YouGov poll has Tories holding smaller lead over Labour Party
Friday's session ended with an all-time high for U.K.'s benchmark for blue-chip stocks, as the pound dropped to a one-month low after a poll showed a further narrowing of the ruling Conservative Party's lead before the country's general election.
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The FTSE 100 rose 0.4% to close at 7,547.63, leaping over its previous closing high of 7,522.03, notched May 16, FactSet data showed. The financial and utility sectors were the only ones that finished lower. Advancers were led by consumer-related shares.
It was also a notable session for the midcap FTSE 250 index . That equity gauge rose 0.3% to close at 20,024.92, its first ever close above 20,000.
For the week, the FTSE 100 climbed by 1% and the FTSE 250 gained 1.1%.
Friday's session featured a pummeling of the pound and big swings in oil prices after an OPEC-related selloff.
The pound bought $1.2781, trading below $1.28 for the first time since April 25, according to FactSet data.
Sterling was below $1.29 when U.K. equity trading got under way after a YouGov poll for The Times newspaper (https://www.thetimes.co.uk/article/tory-lead-cut-to-five-points-as-corbyn-closes-in-on-may-rgmckfnpp) released Friday showed the Conservative Party's lead cut to 5 percentage points over the Labour Party ahead of the June 8 election.
A weaker sterling can benefit the FTSE 100, as many of the index's multinational companies make most of their sales in foreign-denominated currencies.
Among such companies, shares of British American Tobacco PLC (BATS.LN) climbed 1.8%, drugmaker GlaxoSmithKline PLC (GSK.LN) picked up 1.1% and advertising heavyweight WPP PLC (WPP.LN) advanced 1.6%.
Tightening election: The YouGov poll adds to other surveys released this week that indicated the Conservatives are losing support, and those polls contributed to pulling the pound below $1.30.
The Conservatives, or Tories, hold a slim, 17-seat majority in parliament. When U.K. Prime Minister Theresa May in April called for a June snap election--instead of holding the race in 2020--the Tories had an advantage of roughly 20 percentage points in polls. Recent survey suggest potential voters aren't receptive to some of the Tory proposals, including its stance on lifetime-care costs.
"You could see the pound drop like a stone," if the Labour Party pulled off a shock result and gained control of parliament, said Michael Hewson, chief market analyst at CMC Markets, in an interview this week before the Friday release of the YouGov/Times poll.
He said the pound could be pulled back to around $1.25 on such an outcome. "There would be significant concerns about how [Labour's manifesto] would be funded," he said.
A gain of 50 or 60 seats in the election "would be fairly positive" for the Conservatives, said Hewson.
Notably, the impending voting comes as the U.K. is attempting to renegotiate its trade agreement with the rest of Europe after moving forward with plans to exit from the European Union.
The pound was down more than 1% against the Japanese yen , and dropped against the .
Meanwhile, shares of BP PLC (BP.LN) (BP.LN) and Royal Dutch Shell PLC (RDSB.LN) (RDSB.LN) turned higher Friday, each ending up by 0.3%.
The shares had fallen earlier in the wake of a nearly 5% slide in oil prices on Thursday (http://www.marketwatch.com/story/oil-rise-slightly-as-some-investors-buy-in-wake-of-opecrelated-plunge-2017-05-26). Oil prices had dropped (http://www.marketwatch.com/story/oil-reverses-some-losses-as-investors-get-ready-for-opec-meeting-2017-05-25)after the Organization of the Petroleum Exporting Countries and non-OPEC members didn't include deeper production cuts as part of an agreement to keep curbing output for another nine months. Oil futures swung between gains and losses on Friday.
The energy group has a roughly 14% weighting on the FTSE 100.
In other moves Friday, Informa PLC (INF.LN) shares climbed 5.8% after the publisher and business events group said it's on track to meet full-year targets (http://www.marketwatch.com/story/informa-backs-full-year-expectations-2017-05-26).
(END) Dow Jones Newswires
May 26, 2017 12:49 ET (16:49 GMT)