Qatari Typhoon Tailwind Tips BAE Systems Higher

Monday, September 19: UK indices started the week in the green, despite the larger cap overseas earners struggling in the latter part of last week, following a change in rhetoric from the BoE to that of a more hawkish stance regarding inflation. This prompted sterling to strengthen to post-Brexit vote highs of almost $1.36 and over €1.13, scuppering the FTSE 100. However, sterling has since weakened from the highs of last week which helped UK indices higher today.

The market is pricing in a c.50% chance of an interest rate hike from the BoE in November, with Barclays one of many firms expecting a 25bps hike to 0.50%. Commentary from HSBC on the matter suggests that two rate hikes are on the table by 2018 end to combat inflationary forces, to the detriment of those of us with mortgage repayments to make.

Esure(+5.82%) was the largest gainer on the FTSE 350 as rumours emerged that its founder, Peter Wood is looking to sell his controlling stake in the company. The Sunday Times reported that Wood is in informal talks with potential buyers to offload his controlling 30.7% stake in the London-listed home and motor insurer. The news article cited “senior” City sources, which declared rival insurance chiefs claim they have been contacted by Wood in recent months to gauge interest. A deal could be in place as soon as next month.

Meanwhile, BAE Systems(+2.86%) emerged to be the best performer on the FTSE 100 with hopes of a fighter jet deal. Qatar is expected to sign a letter of intent with the British government to buy 24 Typhoon fighter jets.

Across Europe, indices were higher at the close with the FTSE 100 +0.52%, the DAX 30 +0.32% and the CAC 40 +0.30%.

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