FTSE enjoys boost from plummeting pound and M&A activity
The pound hit a two-and-a-half-year low and there was positive news from Just Eat and the London Stock Exchange Group.
The FTSE 100 had a strong showing on what should have been a quiet day for the leading blue chip index.
Deals galore and a plunging pound helped the index close the day up 137.55 points, or 1.8%, at 7,686.61.
Typically, the FTSE 100 rises when the pound falls, due to it being primarily made up of international mining and oil stocks that have little exposure to the UK and trade in US dollars.
International investors also enjoy the “cheap” shares when the pound is weak.
On what could have been a quiet day otherwise, the FTSE struck upon a bounty of news. Not only are Just Eat and the London Stock Exchange up... but the pound has fallen off a cliff Connor Campbell, SpreadEx
By the time the markets closed, the pound was trading down 1.24% at 1.2228 dollars, and was down against the euro by 1.34% to 1.0981.
By comparison, the German Dax was flat and the French Cac lost 0.2%.
Brent Crude was up 0.13% to 63.54 dollars a barrel.
The extra boost to the FTSE 100 came from major announcements in company news that sent shares soaring.
Connor Campbell, market analyst at SpreadEx, said: “The FTSE was in its own, very lucrative, Brexit and M&A bubble on Monday, the UK index effectively playing a different game to its muted eurozone and US peers.
“On what could have been a quiet day otherwise, the FTSE struck upon a bounty of news. Not only are Just Eat and the London Stock Exchange up… but the pound has fallen off a cliff.”
Just Eat was the biggest riser, closing up 144.4p, or 22.7%, at 780p.
The rise was due to bosses announcing a £9 billion merger with Dutch rivals Takeaway.com. But the shares closed considerably higher than the 731p a share offer from Takeaway.com, suggesting a rival bid could be on its way.
London Stock Exchange Group also confirmed talks to acquire data vendor Refinitiv, in a move that would create a financial information giant.
Under the terms of the possible deal, LSE Group would acquire Refinitiv, which makes the Eikon software, for 27 billion US dollars (£21.94 billion).
Shares in LSE Group closed up 870p, or 15.3%, at 6,542p.
The other biggest risers were Vodafone, up 6.24p at 152.24p, Astrazeneca, up 275p at 7,180, and Centrica, up 3.36p at 90.84p. All three have large overseas divisions which benefit from a falling pound.
The biggest fallers were all minimal movements, with DS Smith, down 6.3p at 369.2p, Sage, down 6.8p at 735.6p, Bunzl, down 13p at 2,145p, Flutter, down 36p at 6,850p, and Pearson, down 4.8p at 922.2p.
Just nine companies in the FTSE 100 saw their shares fall on Monday.
Insurer Hiscox closed down 2p at 1,770p as the company said profits rose in the six months to June 30, despite an uptick in the number of claims compared with last year.
The FTSE 100 firm said profits before tax came in at 168 million US dollars (£135.8 million) up by 3.3%. However, some investors are fearful that premiums could rise as a result of the weak pound.
Elsewhere, there was minimal movement from Barclays and Royal Bank of Scotland, despite the pair being named as two of five banks facing a £1 billion civil lawsuit in the UK over an illegal currency exchange cartel.
Fiona Cincotta at CityIndex.co.uk said: “UK banks are holding up surprisingly well given that some are being sued by investors over allegations they have rigged the global foreign exchange market.
“Only several months ago European regulators fined the same group of banks 1 billion euros for manipulating foreign currency markets between 2007 and 2013.
“However, all of the UK banks are trading in the black today, attracting a solid volume of trade.”