Blue-chip benchmark set to break 2-day run of losses; Coca-Cola HBC shares downgraded
U.K. blue chips stocks marched higher Monday, as the pound fell on reports that British Prime Minister Theresa May is facing pressure to resign. Sterling's slide drove shares of multinational companies higher and guided the broader market toward a potential win after two losing sessions.
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What markets are doing: The FTSE 100 index rose 0.4% to 7,459.67, led by the health care, and oil and gas groups. But financial and industrial shares fell. On Friday, the index dropped 0.7% (http://www.marketwatch.com/story/retailers-help-drive-ftse-100-toward-biggest-weekly-fall-in-2-months-2017-11-10) for its second straight loss and its lowest close in six weeks. The London benchmark last week fell 1.7%.
The pound traded at $1.3070, down 0.9% from its level of $1.3191 late Friday in New York. Against the euro, sterling bought EUR1.1222, falling 0.8% from EUR1.1309 late Friday.
The yield on the 10-year gilt fell 2 basis points to 1.31%.
What's moving markets: The pound was knocked back after The Sunday Times reported (https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&uact=8&ved=0ahUKEwjJwKegh7vXAhVD2KQKHX25AqkQqUMILDAB&url=https%3A%2F%2Fwww.thetimes.co.uk%2Farticle%2Ftory-turmoil-as-40-mps-say-may-must-go-kkg3w6l89&usg=AOvVaw0P3ydYgZ0X_1ThNri40pNZ) that 40 lawmakers in the British parliament had agreed to sign a letter of no confidence in Prime Minister Theresa May. Just eight more MPs are required to start a formal leadership challenge, according to the report.
But the pound's decline bolstered shares of multinational companies that make most of their earnings overseas. A weak pound can boost earnings once they are converted from other currencies into sterling.
Check out:Is British leader Theresa May on her way out? Why that's the fear--and why it matters (http://www.marketwatch.com/story/is-british-leader-theresa-may-on-her-way-out-why-thats-the-fear-and-why-it-matters-2017-11-09)
What strategists are saying: "Brexit continues to be a drag on sterling ... with the EU negotiators ratcheting up the pressure. Beleaguered U.K. Prime Minister Theresa May is meeting Brussels officials today in an attempt to push the process along. However, there seems little appetite from within the EU to help her, as she continues to fight fires both at home and abroad," said Richard Perry, market analyst at Hantec Markets.
"Sterling subsequently remains a key mover on the fractured U.K. politics and a strong move to the downside already this morning does not suggest that traders are overly confident of a positive outcome. This is in turn still a driver in the performance of FTSE 100 with the negative correlation still in play again today," he noted.
Opinion:Brexit hardliners are selling England by the pound (http://www.marketwatch.com/story/brexit-hardliners-are-selling-england-by-the-pound-2017-11-09)
Stock movers: Among multinationals, shares of drug maker AstraZeneca PLC (AZN.LN) (AZN.LN) climbed 2.3% and consumer products heavyweight Unilever PLC (ULVR.LN) rose 1.4%.
Iron ore miner Rio Tinto PLC (RIO) (RIO) (RIO) gained 0.9%.
Oil producer Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) shares gained 1.1%. Shell said it will raise 2.2 billion Australian dollars ($1.7 billion) from the sale of 71.6 million shares (http://www.marketwatch.com/story/shell-raises-a22-bln-from-woodside-shares-sale-2017-11-13) in Woodside Petroleum Ltd. (WPL.AU) .
Meanwhile, Coca-Cola HBC shares fell 4.6%. The bottler's rating was cut to neutral from overweight at J.P. Morgan Cazenove, according to Dow Jones Newswires.
Taylor Wimpey PLC (TW.LN) edged up 0.1%, paring gains, after the house builder said it's on track to meet yearly expectations (http://www.marketwatch.com/story/taylor-wimpey-on-track-to-meet-yearly-expectations-2017-11-13).
(END) Dow Jones Newswires
November 13, 2017 04:19 ET (09:19 GMT)