On Thursday, a huge downfall was witnessed in the UK shares, which brought down three days of gains. Despite robust trading updates from BT and Smith & Nephew as optimistic news on Brexit ushered a hike in the pound that acts as an accounting drag on blue chips’ foreign revenues, London’s FTSE 100 closed down 0.5 percent.
FTSE 100 underperformed its European peers as pound took a leap of 1.4 percent. This was the biggest one-day rise since January, when reports were released that London-based financial services will be able to access the European Union markets after Brexit.
The Bank of England kept the interest rates unchanged that led to a brief boost in the currency. The bank also suggested that a slightly faster future rise could be expected if Brexit goes smoothly.
The oil prices also went down hitting the British benchmark by a great extent and bringing down index heavyweights BP and Royal Dutch Shell by 4.4 percent and 2.3 percent respectively. For BP, it was the biggest one day fall in two years. In the third quarter, Royal Dutch Shell reported soaring, but below consensus profits.
British factories witnessed their worst month since 2016’s Brexit vote, according to the data. “The FTSE was forced to give back some of its Halloween rally,” said Connor Campbell, an analyst at Spreadex, referring to the previous session’s gains.
Along with the third quarter’s earnings, also came some motivating news for equity investors. BT’s shares topped the FTSE 100 as it went up by 9 percent, making it the best day for BT since May 2013. Broker Bernstein called BT’s figures “stellar”.
Alasdair McKinnon, who owns shares in the broadband and telecom company and is the fund manager of the Scottish Investment Trust, said: “It’s early days, but this could be the sign of traction that investors have been waiting for.”
Medical equipment maker Smith & Nephew also showed its best day in almost four years, when it jumped by 6.4 percent, after saying that it expects its trading profit margin to be even higher this year on better performance for its hips.
Miner BHP Billiton said it would buy back shares and promised to pay a special dividend to return $10.4 billion to shareholders. The shares of the company went up by 2.6 percent.
FTSE 250, which is more domestically focused was benefited from the stronger pound, saw a three-week high by rising up to 1.2 percent, led by Spire Health, up 12.4 percent and Just Group, up 11.5 percent.