at the hands of a rampant pound, added IG analyst Joshua Mahony. Eurozone trading was muted yesterday with Frankfurt and Paris stocks holding steady ahead of the weekend pause. The pound was catapulted higher after the Bank of Englands most dovish rate-setter revealed that he may back a hike as early as in the coming months. Gertjan Vlieghe, a member of the BoEs Monetary Policy Committee (MPC), said he has been struck by a series of developments in the British economy, including high inflation, employment growth, slight wage increases and stronger spending growth. Until recently, I thought the appropriate response of monetary policy was to be patient, given modest growth and subdued underlying inflationary pressure. But the evolution of the data is increasingly suggesting that we are approaching the moment when bank rate may need to rise, Vlieghe said. If these data trends of reducing slack, rising pay pressure, strengthening household spending and robust global growth continue, the appropriate time for a rise in bank rate might be as early as in the coming months. The possibility of a hike as early as the next BoE policy meeting in November comes as other central banks consider similar moves with world growth slowly improving. North Korea missile Investors meanwhile brushed off concerns over North Koreas latest missile launch. Pyongyang fired its second rocket over Japans Hokkaido in less than a month, just days after the UN Security Council imposed sanctions in response to its nuclear test. Analysts said the rocket travelled further than any other it has fired, adding to fears about the Norths ability to strike the US mainland with an atomic bomb. The news rattled Asian markets but by the end of the day the losses had either been sharply cut back or reversed.