FTSE reverses early gains as sterling surges on Biden boost

(Update) The FTSE 100 reversed early gains to close in negative territory after the pound climbed against the dollar on the prospects of US stimulus.

The blue-chip index ended the session down 0.4%, or 25 points, at 6.715.42 after being up as much as 0.6% in morning trading.

In the US, equities were more subdued after yesterday’s strong gains as Joe Biden’s inauguration passed smoothly and the new president drew up plans to reverse many of Donald Trump’s most controversial policies.

The Dow Jones was down 0.2%, or 56.5 points to 31,131.88.

The bigger move was in the currency markets, where sterling jumped 0.6% against the dollar to reach $1.373, the highest level since May 2018.

The FTSE 250 also fell back, dipping 0.4%, or 88 points, to close at 20,793.72.

9:50am: FTSE ticks up on Biden hopes

The FTSE 100 climbed in early trading after Joe Biden made sweeping changes within hours of taking office at the White House.

The main index advanced 0.5% on opening before its gains were scaled back to just 10 points, or 0.1%, to leave the index at 6,751 after Biden’s inauguration pushed the Dow Jones to a fresh all-time high amid hopes for widespread fiscal stimulus in the US.

Spreadex analyst Connor Campbell said Biden was ‘aggressive in the first few hours after taking office’ as he announced 17 executive actions, with 15 of those being executive orders including halting the construction of a US-Mexico border wall and making moves to rejoin the Paris climate agreement.

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‘It appears that Biden isn’t messing around,’ said Campbell. ‘And it is exactly this purposeful and robust approach the markets were hoping for – especially if it leads to his $1.9tn Covid-19 stimulus package escaping the Senate unscathed.’

Gains on the FTSE 100 lagged US and European peers due to a surge in sterling, which affected the internationally-focused market; the pound was up 0.57% to trade at $1.3732 against the dollar.

However, Campbell warned there was ‘a cause for the FTSE and pound to worry’ after a study from Imperial College London showed the post-lockdown drop in coronavirus cases may have plateaued and in some areas is going up again.

‘Though it is questionable how much further restrictions might help, the government may feel like they have no choice but to act, potentially setting the UK markets up for a fall,’ he said.

Software group Sage (SGE) led the blue chips higher, adding 6.1%, or 35p, to trade at 608p after reporting an increase in first quarter revenue.

Just Eat (JE) was up 2.2%, or 180p, at £81.90 on positive analyst notes and HSBC (HSBA) increased 2.1%, or 8p, to 416p.

The FTSE 250 added 0.1%, or 31 points, to 20.912 despite the jump in sterling, which the index normally benefits from due to its domestic bias.

Brick manufacturer Ibstock (IBST) jumped to the top of the mid-caps, leaping 7.2%, or 14p, to 211p, after it benefited from increased demand in new build housing and repairs in the final quarter of last year and a positive outlook for housing demand this year.

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Promotional product printer 4imprint (FOUR) rose 4.4%, or 100p, to £23.60 after an in line full year update prompted analysts to increase their target prices on the stock.

In trust news, Jupiter Green (JGC) drifted 0.6%, or 1.8p, lower to 290p after it announced the departure of manager Charlie Thomas, who had run the trust since 2006. He will be replaced by Jon Wallace.

Jupiter UK Growth (JUKG), which is being wound up, was also on investors’ radars, slipping 1.3%, or 3p, lower to 226p. As part of the wind-up, shareholders were offered the default option of a rollover into the open-ended Brown Advisory Global Leaders fund. However, the board has now announced that the cash exit at net asset value less costs will now be the default option and those wishing to move into the open-ended fund will have to elect to do so.



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