The FTSE 100 had a mixed week with movements in the index driven by corporate earnings. Sterling weakened against the euro after a turbulent week in Brexit negotiations (see below for more), although it held strong against the dollar.
The FTSE 100 joined the global stock market rally on Monday, as concerns about European political risk eased following the first round of French presidential elections, before levelling off for the rest of the week. Meanwhile, sterling strengthened against the dollar and other major currencies, as opinion polls showed Prime Minister Theresa May easing into a comfortable lead in the election race.
Sterling rallied against the dollar and other G7 currencies after Prime Minister Theresa May called a surprise general election, leading to hopes that a larger Conservative majority in the House of Commons will put the UK in a stronger position when negotiating the terms of Brexit. The strength of the pound weighed on the FTSE 100 which spent most of the week sliding lower
Moves in the FTSE 100 were mostly sector- driven, with airlines and gold miners boosting the index earlier in the week before it was dragged down by poor performance in the supermarket industry. The pound strengthened against the dollar, as UK inflation held steady and President Trump warned the US currency is too strong.
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The FTSE 100 recovered to finish the week strongly, following US military action in Syria. This boosted gold miners and other safe-haven assets. Despite figures showing the UK services sector continues to thrive, UK government bond yields continued to fall due to an uncertain growth outlook for the economy.
The FTSE 100 was relatively subdued as the first quarter of 2017 came to an end. Despite rallying after Prime Minister Theresa May triggered Article 50, it was weighed down later in the week, as sterling strengthened against the dollar on rising UK inflation and expectations of an interest rate hike were brought forward. Many FTSE100 companies generate revenues in dollars, so a stronger pound can hamper the performance of the index.
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In the second part of our review of David Docherty’s trip to America, we explore four sectors that David believes could be affected by the Trump administration, and what investors should look out for. This sort of independent review from a fund manager from another asset class is often useful when discussing investments with our US fund manager.
Read the Omnis market update »
Having hit a record high on Monday, the FTSE 100 dipped midweek as the markets reacted to the attack on Westminster and doubts over whether President Trump will manage to follow through on his campaign promises.
In part one of this two-part series, Omnis look at Trump’s style of presidency, and what fund manager David Docherty believes will be Trump’s legislative priorities.
