Overseas holidaymakers cash in on Brexit Sterling tumble

Monday, 8th August: Indices in London backed up a strong overnight Asian session with a flat trading session. The FTSE 100 closed +0.23%, as a clutch of natural resource and banking stocks and a strengthening in oil trade lent support to the index. Brent Crude staged somewhat of a resurgence as it stood 7.49% higher over the last seven days, following the one month low last week.

Miners were buoyed in early morning trade, as favourable news for miners hit the wire. Analysts from Citigroup expect that the top four UK-listed miners: BHP Billiton, Rio Tinto, Glencore and Anglo American are forecast to generate a combined $15.9bn in free cash flow in 2017, implying an 8.4% free cash flow yield, significantly higher than the expected market dividend yield of 3.5%. Clearly, the numbers suggest that higher dividend yields can be delivered to shareholders than the dividend policies suggest.BHP Billiton(+3.20%), Rio Tinto(+2.05%), Glencore(+0.81%) and Anglo American(+1.57%) all jumped higher on the news, along with other sector peers.

Flight bookings to the UK jumped 4.3% in the 28 days following the Brexit vote than the respective period last year. This influx of higher bookings was due to a fall in the value of Sterling against other major currencies, making the UK a more attractive destination for holidaymakers from overseas. Bookings from Hong Kong leapt by 30.1%, whilst booking from the US and the EU were up 9.2% and 5% from Europe. Sterling has fallen about 13% against the dollar since its June 23rd peak, and has seen a concurrent 10% fall against the euro. However, given it is a matter of weeks since the Brexit vote, there is little indication as to whether this post-Brexit tourism bounce will be sustained.

At the close European indices were up as the FTSE 100 closed +0.23%, the Cac 40 +0.11% and the Dax 30 +0.63%.

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