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You can find the current article at its original source at https://www.theguardian.com/business/live/2016/oct/04/pound-dollar-low-construction-imf-brexit-business-live
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Pound hits 31-year low, as FTSE fails to hit record high - business live | |
(35 minutes later) | |
4.53pm BST | |
16:53 | |
#Breaking The FTSE 100 Index closed up 90.82 points to 7074.34, just short of the record closing price of 7104. pic.twitter.com/2aiMbJHROt | |
4.44pm BST | |
16:44 | |
FTSE 100 fails to hit record high | |
A groan ripples around City trading floors, as the FTSE 100 fails to hit a new record closing high. | |
The blue-chip index closed up 90 points, or 1.3%, at 7074. That is a new 17-month closing high, but not the record. | |
It was still a good day for shares, with some internationally focused firms like Rolls-Royce and Pearson leading the rally. | |
But the temptation to take profits took the wind out of the markets’ sails at the end. | |
It was quite a dramatic day, as Joshua Mahony, market analyst at IG, explains: | |
Today’s incredible rise in the FTSE 100 has been one of the biggest risk on moves of the year, with investors seeing in Q4 with a bang. | |
Fears over the economic implications of a Brexit have been brushed aside in favour of a focus on the benefits a weak pound and loose monetary policy would bring to stocks. As Phillip Hammond said, we are in for a roller coaster, yet on initial evidence, markets like the idea. | |
Updated | |
at 4.47pm BST | |
4.31pm BST | |
16:31 | |
The stock market has gone into its closing auction!.... And we’re about to find out if the FTSE 100 has hit a new record closing high.... | |
Updated | |
at 4.31pm BST | |
4.26pm BST | |
16:26 | |
BoE policymaker: Brexit won't be too bad | |
Michael Saunders, the newest member of the Bank of England’s monetary policy committee, has fired a broadside at his colleagues for being too pessimistic over Brexit. | |
In a speech just released (due to be given tomorrow), Saunders says that the EU will probably cause rather less damage than policymakers had feared. | |
He cites Britain’s “considerable supply-side advantages”, from its flexible labour market and openness to foreign investment, to the current “low-ish” tax rates and strong position in high-tech manufacturing and knowledge-intensive services. | |
So Saunders (who was a top economist at Citigroup until he joined the BoE rate-setting this summer), reckons growth in 2017 will be stronger than expected. | |
After a good lunch, Saunders will tell the Institute of Directors in Manchester tomorrow that: | |
The process of EU exit may be lengthy and bumpy. It is certainly possible that anticipation of EU exit will have a greater near-term adverse effect on the economy than the MPC expect, especially if EU nationals currently working in the UK decide to leave or business investment weakens really markedly. But, unless Brexit-related uncertainties rise sharply and/or global conditions disappoint markedly, I suspect that the UK economy will be not too bad in the year ahead, with growth in 2017 more likely to be clearly above 1% rather than (as the consensus expects) below 1%. | |
Hence, especially if productivity growth remains modest, there may be little or no rise in unemployment in the UK over the coming year, although the current degree of slack would remain unless growth is strong enough to cut unemployment further. | |
You can see the speech here (lunch, alas, not included) | |
The economic outlook - speech by Michael Saunders | |
4.15pm BST | 4.15pm BST |
16:15 | 16:15 |
Some investors who bought shares after the Brexit vote will be cashing in their | Some investors who bought shares after the Brexit vote will be cashing in their |
hard-earned gains | hard-earned gains |
winnings this afternoon. | winnings this afternoon. |
So says Michelle McGrade, chief investment officer at online dealing group TD Direct Investing. | So says Michelle McGrade, chief investment officer at online dealing group TD Direct Investing. |
“With the FTSE peaking 7,100 this afternoon, our customers are predominantly selling today - demonstrating their savviness. Experienced investors have been buying up since Brexit and seemingly now enjoying the profits. The important thing for the markets is that it holds 7,000 overnight – this will be impacted by how the S&P 500 behaves. | “With the FTSE peaking 7,100 this afternoon, our customers are predominantly selling today - demonstrating their savviness. Experienced investors have been buying up since Brexit and seemingly now enjoying the profits. The important thing for the markets is that it holds 7,000 overnight – this will be impacted by how the S&P 500 behaves. |
She also urges small investors to be cautious... | She also urges small investors to be cautious... |
“From a broader perspective, we hope that those less experienced investors aren’t getting too excited by the excitement and piling in, for the first time, while it’s high – this isn’t the best investment strategy and they will lose their confidence yet again.” | “From a broader perspective, we hope that those less experienced investors aren’t getting too excited by the excitement and piling in, for the first time, while it’s high – this isn’t the best investment strategy and they will lose their confidence yet again.” |
4.08pm BST | 4.08pm BST |
16:08 | 16:08 |
Ben Chu, the economics editor of the Independent, has done a nice piece about the causes of the pound’s weakness. | Ben Chu, the economics editor of the Independent, has done a nice piece about the causes of the pound’s weakness. |
He says: | He says: |
This week’s renewed downward lurch has coincided with Theresa May saying she will trigger Article 50 before next March and making it clear that she will not compromise on curbing EU immigration to the UK, something that strongly implies Britain will be out of the single market by 2019. | This week’s renewed downward lurch has coincided with Theresa May saying she will trigger Article 50 before next March and making it clear that she will not compromise on curbing EU immigration to the UK, something that strongly implies Britain will be out of the single market by 2019. |
The fundamental reason for sterling’s descent is that traders believe there will be lower demand for sterling assets as a result of Brexit – that we will ultimately do less trade with the rest of the world and that we will be poorer as a result. Argue the markets are wrong if you want to – but recognise what they are saying. | The fundamental reason for sterling’s descent is that traders believe there will be lower demand for sterling assets as a result of Brexit – that we will ultimately do less trade with the rest of the world and that we will be poorer as a result. Argue the markets are wrong if you want to – but recognise what they are saying. |
The economic reasons the pound is falling. My @IndyVoices column: https://t.co/17GAnZ6Y8C pic.twitter.com/nZGw7SnmTi | The economic reasons the pound is falling. My @IndyVoices column: https://t.co/17GAnZ6Y8C pic.twitter.com/nZGw7SnmTi |
3.57pm BST | 3.57pm BST |
15:57 | 15:57 |
Financial reporters are squinting at their terminals, desperate to see if the Footsie hits a record high today (we’re easily amused, to be honest) | Financial reporters are squinting at their terminals, desperate to see if the Footsie hits a record high today (we’re easily amused, to be honest) |
Nerves kicking in as #FTSE100 stands 2 points away from all-time high. pic.twitter.com/YBBI8g5HmD | Nerves kicking in as #FTSE100 stands 2 points away from all-time high. pic.twitter.com/YBBI8g5HmD |
3.52pm BST | 3.52pm BST |
15:52 | 15:52 |
Ooooh the FTSE 100 is pushing even higher as the clock ticks down to 4.30pm. | Ooooh the FTSE 100 is pushing even higher as the clock ticks down to 4.30pm. |
It just hit 7121 points, a whisker away from the record intraday high of 7122 (set in April 2015). | It just hit 7121 points, a whisker away from the record intraday high of 7122 (set in April 2015). |
Oh, and I made a mistake before. The all-time record closing high is 7104. And that record is ON.... | Oh, and I made a mistake before. The all-time record closing high is 7104. And that record is ON.... |
Updated | Updated |
at 3.52pm BST | at 3.52pm BST |
3.41pm BST | 3.41pm BST |
15:41 | 15:41 |
With one hour to go, the FTSE 100 index is just three points away from its record closing high, at 7009 points. | With one hour to go, the FTSE 100 index is just three points away from its record closing high, at 7009 points. |
Richard Stone, chief executive at The Share Centre, explains why the weak pound has pushed shares up: | Richard Stone, chief executive at The Share Centre, explains why the weak pound has pushed shares up: |
For companies in the FTSE100, some three quarters of their revenues are not earned in Sterling so are now worth more in Sterling terms. This makes their profits higher in Sterling and therefore their value in Sterling terms also increases. | For companies in the FTSE100, some three quarters of their revenues are not earned in Sterling so are now worth more in Sterling terms. This makes their profits higher in Sterling and therefore their value in Sterling terms also increases. |
Updated | Updated |
at 3.51pm BST | at 3.51pm BST |
3.40pm BST | 3.40pm BST |
15:40 | 15:40 |
The IMF’s new report hasn’t helped the pound; it’s still wallowing at the 31-year low of $1.275. | The IMF’s new report hasn’t helped the pound; it’s still wallowing at the 31-year low of $1.275. |
Betway, the gambling firm, are offering odds on it falling further, and even hitting parity, before the end of the year. | Betway, the gambling firm, are offering odds on it falling further, and even hitting parity, before the end of the year. |
Lowest GBP/USD rate in 2016: | Lowest GBP/USD rate in 2016: |