Brexit quid pro quo sends FTSE 100 inching towards new record

Monday, 9th January: The FTSE 100 opened higher continuing the strong start to the year last week, and equalling the longest record-setting streak(May 1997) since inception of the index 33 years ago. The index was buoyed by a slew of stocks, but natural resource stocks were the main suspects to nudge the index higher, and with a leg up from weaker sterling the index closed +0.38%. Likewise, the FTSE 250 continued its march higher on a similar thesis, with natural resource stocks behind the price action closing +0.21%.
Late on Sunday evening, the GBP/EUR pairing gapped lower and continued to slide to c. €1.1544 this morning, a move prompted by comments from Sky News’ interview with Prime Minister Theresa May in which she declared the eventual exits of the UK from the EU will be about ” getting the right relationship ” and “not about keeping bits of membership “. The Prime Minister added the government ” will be setting out some more details in coming weeks as we look ahead to triggering Article 50 “. A similar slump was seen in the GBP/USD pair as it slipped to its lowest in over two months, though this did help to lift the primary UK index to new highs.
Brent crude slipped off the 18 month highs of $58/bbl last week, and fell a further $0.80 intraday to c. $55.40/bbl as volatility continued in the interim period. This was prompted as signs of growing US production(increasing rig counts as of Friday) counter-balanced optimism that OPEC-associated producers were sticking to a deal to cut supplies.
Halifax house price data came in stronger than expected, as the number for December stood at +1.7% month-on-month, beating forecasts of +0.3% on the same basis. Therefore house prices actually stood 6.5% higher on an annual basis. However, commentators have noted that the underlying trend “remains significantly weaker than before the referendum” and that it is expected that “house prices likely will track growth in households’ incomes much more closely this year”.

At the close, European indices were mixed as the FTSE 100 finished +0.38% , the CAC 40 -0.29% and the DAX 30 -0.28%.

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