British Pound Rises As Johnson Takes Office
The British pound rose Wednesday as arch-Brexiteer Boris Johnson prepared to take over as prime minister, while European stocks mostly fell on the weak mining sector.
Sterling gained versus the euro and dollar as traders readied for Johnson — a leading Leave campaigner in Britain’s shock Brexit referendum three years ago — to take the reins from outgoing premier Theresa May.
He is to be appointed later Wednesday by Queen Elizabeth II at Buckingham Palace.
Sterling had briefly rallied Tuesday in reaction to Johnson’s election as Conservative Party leader, with investors keen to see whether he pushes ahead with a no-deal divorce from the European Union at the end of October.
Brexit scepticism ‘priced in’
“The pound is beginning to stabilise, proving that a lot of the scepticism about Boris Johnson’s Brexit policy was already built into the price,” said City Index analyst Fiona Cincotta.
“Sterling is trading a touch higher this morning,” she noted.
May was forced out after failing to get parliamentary support for a Brexit deal she had struck with EU leaders.
Meanwhile, Europe’s major stock markets mostly fell, with miners weighed down by sliding iron ore prices, dealers said.
In afternoon trading, London’s FTSE 100 was down by 0.8 percent.
In the eurozone, Paris CAC 40 shed 0.3 percent but Frankfurt’s DAX 30 won 0.4 percent in value.
“The FTSE 100 is firmly in the red as mining stocks are weighing on the index,” said CMC Markets analyst David Madden.
“A sell-off in iron ore prices in China has prompted a decline in major mining stocks like Rio Tinto, BHP Billiton, and Glencore.
“Brazil’s Vale won approval to restart iron ore production, and that triggered the drop in iron ore prices.”
Tech under threat
Most Asian markets enjoyed another day of gains, with support coming from more healthy earnings results and renewed hopes for a resolution of the China-US trade war.
The latest big-name firms to post positive results were Coca-Cola, toymaker Hasbro and Harley-Davidson, helping all three main indexes on Wall Street end with sharp gains overnight.
Adding to the upbeat mood were reports that US President Donald Trump’s Trade Representative Robert Lighthizer will lead a delegation to China next week to resume trade talks.
The meeting would be the first head-to-head talks since negotiations were cut short in May by Trump’s surprise decision to hit China with more tariffs for what he called Beijing’s backsliding.
However, US markets opened lower Thursday as investors turned their attention to a US government investigation into top tech firms, with the Dow sliding 0.5 percent.
The Justice Department announced it would begin an antitrust review of major online platforms to determine if they have “stifled” innovation or reduced competition, and while it did not name specific firms, it appears Google, Facebook, Amazon and Apple are in the crosshairs.
“In other words, it will focus on some of the biggest, most successful, and widely-held, stocks in the land,” said market analyst Patrick O’Hare at Briefing.com.
“They are all trading lower in pre-market action — nothing major, but indications nonetheless that are a dragnet for the broader market,” he added.
Key figures around 1330 GMT
Pound/dollar: UP at $1.2489 from $1.2440 at 2050 GMT
Euro/pound: DOWN at 89.29 pence from 89.64 pence
Euro/dollar: DOWN at $1.1150 from $1.1152
Dollar/yen: DOWN at 108.05 yen from 108.23 yen
London – FTSE 100: DOWN 0.8 percent at 7,496.88 points
Paris – CAC 40: DOWN 0.3 percent at 5,600.48
Frankfurt – DAX 30: UP 0.4 percent at 12,535.63
EURO STOXX 50: DOWN less than 0.1 percent at 3,530.80
New York – Dow: DOWN 0.5 percent at 27,225.14
Tokyo – Nikkei 225: UP 0.4 percent at 21,709.57 (close)
Hong Kong – Hang Seng: UP 0.2 percent at 28,524.04 (close)
Shanghai – Composite: UP 0.8 percent at 2,923.28 (close)
Brent North Sea crude: UP less than 0.1 percent at $63.87 per barrel
West Texas Intermediate: UP 0.3 percent at $56.92
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